This is a guest post from AEE Member Navigant Consulting. 

The energy industry is undergoing significant changes. From the adoption of renewables to energy storage, technology is changing how energy is generated and supplied. Navigant Research estimates that in 2015, global advanced energy markets reached $1.4 trillion in revenue. As AEE put it in the Advanced Energy Now 2016 Market Report, this means the advanced energy industry is as “big as fashion, twice the size of airlines, and close to worldwide spending on media and entertainment.” These numbers are impressive for illustrating the momentum in advanced energy adoption, but what does this mean for commercial buildings? It means it’s time for buildings to get smart. 

Navigant Research has characterized the shift from a centralized hub-and-spoke grid toward an increasingly decentralized electrical grid as the Energy Cloud. This evolution will also rely on a transformation of demand; in particular, commercial buildings must evolve into dynamic nodes in this new energy infrastructure. Buildings become hosts for distributed energy, but also act as important levers to maintain equilibrium between supply and demand for new levels of power reliability and resilience. Commercial buildings must become instrumented, automated, and efficient in order to integrate with the changing energy grid. Intelligent building technologies are the keys that enable the transformation of facilities into this vision of dynamic nodes in the Energy Cloud.

Hardware devices, software, and services are the three pillars that infuse intelligence into commercial buildings. The integration of sensors, controllers, gateways, and software creates data-rich buildings that can then be automated to redefine operations for efficiency and automated responses to optimize energy consumption. What this means is that a building manager as well as the executives in charge can rely on intelligent building technologies to operate equipment (including HVAC and lighting) to optimize energy consumption for lower utility costs, but also to gain greater insight into operations for ongoing decision-making. Building energy management systems (BEMS) are the software brains inside the intelligent building. BEMS have the capacity to gather, aggregate, and analyze diverse data streams from building automation systems, meters, sensors, and external sources such as utility signals or weather to generate actionable information. BEMS enable decision makers to get better information—not just more data—as they embark on the journey of transforming their facilities into intelligent buildings. As noted in AEE’s Market Report, the BEMS market in 2015 was $2.8 billion globally and $1.1 billion in the United States. Navigant Research forecasts that global BEMS revenue will reach $10.8 billion in 2024.

The view on intelligent buildings framed around energy efficiency and the new opportunities with the evolving energy grid is important because how and when buildings consume energy has a direct and quantifiable impact on the big picture issues of energy reliability and resilience, climate change, and sustainability. A reduction in kilowatt-hours is an explicit quantification of greenhouse gas emission reductions, and a shift in demand is a direct reduction in stress on energy transmission and distribution. These energy benefits have significant bottom line impacts for large organizations, and so as the intelligent building technologies market emerged, energy was front and center in investment conversations.

Today, the intelligent buildings market continues to mature, and business benefits beyond energy are important to promoting investment and deeper market penetration. Navigant Research suggests that the market will grow as customers understand the improvements in operational efficiency and occupant engagement and satisfaction that come hand in hand with energy efficiency through the deployment of intelligent building technologies.

Technology partnerships are bringing sophisticated intelligent building solutions to market that help customers do more with less to see real bottom line improvements. Intel and Switch Automation, as one example, have partnered to offer a cloud-based solution that utilizes a wireless gateway and communications with software to deliver significant improvements in building operational efficiency. This kind of platform of devices, communications, and software takes advantage of wide arrays of data including utility billing, weather, business intelligence tools, and automation systems to deliver equipment-level insights into building performance.

Recent Navigant Research reports on wireless sensors and data integration for buildings outline the diverse market of intelligent building technology providers and the movement to position offerings for new customers as both energy and operational efficiency tools. There is a commonly referenced 3:30:300 rule of thumb in commercial buildings management. What this means is that for every $3 spent on utilities, $30 goes to rent and $300 to payroll per square foot. This reality underscores the importance of educating customers on the non-energy benefits of intelligent building technologies to see continued investment. If intelligent building solution providers can demonstrate how investment improves satisfaction and efficiency, they can draw the lines from technology to rent and payroll.

While it is a challenge to quantify soft costs such as productivity and satisfaction, a data-rich commercial building managed with a BEMS solution helps executives shape messaging. Examples of how BEMS can address the rent and payroll include:

• Space utilization: The workplace trends of hoteling, open offices, and working from home enable employers to lease fewer square feet if they have a clear idea of the needs of their workforces. BEMS can track space utilization to help employers make the right leasing decisions.
• Productivity, engagement, and satisfaction: Turnover is a huge cost to businesses, and happy employees stay. BEMS can be an effective tool to help amplify employee satisfaction by creating comfortable workspaces, engaging employees on sustainability initiatives, and even helping employees find collaborative spaces through scheduling huddle or conference rooms. 

What are your thoughts on intelligent building technologies? I will be joined by Ken Cardita, Software Solutions Architect at Intel, and Aaron Lapsley, VP of Global Engineering Services at Switch Automation for a free roundtable webinar discussing the topic on May 6 at 2:00 pm EDT. Register today to join the conversation.