With smart connected technology rapidly advancing, commercial buildings are becoming more and more efficient, resulting in an increased net operating income (NOI) and lower operating costs. Underperforming assets can get a boost by putting in place the technology to increase your building’s energy efficiency and enhance occupant comfort.
To help keep you competitive, and put the right technology mix in place, we created this comprehensive guide highlighting industry challenges, future trends, along with tools and strategies to help increase your energy efficiency.
According to the United States’ Office of Energy Efficiency & Renewable Energy, commercial buildings account for 36% of all electricity consumption — yet 30% of this energy is wasted. This amounts to roughly $60 billion of wasted energy per year. All of these wasted resources have a massive impact on your bottom line, not to mention the environmental degradation.
There is a variety of contributing factors to energy inefficiency that will be broken down in this piece, but HVAC and lighting are the major causes — accounting for 70% of the utility bill for most commercial and industrial facilities, according to The Energy Alliance Group of North America.
To combat these inefficiencies, new processes, systems, and technologies must be implemented to streamline operations and ensure that buildings are operating at peak efficiency.
According to recent research from Verdantix, the top 3 real estate priorities over the next 12 months are focused on reducing utility bills, improving cybersecurity for building operational systems, and enhancing occupants’ comfort and well-being.
Reducing utility bills comes with the obvious advantage of cost savings, and increasing cybersecurity ensures that sensitive data is not able to be accessed by outside parties. Enhancing the comfort and wellbeing of occupants decreases the chances of tenant turnover and adds value to the property.
The next two most important priorities are improving the quality of data collected and implementing new collaboration and productivity technologies. Both of these support the top 3 priorities by giving access to a wealth of data and a platform in which it can be analyzed and broken down into valuable insights. These insights can then be used to gauge where utility expenditures can be reduced, what aspects of your system are weak and able to be breached easily, and how to increase comfort for occupants. Building data is extremely valuable in guiding all decisions surrounding operations, so you want the highest quality and quantity of data possible.
Outdated technology is hugely inefficient and causes energy usage to skyrocket. The performance of equipment degrades over time, causing them to consume more energy to perform at standard levels.
The speed at which equipment loses its effectiveness depends on how long it is operating during the week, how well it is maintained, and the overall quality of the equipment at purchase.
Commercial buildings often have disparate legacy systems throughout the building, not allowing the operational efficiency of the whole operation to be assessed. Data analytics is a key player in determining the efficiency of buildings, but with these legacy systems, it is extremely difficult to gather and analyze these data sets. We’ll take a look at why it is so difficult to access this data in the next section.
There is a wealth of information that can be gathered from buildings, but it can sometimes be difficult to access this data — let alone analyze it. Legacy systems tend to be older, and it can be complicated to extract this operational data. You may also have multiple legacy systems that data has to be pulled from, so the difficulty level rises.
According to Memoori, “Historically, as much of the data generated by building systems was inaccessible and constrained by not only proprietary systems based on antiquated systems protocols but also by individual licenses, contracts and support agreements for each respective systems. This left the enterprise subject to several inefficiencies and limitations including limited automation or intelligent control, little or no IP connectivity, no access to analytics and very constrained opportunities to integrate the data from BAS systems with other building or enterprise systems.”
Once the data is collected, actionable insights into how the building is operating and what aspects are causing inefficient energy usage are gathered through analyzing the data. Analytics turns all of this raw data into easily understood trends and patterns, allowing you to identify energy systems not operating at optimal levels.
Analyzing this building data allows you to be confident in making operational decisions because you are getting hard-data on the efficiency and effectiveness of the systems in place.
Accessing and analyzing building data is a critical factor in increasing the energy efficiency of a building. It helps you identify systems in a building that are underperforming and fix them.
With technology rapidly advancing, there is an opportunity to increase the efficiency of buildings dramatically. There is a business case for investing in these technologies as a return on investment usually happens in a relatively short period of time.
A recent Verdantix study interviewed 100 real estate investors to understand how they perceive technology amongst the broad range of market factors affecting them. Over 45% of respondents expect their technology budget to increase over the next two years.
