Archive for the ‘Smart Buildings’ Category

Renewable energy with smart grid technology – The new complex relationship turning everthing upside down

Saturday, April 3rd, 2010

The energy world is about to turn upside down. With the coming of smart grid, the electricity consumer customer becomes the electricity seller; the passive home appliance becomes the active energy manager; and the local 11KV DNO network becomes the power generation network itself.

Such an upheaval means that the energy world needs to start thinking about a new business model, says a recent report by IBM Global Business Services Energy and Utilities.

The fact that IBM is advising the energy industry is itself a point of interest, yet another signal of the new market opportunity emerging within the energy arena for information technology. This opportunity has drawn the attention of not only IBM, but also CISCO, Google and many others.

So how does IBM see the energy business model changing? First consider what it has been for the last century: a grow-and-build model. Utilities encouraged more and more consumption, and they built power plants and transmission to the far corners of the nation to serve the growing demand.

“The success of this strategy was remarkable. In the United States for example, from 1920 to the mid 1960s (excepting the period of the Great Depression), usage increased at seven percent annually – about five times the rate of usage of all forms of energy combined and three times the rate of economic expansion in general,” says the IBM report, “Switching perspectives: Creating new business models for a changing world of energy.”

But today we no longer need such expansion. The grow-and-build model is obsolete, yet continues to be used by utilities. As a result, utility stocks, which in the 1940s-1960s significantly outperformed the Dow Jones Industrial Average, now lag well behind.

Instead of expanding their territory, utilities are being called upon to change their product — to offer energy that is more efficient and clean and service that is more consumer-friendly.

Smart grid technology can help utilities meet today’s imperative. But it brings with it a new and complex relationship between customer and utility. This is because smart grid allows consumers to control energy usage via a home computer. With smart buildings into the mix and their appliances can control energy usage without the consumer doing anything. And with increased use of solar energy and other distributed technologies, the home also becomes power plant and storage facility for the electric utility.

“Companies willing to tackle industry model innovation and sit at the nexus of new complex relationships among business partners and customers will be well positioned to create and capture new demand for emerging products and services. Strong growth in revenues and profits – albeit accompanied by some risks – is achievable in multisided business models because of the embedded network economies of scale (i.e., margins increase with network size),” says the report.

IBM calls this new business model “a multisided platform.” What does it look like?

“Manufacturers, retailers and shoppers all benefit from having a single location where they can meet and transact business. A wider variety of stores and services brings more shoppers; more shoppers bring higher sales volumes for manufacturers and lower costs for retailers (and, in theory, also lower prices for shoppers). Thus, some element of network economy is bundled into the shopping center value proposition. The platform owner (the shopping center operator) extracts some of this value in the form of rent to store owners and, in some cases, service fees to shoppers,” says the report.

If indeed this is the future, it won’t be embraced quickly or easily by utilities, which are notorious for their caution. For those who do move forward, here is some of what IBM advises.

Be sure your current customer base is sizable enough to ensure that you get a meaningful head start.

But don’t hurry. History has shown that later movers may actually benefit from standing back from the first wave of early adopters.

Time the announcement of your new business model carefully to avoid shocking long-time constituencies or alerting rivals too soon.

But in the UK, the cat has already leaped out of the bag!

The UK Regulator – Ofgem’s duty to contribute to the achievement of sustainable development promoted this duty, placing it on an equal footing with its duties to meet reasonable demand and financing authorised activities. The principle objective, to protect the interests of consumers, refers to future as well as existing consumers. These changes underline Ofgem’s important and developing role in shaping the future of gas and electricity industries in a sustainable manner.The UK is facing a future that involves increased geopolitical risks to energy security, potentially higher energy prices and the need to do much more to reduce greenhouse gas emissions while making sure everyone can afford to adequately heat their homes.

While much of what is needed to deliver sustainability is not within the regulators direct control, a responsibility to facilitate change by engaging in the debate, trying to persuade relevant players to make changes where required and contributing information and expertise where it can.

Actions speak louder than words:

So whats already implemented in the UK?

  • Smart metering (CoP10) with import and export facilities – Coming to every home in the UK – See my blog on smart metering for more information
  • feed-in tariffs (FITs) for small-scale low-carbon electricity generation from 1 April 2010 – Customers own micro energy generation agreements connected to the local DNO grid – See FITs for more information
  • Climate Levy Tax incentives – Look at you next bill and spot this tax!
  • ROC’s – See my blog for more information
  • REGO – See my blog for more information
  • OGEMs – See my blog for more information
  • REC’s – See my blog for more information

The next step:

  • Informing the customer and proving ‘idiots’ guides to understand the available technologies and energy savings available.
  • Providing engineering design  and installation solutions.
  • The correct customer incentives to explore and implements these technologies.

