While other cleantech markets continue to face challenges, the building energy efficiency market is marching onward and upward. Driving efficiency in our existing building stock is the nearest-term path to significantly reducing energy consumption. In fact, a recent Deutsche Bank report estimated $1 trillion in savings opportunities through building efficiency.
While we aren’t yet tapping the full potential of building efficiency, or anywhere close to it, the tide is quickly turning with the infusion of data into energy efficiency evaluation. Data, combined with software to make sense of it all, is driving new trends in areas that have historically served as roadblocks, or have not provided as much benefit as they otherwise could. Mapping to various stages of the efficiency lifecycle, the areas we see being positively impacted by data are:
- Pre-Implementation: Better prioritization, benchmarking, and analysis
- During / Near Implementation: More robust financing ecosystem
- Post-Implementation: Improved measurement and verification
More Effective Prioritization, Benchmarking, and Analysis. Industry conventional wisdom suggests that, on average, a major retrofit can save a building an average of 30% in energy consumption. While we’ve found that to be true through energy analytics done on our platform, we’ve also seen a major variance in savings opportunities across buildings. One building may have a 50% savings opportunity, while another may only have a 10% opportunity. So understanding which one is which before you conduct an energy audit becomes critical to avoid wasting time and money.
Data and associated analytics can help us identify true savings opportunities in a single building or across a portfolio before ever stepping foot on site. Knowing which buildings to target focuses on those with the best potential and makes it much easier to get buy-in to move forward with an on-site audit, which remains an integral part of the sales and evaluation process.
There are also new emerging ratings systems, which serve as another way to prioritize and benchmark buildings. ENERGY STAR and LEED don’t correlate well enough to a building’s true energy savings potential to guide users to actionable next steps. There are now various new asset rating programs being developed, such as those being piloted by the Department of Energy and the state of Massachusetts, that attempt to normalize for operational factors to measure a building by its ‘as-built’ efficiency.
More Robust Financing Ecosystem. Energy efficiency retrofits have often stalled in the financing stage where some building owners and operators are unwilling to invest the capital required to complete the project. This can happen for a variety of reasons: lack of internal commitment, preference to focus capital on core resource development, fear of being locked into a long-term contractual agreement with a third party, etc. ESCOs, as well as newer players such as Transcend Equity (acquired by SCIEnergy) and Metrus Energy, exist to fill the gap for those owners that want to participate in efficiency, but can’t come up with the cash.
For energy retrofits to become even more mainstream, however, traditional big bank lenders and institutions will need to provide attractive products for building owners. And for that to happen, these organizations need streamlined ways to validate the energy savings of a given project. Again, data plays a key role here, with solutions including standardized analytics and energy modeling, or actuarial-type methodologies that assess project risk based on key factors. These analyses also need to incorporate traditional factors that banks consider when making a loan, such as the credit-worthiness and overall financial health of an organization.
Improved measurement and verification. Once implemented, it is often difficult to measure the realized benefits of an energy efficiency project in a cost-effective way, as traditional hardware or manual approaches can be cost-prohibitive for most retrofit implementations. With operational changes and weather patterns impacting energy consumption from one period to the next, energy savings can sometimes be ‘hard to see’ for a typical building owner, leading to confusion and frustration over where savings can and should be claimed. When that happens, a building owner is unlikely to implement retrofits on other buildings or speak positively about energy efficiency.
With granular data on energy consumption, information about a building’s systems, and external data such as weather, one can objectively determine how a building would have performed if a measure had not been implemented during a given period of time. By comparing this to what actually happened, building owners and service providers can quickly align on the true energy savings of a particular retrofit.
These are just three of the ways in which the increase in data availability is beginning to help building owners and operators drive commercial energy efficiency projects faster and more effectively. In each instance, there are various players, programs and initiatives using different data sources in different ways. Converging on standards and best practices to leverage this data will be important for the industry as a whole. As that happens, the commercial efficiency market will continue to grow and invite more participation by asset owners, vendors and investors alike.
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Bennett Fisher is the CEO and Co-Founder of Retroficiency. Retroficiency enables energy service providers, facility managers, utilities and building owners to cost-effectively prioritize high-potential commercial buildings and to evaluate thousands of energy efficiency measures in minutes.