Green Intelligent Buildings: Where's The Business Model?

May 1, 2008
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Demand Response Comes To The Fore

So with this huge green opportunity that seems to be the subject of every article in all sorts of magazines, where do we start? This article will sound like it is written to the system integrator, but in fact it applies equally to building owners and consulting engineers.

John Doerr, a partner at KPCB, was quoted in an April article in Fast Company magazine. He says that the “green tech” boom is the “mother of all markets,” and energy in particular is “the biggest business in the world.” Much of the buildings industry subscribes to the same idea. The problem is that many automation companies and system integrators don’t know where to start.

Demand response (DR) is the green and intelligent place to start. The current environment creates the perfect justification for much-needed capital upgrades and a major infusion of intelligence to all buildings. The emphasis with DR, though, is the opportunity for system integration and building automation. This is about higher energy prices, but it is about the dramatic cost increases we are poised to see for electricity as well.

A crisis is coming for electricity. Electric demand is outstripping our system capacity, and that means more risk of brownouts, blackouts, and loss of business and money. DR is a simple concept: utilize technology in buildings to reduce electric use at critical times. To briefly revisit Electric Bill 101, the peak demand is a short period of time each year when we consume the most electricity in a building. Typically, it occurs during the summer cooling season, and even more alarming, it lasts for only about 100 hrs/yr.

A controls integrator can already see how easy it would be to build an algorithm to control the building and reduce demand during those 100 hrs. In fact, there are still a number of people in our industry who remember doing this about 25 years ago. The difference now is that utilities are willing to pay customers to do this. Why? Because it is cheaper to automate energy efficiency through building automation than it is to build a power plant, far cheaper. Also, no one wants a power plant in his backyard.



Business Model Defined

So where is the business model? It is in helping your customers to get more value from the automation systems they already have installed. Equally important, the model is about using the cash that utilities will pay customers to participate in upgrading their systems. If you are the customer, this is the way to convince management to invest in energy efficiency during an economic downturn. Now there are a number of types of DR, and they vary by location. In some cases, owners are doing something as simple as starting an emergency generator on a signal.

The vision for more sophisticated approaches is to truly leverage controls to shift setpoints, pre-cool, trigger distributed generation, and implement a host of other strategies. No one understands more about the largest energy consuming loads in buildings, HVAC, and lighting, than system integrators. That is why DR is a ready-made market opportunity for the controls industry. If you are ready to learn more, there are a host of places to begin to get educated.

Contacts

The message to readers is that green is not just about LEED®, and that DR is the opportunity to build a new business model that does not rely on new construction. Just take a look at AutomatedBuildings.com and see the wealth of information about DR.

Don’t stop there, though; there are a number of exciting educational opportunities. Last month DR was a prominently featured topic at Engineered Systems’ Green Intelligent Buildings conference in Baltimore, and there will be another event this fall. On the GridWise website at www.gridwiseac.org, there is information on upcoming events, including the GridWise and DR expos this May in California and the Grid-Interop Conference this September in Atlanta. A consortium of building automation and technology companies is calling themselves NewEnergy Alliance, banding together to drive the DR business with integration.

The prediction here is that the new convergence of zero net energy, carbon footprint, and DR will create more market demand in the next decade than new construction. GIB

Recent Articles by Jack Mc Gowan, CEM

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