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Was 2013 the year efficiency got cool, sexy and cheap?
Not quite. But it did become cooler, sexier and cheaper than ever before -- driven largely by innovations in intelligent efficiency such as energy management software, virtual audits and better data crunching abilities.
Scaling the efficiency market will come through better IT deployment, as well as the less exciting work of educating customers, adjusting utility incentives and crafting better financing options.
In order to understand how these factors will work together over the coming year, GTM reached out to a range of efficiency executives to get their thoughts on what's working and what needs to be improved. Here are their responses.
What was the most important technology or market development for efficiency in 2013?
Greater acceptance of efficiency on the part of large commercial customers
Clay Nesler, VP of global energy and sustainability, Johnson Controls: In our 2013 global survey of 3,000 facility and energy management executives, we found that 73 percent of organizations had made internal or public goals to reduce energy consumption. We also found that organizations that made public goals implemented 50 percent more efficiency measures last year and were 2.7 times more likely to increase investments next year than organizations without goals.
Paul Baier, vice president of sustainability, Groom Energy: This year we saw widespread acceptance among senior management of the importance of energy efficiency, driven by the three trends: 1) execution to achieve publicly stated greenhouse gas reduction goals; 2) pressure from top customers like Wal-Mart; and 3) increased funding from utilities for behavior change (through demand response) and retrofits (through incentives). Most management teams now realize that energy management can no longer be left to the backwater of "deferred maintenance" programs and local decisions.
Better data and reporting
Chuck McKinney, VP of marketing, Aircuity: The availability of building energy consumption information is playing an important role in driving the efficiency market. Many different factors have contributed to this, including inexpensive sub-metering solutions, energy management software (including virtual energy audit services) to compile and transform raw data points into useful information about energy use, and legislative mandates for reporting energy use.
Swapnil Shah, CEO, FirstFuel: In 2013, we started to see utilities demonstrate some innovative thinking around the EE assets that can help them deliver efficiency -- specifically in the case of demand-side data analytics, which officially entered the utility mainstream. This is a major expansion beyond just analytics related to generation sources and the meter (sometimes referred to as "supply-side analytics").
At the same time, the days of finding low-hanging efficiency fruit across utility service territories are behind us. Demand-side data analytics have emerged as a key enabler for identifying, prioritizing, and delivering the next generation of energy efficiency in the U.S. In 2011 and 2012, the name of the game was pilot programs; in 2013, we saw the release of over a dozen analytics-based RFPs. Utilities are now relying on analytics to find and enable this efficiency at mass scale, and we see that in our own customers, where 40 percent of the savings identified are in previously underserved mid-sized buildings, and 50 percent of savings are from operational improvements.
Technology and market convergence
Stephen Cowell, CEO, Conservation Services Group: The Nest thermostat catching hold is an example of a smart device providing multiple benefits by combining technologies to control equipment, engage customer behavior and link to both demand response and efficiency. This interesting development points to a new technology trend that appeals to multiple customer and utility value propositions.
On the market development side, there's a recognition that both demand response and energy efficiency are inexorably linked from a policy perspective. This is an important change in the market that will influence the way that capacity markets incorporate demand-side resources.
What is the most serious hurdle for efficiency in 2014?
Financing
Swapnil Shah, FirstFuel: The most serious hurdle for commercial efficiency is fostering private investment and unlocking financing for projects. The fundamental challenge is a lack of uniform, reliable, and universal building performance data that project investors can use as a basis for investments in EE upgrades. Just as the creation of new financial products in other sectors is based on credit scores and other measures of investment worthiness, new investment in the energy efficiency sector demands a standard way to assess and measure value.
Clay Nesler, Johnson Controls: Year after year, our EEI survey identifies lack of funding as the greatest barrier to investment in energy efficiency. Specific barriers include lack of internal capital, competition from other investments and lack of competitive third-party financing options. These are especially critical barriers in the private-sector commercial real estate market where credit-worthiness, short-term ownership, and split owner/tenant incentives add to the already-significant barriers to investment.
