Why Commercial Buildings Need to Get Smarter About Energy and How EMS Can Help

Smarter commercial buildings benefit the bottom line and address nationwide energy challenges regardless of regional policy

New state energy goals and innovative utility program offerings have been making headlines in recent months. These types of regional policies and incentives are important, especially as we face challenges ranging from grid constraints and fluctuating electricity prices to environmental concerns, but significant portions of the country are outside of the direct influence of energy use mandates and incentives. 

Nationwide, the need for sound energy management strategies in commercial buildings like retail, restaurants and hospitality facilities is more apparent than ever. These buildings consume a significant portion of U.S. energy, and increasing their efficiency improves the bottom lines of the businesses that run them while also benefiting broader goals to reduce emissions. With a clearer understanding of how new technologies overcome historic barriers, all commercial building managers can adopt energy management solutions (EMS) that make streamlining easier. Implementing effective EMS in the many small- to mid-size commercial buildings across the country adds up fast to tackle national energy challenges. Even better, upgrades are widely accessible and effective regardless of location and outside incentive. 

Regional Policies and Utility Programs Are a Start 

According to ACEEE’s 2017 State Energy Efficiency Scorecard, total per capita energy consumption continues to climb throughout the country even as “high achieving” states like California, New York, Minnesota and others implement energy targets. 

For example, Governor Brown of California recently passed SB 100, a clean energy bill that will have major implications on energy use in the Golden State. Notable utility programs also incentivize adopting smart metering devices in homes and commercial businesses. Others like Southern California Edison are aiming to increase demand response (DR) participation through commercial rebates.  

But What About Buildings?

Just as efficiency policies and utility incentives vary state by state, energy costs fluctuate across the entire country. Yet buildings are significant consumers regardless of changing electricity prices, responsible for 40 percent of U.S. energy use and nearly half of total CO2 emissions. Much of that energy isn’t being used effectively either — the average commercial building wastes 30 percent of the energy it consumes. 

State policies like SB 100 are outliers, and ultimately utilities are too regionally focused to have a major impact across state lines beyond inspiring others to follow suit. Top-down stakeholders including lawmakers and energy providers are only part of the wider equation. Successful efficiency achievements across the country will depend on decisions at the portfolio level.

According to the New Buildings Institute, the energy usage of buildings will have to be cut anywhere from 50 to 85 percent to reach net-zero carbon goals. With immediate economic incentives to gain, commercial facilities of all kinds should be given more attention. Retail operations in particular stand to benefit from technologies that manage energy. By decreasing energy costs by just 20 percent, retailers can experience a similar financial impact as a 5 percent sales increase. An EMS is a simple way to both improve energy utilization and boost profits. 

Examining Roadblocks To Proper EMS Adoption

Why haven’t all facilities installed EMS already? Barriers ranging from inconvenience to cost have historically prevented these technologies from being accessible across building types.

Nearly 82 percent of commercial buildings in the U.S. were built before 2000, meaning many active facilities were not designed with energy efficiency in mind. Older buildings can sometimes be retrofitted with new technologies, but a complete transformation introduces steep costs, and, depending on the sector, it may not even be an option. For example, restaurant franchises are greatly limited by layout and design plans. For other facility types, additional considerations like pricey permitting and space constraints prevent building operators, especially franchise managers, from transitioning into greener buildings. 

Operational logistics also throw a wrench into adoption. Historically, energy management solutions for commercial buildings have been complex, costly and disruptive to ongoing business operations. As a result, less than 20 percent of commercial buildings in the U.S. have installed building automation solutions. When considering intensive solutions, most businesses do not have the option to temporarily halt operations to install comprehensive hardware systems. Aside from the installation process, incorporating new technologies into daily operations can impact staff productivity as initial training drains worker bandwidth. Finally, high upfront costs and slow return on investment (ROI) prevent owners from adopting new solutions. Many traditional building automation technologies could take up to three to five years before achieving a ROI. 

Characteristics To Consider When Selecting EMS

New energy management technologies, often modular and enabled by Internet of Things (IoT), overcome many of these original barriers. Facility decision makers can recognize the markers of an effective EMS by focusing on a few criteria. 

Ease of use and installation are always key qualities. Employees must be able to interact with systems with minimal oversight or training. “Set it and forget it” is a valuable philosophy design for energy management tools that allows facility managers to focus on other tasks. A good EMS platform should also minimize the need for physical construction. As discussed, most businesses can’t easily accommodate renovations into their plans. EMS services that require little hardwire reconfiguration and installation disruption create fewer headaches. 

Another important capability is remote connection to the EMS – a huge benefit for managers that work in the hospitality and retail industries. Remote scheduling and lockouts can maximize guest comfort without overburdening HVAC units, ultimately leading to less disruptive maintenance calls.  

Not only does remote functionality help with multi-site control — cutting travel time while managing a chain of stores — IoT connectivity can offer advanced analytics about energy use and patterns. This data can help make stronger operational decisions moving forward. 

Compatibility with demand response (DR) programs offer additional benefits for EMS beyond energy efficiency. For the SMB market in particular, there is a lot of room for growth. Demand response participation rates in this sector are only one-third of the average for all business types. Many utilities provide commercial customers with DR incentives like equipment rebates or energy rate reductions that can pay for a new EMS. Lighting and heating can be automatically reduced during DR events to help lower peak hour electricity usage. 

Between streamlining operations and opening up new revenue streams, the latest effective EMS technologies can reduce the payback period down to one year.

Taking Action Now

Aligned with larger policy and utility trends, commercial buildings should focus on the growing role of energy optimization. A wide range of facility types in the commercial space can fulfill similar goals by selecting the right technologies. Building by building, we can achieve the energy future that California and other leading states are imagining sooner rather than later.  

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James McPhail is CEO of Zen Ecosystems. He has significant experience in strategy and management within the energy industry. James is focused on building the business and channel relationships with utility providers, resellers and technology partners. Prior to Zen, James was EVP Sales at REGEN/Encycle for over four years, building sales from the ground floor, which now boasts a customer base of some of the largest national retailers.  Before joining REGEN, James led Western US Sales at EnerNOC, a recognised leader in Demand Response, with a focus on bringing commercial and industrial customers together with utility-funded DR programs and data-driven energy management solutions.  

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