Smart building technology and the availability of more building data were seen as the biggest source of opportunity, with 81% and 73% of respondents identifying them, respectively. One of the biggest drivers for this increased investment in technologies is the desire to boost net operating income.
In line with this desire, 50% of respondents view asset maintenance, and 47% of respondents view energy management as having a very high potential impact on their real estate portfolio.
The way in which this technology is deployed is changing as well. With the rise of SaaS and cloud-hosting, traditional on-premise deployment types are starting to decline. On-premise solutions have to be housed within the building and take up valuable space, along with having high upfront costs for implementation. On the other hand, cloud solutions can be offered with a SaaS subscription model and have low upfront costs.
According to The Insight Partners, on-premise solutions had a market share of 46.7% in 2017, with cloud holding 36.6% and hybrid 16.7%. On-premise solutions are projected to be on the decline for the foreseeable future, with cloud and hybrid models taking larger shares of the market.
The rise of the internet of things (IoT) has created an opportunity to connect almost all aspects of a building and allow you to gather massive amounts of insightful data. According to Memoori, “we see the IoT as physical objects (things) that combine with networks, software, and applications to enable data exchange.”
As we touched on in the previous section, cloud technology is increasing in popularity — and with it comes IoT technology. IoT acts as the vehicle to gather and transmit the building data to the cloud where it can be analyzed. This allows a building’s complete energy profile to be built and give invaluable insights into its operating capacity.
Cloud and IoT technology has a substantial impact on your bottom line as well. The reduced upfront cost in comparison with in-house processing and data-storage solutions lowers the total cost of ownership and has a quick ROI.
Equipment in buildings will eventually need maintenance to address breakdowns and keep it operating at peak efficiency. But only having reactive — not proactive — processes in place can significantly increase facility operating costs due to the need for emergency personnel and unplanned for equipment replacement.
Having a system in place to immediately notify the proper personnel when a piece of equipment isn’t operating correctly will save both time and money. A system that can remotely identify inefficiencies and potential faults based on historical equipment data and performance will extend equipment life tremendously. This can be achieved by adding a layer of intelligence with wireless devices.
According to Verdantix, “within the past five years, the cost of embedding sensors and software for edge analytics and decision-making into building equipment has significantly declined.” These sensors are essential for gathering all of the building data needed to perform an analysis. Granular data for each system can be gathered through the use of these sensors, giving insight into operations with extremely high-quality data.
These sensors are connected through the use of the IoT and cloud technology, giving you visibility into your building operations wherever you are. Reactive maintenance is also less frequent as you have analytics in place that can predict when issues may arise.
Software as a Service (SaaS) is on-demand software using cloud storage. A SaaS solution can be presented as a subscription model, offering opportunities to save even more money. This model allows you to choose the services that best fit your business needs rather than having to purchase a “one size fits all” solution.
One of the major benefits of SaaS is the cost savings. The up-front costs are generally much lower than committing to a long-term contract along with the lifetime cost of ownership being lower. IT costs for data are reduced because the data is stored in the cloud rather than on your physical on-site servers — eliminating overhead costs such as hardware, maintenance, and repairs.
Diplomat Spa and Resort, owned by Hilton, implemented a building analytics platform in 2015. With almost 1,000 guest rooms and more than 200,000 square feet, pinpointing energy inefficiencies was impossible — until they implemented a quality building analytics platform. They now can see energy surges and immediately correct the problem. Since 2015, this type of system has saved them over $500,000. You can access the full case study here.
Marlins Park, home of the of the Miami Marlins, opened in April of 2012. With energy costs soaring high above what they had expected — and unable to diagnose why — they were searching for a solution. They decided to invest in a building analytics platform so they could see tangible results. Since 2013, their building analytics platform has reduced their energy spend by more than $490,000. See how this was achieved here.
At a time when operational efficiency, cost reduction, and occupant comfort has never mattered more, turning energy from a commodity cost to a value-added resource could be just what you need to gain a competitive advantage and enhance your asset value. Contact us today, and we’d be happy to help!
Or request a complimentary building assessment so you can be on your way to peak energy performance that a quality building analytics platform can offer you.