In the previous installment, we argued that energy dashboards are marketed, sold and purchased in a way that fundamentally misunderstands the true nature, value, and purpose of these tools. We believe that in many cases the wrong tools are being purchased or the tools are being used ineffectively, if at all. Far from proposing that dashboards are of no value, we believe that the really good ones can be valuable tools.
Liar’s Poker
So why have essentially none of the market-leading, paradigm-busting tools from the '80s, '90s and later become a dominant force over time? Part of the answer may lie in the way vendors have always sold and customers have always purchased energy dashboards. It is a self-reinforcing downward spiral between vendor and buyer that focuses on the wrong metric, so that in the end, both parties wind up damaged.
It seems every customer demands to know what level of return on investment or ROI they can expect from their energy dashboard purchase because they can’t fathom or are unable to justify a purchase without one. Unfortunately, what seems on the surface a very reasonable request often becomes a game of liar’s poker, with the winner being the vendor that promises the most 'savings' for the least effort.
In response, the dashboard-selling process has devolved to an overly simplified 'guaranteed' bottom-line number that pretends to provide an answer, with no need to get into the gory details of the building -- let alone building science. In reading some of the energy savings claims on dashboard vendor’s websites, it seems to us that the principal difference between the hawking of weight loss programs and that of energy dashboards is the FTC-imposed disclaimer of “results may vary” in the weight reduction programs.
ROI Revealed
When it comes to energy conservation purchases, the term ROI appears to deliver a powerful positive buying connotation. After all, we hear these stories all the time: how some company achieved this incredible ROI when they did some energy-saving task like solving a pumping issue, or a variable-speed drive stuck at 100 percent, or any number of things that can go wrong and waste thousands of dollars per year if left unchecked. The cost of the repair was 100 dollars; it saved 1200 dollars per year and achieved a one-month ROI, all thanks to the newly installed dashboard. Everybody is happy…right?
Let’s face it -- buildings consist of ever-changing operational requirements and dynamic components that if not carefully watched can easily go astray and waste significant energy. The good folks at Lawrence Berkeley National Laboratory (LBNL) and Texas A & M have done seminal work on the typical 10 percent to 30 percent 'drift' in energy consumption that can happen in just the first two years of building operation. The prescription for halting and reversing this drift is regular retro-commissioning. LBNL’s database of over 600 buildings representing around 100 million square feet of floor-space shows that the median whole-building energy savings for retro-commissioning is around 16 percent and the median ROI is 1.1 years.
What the LBNL study does not address is how many serious issues are actually discovered by those diligent on-site facility folks who provide 'daily' maintenance -- eventually. The question is, when? Sometimes issues are prevented before they happen through daily maintenance routines, or sometimes they are caught days, weeks or months later.
A couple of questions occur to us. What would be the value of a tool that could reduce the time needed to discover problems? When one thinks about it, retro-commissioning is designed to find issues that we assume no one would ever have found in the course of a typical maintenance regime, or that would have at least remained undiscovered for a year or more. Is that a good thing?
As far as promised ROI goes, rarely is enough due diligence performed pre-dashboard deployment to understand how well a building or portfolio is performing and therefore what can be saved. The only way an ROI can authoritatively be claimed is if there is perfect future knowledge about what would have happened anyway in the absence of the installation of the dashboard. Since this obviously is not possible, one can only conclude that most, if not all ROIs mentioned in the context of a purchase or sale are self-serving at best.
To further illustrate the point, let’s say that a dashboard helps identify a problem with a facility’s load profile. Upon further investigation, it is discovered that equipment has been running overnight unnecessarily because the building operator made an error when programming the building automation system. The problem gets resolved right away. How long would the equipment have continually run had the issue not been discovered? A day? A week? A month? Or would it occur until the next retro-commissioning occurs? Your 'ROI' would vary by up to three orders of magnitude depending on the answer.
Further complicating the issue is that quite often buildings are not performing, or are not being operated, as designed/intended, which means that initial energy baselines established by the energy dashboard may overlook existing problems. Put another way, dashboards benchmark buildings against what is happening, not necessarily what should be happening. If, for example, when the energy dashboard is installed, a site has an air-handling unit that is not being turned off at the appropriate time, it may not exhibit enough energy waste to trigger an alarm. In this case, a typical dashboard would automatically establish an incorrect baseline and trigger an alarm only when energy consumption goes above that amount.
The True Value of Energy Dashboards
The true value of a good dashboard is to prevent ROI from happening in the first place; think of it as an insurance policy. Energy dashboards clearly are useful for initially determining if bad things are happening, but we believe that the more important capacity of these tools is to allow for prompt corrective action so that these bad things do not continue to happen indefinitely. Like commissioning, the ability to simply and clearly track energy use of buildings and their key components should be considered a minimum prerequisite of modern building management practice.
Rather than attempting to see overall energy usage go down due to energy dashboards, they may be worth more to customers by ensuring it does not go up, as LBNL studies indicate it likely will. The issue for facility managers comes back to the old prevention argument: How do you quantify the value of energy waste that did not happen in the first place and justify investment in tools to prevent this waste?
On some level, it comes down to managing risk. Obviously, the best thing that can happen is an efficient, economical and comfortable building. So, what is the worst that can happen? Although most dashboards won’t pick this up, clearly the worst that can happen is equipment failure leading to loss in production, comfort and productivity. The next worst thing is that energy and money are wasted; only the most naive cornucopian believes that overall energy prices will decline in the future, breathless prognoses of unlimited natural gas resources notwithstanding. The LBNL study tells us that as a conservative benchmark, an average of 16 percent energy waste could be expected.
Lastly, let us not forget that even if the energy dashboard exposes significant deficiencies, the onus is on the customer and its facility team to make the corrective actions. If the customer is unable or unwilling to take corrective measures, what recourse is left to the vendor? Rightly or wrongly, dashboard vendors will usually lose the argument with the customer, even when the customer’s inaction was to blame.
Final Thoughts
We believe that there needs to be radical shift in the marketplace as to how dashboard products are built, evaluated and sold. Energy dashboards should be designed to be as simple as possible, providing a concise actionable result with the least complication.
By keeping the cost of development and product pricing lower, the cost-benefit ratio can be much higher and vendors will be more likely to succeed. Glitzy, complicated dashboards seem to be more of a novelty than a useful tool, and our experience is that they soon lose their glamor.
Furthermore, dashboards should be viewed on their true merits as risk mitigation tools and not speculative investments purchased based on some unknowable ROI.
Lastly, customers need to understand the commitment in both time and effort that is needed to take advantage of the tools they purchase.
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John Pitcher founded Scientific Conservation and is currently the COO of EcoTech International. Known as the inventor of automated fault detection and diagnosis, John’s 40-year career covers many product-development and leadership roles in the building automation and energy efficiency field.
Widely known as the “Father of LEED,” Rob Watson is CEO of EcoTech International, which brings integrated sustainability solutions to clients in the U.S., Russia and China. Rob was a semi-finalist for the 2011 international Zayed Award for Energy Efficiency and was the first recipient of the USGBC Leadership Award. Author Tom Friedman has called Rob “one of the best environmental minds in America.”
Shaun Hill is a 15-year building energy efficiency industry veteran, most recently as Project Manager for Scientific Conservation.