Connecting Smart Buildings to the Smart Grid

Friday, November 20th, 2009


Suggesting turning off the lights in our buildings has been a constant theme. Saving or conserving energy, especially when the cleaning crew and security personnel are the only ones occupying a 250,000 sq ft office tower, makes sense at a very basic level. You would think that a simple concept such as conserving energy in our built environment would be easy to deploy. Given that energy, and thus our independence, is on everyone’s mind, combined with the fact that buildings use 40+% of the total daily energy spend, one would expect it to be a high priority.

Over the years engineers have introduced a number of different ideas, concepts and technologies that would help building owners conserve energy. Even to this day, adoption of these “common sense” ideas have been met with great resistance. In trying to better understand why this remains such a low priority I’ve summarized the common client drivers  / observations:

1) during the boom times, making money trumped every other priority,

2) in many situations tenants paid the utility bills and the landlord had no motivation to conserve,

3) real estate companies have struggled with “who” in their organization should take responsibility for this issue (IT,PM,FM,Energy),

4) while executives promoted “green” for marketing purposes, commitment and execution was superficial and

5) many of these technologies involve CAPEX or in some cases initial impacts to OPEX investments and without the motivation of a “return”, never made it past the budgeting process.

There have been bursts of interest in this topic by the built environment over the last 5-7 years. In fact there are case studies of real estate companies who have implemented sophisticated technology solutions to monitor and manage their energy consumption with a much greater level of accuracy. Over the last 24-30 months, many of our trade associations have also joined in the battle to conserve and begun to aggressively educate their memberships on conserving energy. While all of these “green” initiatives have been positive, there has been little discussion on the role that technology, automation and innovation can play. While insulated windows an important part of the strategy so is a lighting strategy that can reduce energy costs by 50%.

Enter the Smart Grid discussion.

About 2-3 years ago the discussion of the Smart Grid started to heat up. Major companies like GE, IBM, Siemens and, most recently Cisco and Google, started to beat the drum on the benefits of being able to manage electricity in more sophisticated ways. Instead of producing power in big old clunky power plants and “broadcasting” the energy down very old “asynchronous” (one way) power lines, the idea has emerged of a “networked”, very smart, easy to manage electrical infrastructure that connects both your refrigerator to the network as well as the solar panel or wind turbine that you have in your backyard or the roof of your office building. The idea is big, the benefits are big, the issues are big, and so are the challenges. While the marketing of many of these large smart grid companies would lead you to believe that the technology is in place and everything has been figured out, there are a mountain of questions ranging from privacy issues to standards and everything in between.

One of those big issues to be figured out is how to we “connect” a smart building to the smart grid and what if we’re starting with a building that is not so smart. One of the most basic questions that need to be answered is “who in a building takes charge of this issue.” Buildings have many number of different tenant landlord relationships, from owner occupied to multi-tenant. The relationship in many cases will influence who takes the lead on this important topic. Once the “business” side of the equation is figured out, then you move to the building technology and ultimately the relationship with the smart grid. These are very big questions and in many respects are the primary reasons that so many building owners have not initiated an energy plan. The other major reasons for slow response to this issue is the maturity of the technology (still evolving) and the regulatory role of local, and national government agencies.

If you break the smart grid into three distinct categories it is a little easier to understand.

We have the:

1) “middle infrastructure” i.e. the transmission lines, sub-stations etc.,

2) the power plants – both traditional as well as the emerging technologies, and

3) the end user, which in our world translates to the building.

These make up the major components of the smart grid. When we isolate the building’s role it’s easy to understand why this is such a complex issue. It’s not only the connectivity of the building to the smart grid, but also the internal infrastructure of the building that needs to be automated in order to create a completely digital, transparent connection. Connecting a building to the smart grid without considering the tenant space will leave you with less than desired results. The topic gets even more complex when you consider all the other building technologies that need to be considered for integration into the building network such as security, tenant communications etc. at the same time you are trying to figure out the connectivity into the smart grid for the purpose energy management and conservation.

The benefits of the smart grid begin to get very interesting when you start talking about how a commercial building owner could gain financially from this concept. Just imagine you’re at 30,000 feet looking down on a major city and picture all the buildings being turned into individual solar and other renewable energy source power plants that could sell unused energy back to utilities via smart grid technologies. There are some who have speculated that this could be a significant income stream for owners and operators once the idea is adequately developed.


The bottom line is that the idea of smart buildings connecting to the smart grid is an idea whose time has come. Whether adoption is fueled by financial opportunities or by strict legislation, this idea is not going away. In the early stages, as with all new technologies and ideas, there are more questions than answers. However, last week’s announcement by the US Obama administration on their 3.2 billion dollar commitment to the smart grid is sure to advance the topic and produce real results.


The question remains how will BUILDINGS CONNECT to the SMART GRID, with technology companies developing products and exploring this new major industry (as it will become). Which company will become the brand leader, but even more important is which real estate owners will become the  known  to champion this technology, and get an competitive edge on its rivals.