Education and accountability
Paul Baier, Groom Energy: Energy accountability still is lacking in many organizations. While more management teams realize the importance of managing energy use, who specifically is responsible for driving improvements (operations, real estate, sustainability, etc.) remains fluid, and thus reduction programs stall.
Mark Housely, CEO, Vigilent: We still encounter a legacy mindset for data center operations which is based on longstanding manual practices. This thinking perpetuates an “always on, all the time” practice for operation, which is absolutely wrong and unnecessary. Many data center managers are unaware of just how much information is available through monitoring sensors, as well as how to use this information to simultaneously reduce energy use and gain time and insight for more strategic, proactive planning.
Figuring out how to use data
Bennett Fisher, CEO, Retroficiency: Despite the notion that big data is readily available and changing every industry, the reality is that the availability of building data needed to harness the power of analytics remains a hurdle to driving efficiency. For example, interval meter analytics can be a powerful technology in helping to identify the right buildings to target, as well as what opportunities exist. But interval data is only available on large buildings or those with smart meters -- 30 percent of the building stock in all.
The market can’t wait for every building to be interval-metered. This is why we’ll see broader solutions in 2014. We’ll see analytic deployments that leverage public information like tax data and monthly consumption data to identify efficiency opportunities. This is the type of approach we need to unlock the full potential of efficiency.
What will be the biggest trend to watch in 2014?
Continued momentum for PACE financing
Clay Nesler, Johnson Controls: There is growing momentum in commercial property-assessed clean energy (PACE) financing. Even after the virtual shutdown of residential PACE programs in 2009 due to Federal Housing Finance Agency concerns, 31 states and the District of Columbia have now passed enabling legislation for commercial PACE programs.
Better use of data
Mark Housely, Vigilent: Intelligent analytics, without question. Sensors have become both inexpensive and ubiquitous, efficiently providing great data in significant volumes. When combined with intelligent analytics, this data will provide unprecedented insight into data center energy use and operating behavior, enabling entirely new and likely unexpected ways of gaining efficiency and uptime safety.
Bennett Fisher, Retroficiency: The biggest trend to watch is if major utilities announce large-scale analytics deployments to drive commercial building energy efficiency. As was the case when major residential efficiency projects were deployed by a few early-adopter utilities, the industry followed suit once positive ROI data was made available. We’ll see the same thing happen in the commercial market this coming year. In 2013, we saw pilots across hundreds or thousands of buildings. In 2014, analytics will be applied to entire cities and states to transform efficiency forever.
Operational savings versus equipment retrofits
Swapnil Shah, FirstFuel: This has traditionally been an industry obsessed with retrofits, while it looks past the easier, non-intrusive operational opportunities. With market education and awareness beginning to change significantly, this could be the year that operational savings get their fair share of attention and deliver their fair share of efficiency results. A 2013 study from NYSERDA showed that commercial buildings that act on a single measure are far more likely to act again in the future. Low- and no-cost operational savings represent half the savings of commercial buildings and are the natural entry point for energy efficiency -- and their adoption could spark a legion of energy-efficiency advocates in commercial buildings across the U.S.
New approaches to equipment integration
Chuck McKinney, Aircuity: We see “airside energy efficiency” as being the next big trend, encompassing several different strategies (improved economizer utilization, natural ventilation, and demand control ventilation). One way this can be observed is in the increasing availability of utility incentive programs for “ventilation optimization." Although many of these programs are customized incentives (as opposed to “prescriptive” incentives), we expect demand control ventilation for airside efficiency to become one of the next standard offerings that utilities begin to drive as the next big category of energy efficiency measures.
Paul Baier, Groom Energy: In the U.S., the major trends are LEDs everywhere with lighting controls, and increased adoption of enterprise energy management software.
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