Energy management is an increasingly important topic across all business types, as buildings are one of their biggest energy consumers and producers. Buildings consume 40% of the energy and produce 21% of carbon dioxide emissions worldwide. Even more startling, one-third of the energy used in a typical facility is unnecessary, and results from inefficient design, poorly functioning equipment, or outdated energy infrastructure technologies.
Buildings that employ energy management systems (EMS) are able to reduce energy usage by monitoring and controlling key energy-consuming devices such as HVAC (heating, ventilation, and air conditioning) units, temperature sensors, and indoor lighting and signage. An EMS can also monitor energy output and performance of renewable energy sources such as onsite solar panels, wind energy, and batteries where installed.
A cloud-based data analytics platform used in conjunction with the EMS can complement building-specific optimization while providing enterprise-level dashboards, key sustainability performance indicators (KPIs), and outlier reporting to quickly pinpoint and resolve issues that would otherwise drive excessive consumption or negatively impact occupant comfort. The system can also help buildings lower maintenance costs by streamlining identification of problems, intelligently dispatching, and remotely validating work performed by HVAC service technicians.
Incorporating the analysis of building energy performance data, along with occupant usage data, into a comprehensive energy management framework that includes demand side, supply side, and renewable energy strategy can ultimately help companies increase productivity and efficiency and reduce downtime and labor costs.
Role of Energy Management on Sustainability
Over the last decade, sustainability has proven to be more than a passing phase; rather, it has become a way of life, and of doing business. With customers and employees wanting to interact with environmentally conscientious companies, businesses continue to establish and track some of the most aggressive sustainability targets.
A large component of most companies’ carbon emissions comes from the electricity they purchase to operate their facilities. Therefore, putting in place an EMS is one of the first steps many customers take on their journey towards carbon neutrality.
The impact can be significant. For instance, grocery retailer ALDI has deployed EMS at nearly 1,500 of its US stores. The technology will help reduce the company’s carbon emissions by an estimated 29,000 metric tons per year, which is equal to removing 6,100 cars from the road annually or of providing electricity for 4,000 homes per year.
Two years ago Siemens announced plans to cut its carbon emissions in half by 2020 and to be carbon neutral by 2030. As of late last year, the German-based company reported that it had already reduced its carbon emissions by 0.5 million metric tons (or more than 20%).
“We believe it’s important to walk the talk, and not just selling our customers on the concept,” says Dave Hopping, president of Siemens’ North American-based Building Technologies Division. “The investment we’re putting in place gives us a significant annual payback. So in three to five years’ time, measures taken will have paid for themselves.”
Synchronized Supply and Demand
As the electricity grid becomes more constrained, and more regions across the US move towards a market-based pricing system, energy management needs to focus on reducing electricity usage (the total amount of kilowatt hours over a given period) as well as on proactively managing real-time electricity demand (the instantaneous amount of power required at a specific moment in time).
When customers use electricity is becoming just as important as how much they use. The smartest customers leverage their automation systems to not only reduce total usage throughout the year, but to also participate in market-based programs such as Demand Response. In such programs, the utility pays customers to reduce their power demand during an agreed-upon time period each day.
To participate in these programs without jeopardizing the comfort of occupants, building owners can leverage systems that automatically connect their buildings to the grid, while closely monitoring indoor conditions to make sure they remain comfortable. Big Lots, a nationwide closeout retailer, has been doing this across the country for many years, generating hundreds of thousands of dollars per year in payments from utilities (not to mention the savings from the energy not purchased during events). The retailer’s EMS also includes an intelligent load management aggregation engine that automatically manages all of its locations within a particular utility as a single portfolio rather than individually. This optimizes revenue while protecting store conditions.
To make the most of these opportunities, companies must also consider their energy procurement strategy. Smart businesses continually monitor to understand if they need to modify elements of their procurement strategy such as tariff structure.
Reductions in demand can be monetized in a number of different ways in both deregulated and regulated electricity markets. While reductions can create opportunities to move to a more beneficial tariff with a business’s host utility, demand changes can also conversely trigger a move to a less beneficial tariff without proactive interaction with the utility. Businesses need to understand their tariff structure and other tariff options before making any material changes to electrical demand.
Demand reductions may not be immediately felt in the utility bill because of demand ratchets or contracted demand. Proactive businesses need to understand and consider this when investing and calculating the return on technologies.
In deregulated electricity markets, supply contracts must be structured in a way to fully realize the value of the reduced demand. For instance, many businesses have demand components embedded in their supply contracts in the form of transmission and capacity tags which are estimated by the retail electric supplier and bundled into the electricity rate. Businesses need to proactively understand and unbundle these charges when contracting to take full advantage of future demand reductions.
In many markets, building owners can “self-initiate” demand response programs based on a forecast of expected system peaks. Last year, a K-12 school district in northern Illinois implemented a demand response program for almost 30 of its schools. This year, the district is on track to save more than $200,000 in energy costs, which illustrates that using technology to lower demand during expected system peaks can lead to significant cost savings on future energy bills.
Additionally, reductions in power demand will also translate to reductions in overall power usage. While electricity tariffs and supply contracts are more sensitive to demand changes, significant usage changes may lead to higher unit costs through diseconomies of scale, potential sellbacks on contracted blocks of energy, or tariff changes by the host utility.
Again, the key is that a business must understand how changes in its energy demand and usage profile will impact its tariff and supply contract structure.
Factoring in Renewables
Many factors, including the lower price of renewable energy, the move toward reducing carbon footprint reduction, and the opportunity to increase power reliability, are driving more customers to install onsite power generating, management, and storage equipment such as solar photovoltaic, fuel cells, and battery storage. Cutting-edge businesses are using renewable sources and energy storage to make the most of their utility tariffs and contract structures and to optimize their energy costs.
Companies can move from being electricity consumers to prosumers, meaning they are either consuming or producing electricity based on environmental and market conditions. Many utilities now have net metering or standby tariffs. Net metering allows solar energy system owners to be credited for the electricity they add to the grid. Standby tariffs are levied against a company that occasionally requires supplemental electrical service from a utility that is not its primary energy supplier. Businesses that employ onsite renewable energy alternatives need to understand these tariffs and how they might apply to their specific case.
Data from all of these scenarios needs to feed into one central software platform for ideal demand and supply energy management. Such software platforms, like microgrid management systems, can often track the long-term performance of a single building, entire physical campus, or virtual network of hundreds or even thousands of sites, enabling the user to monitor and analyze total building performance as measured through energy consumption, energy procurement, and KPIs.
Tying It All Together
Companies are turning to cloud-based systems in order to effectively tie demand, supply, and renewable energy into an integrated system. While controls have been used in industries for years, they generally lived in isolated silos. Various systems in separate buildings did not “communicate” with one another, making it difficult and almost impossible to obtain a comprehensive view of campus- or enterprise-wide energy usage.
Increasingly, what matters most in effective energy management is the software intelligence that guides these buildings’ controls and sensors and how it interacts with occupants, renewables, and the electricity grid.
Controls are now part of an extended network and no longer work mutually exclusively of one another. They are also able to exchange information and interact with parallel building systems. This allows for effective energy management as well as for proactive and predictive equipment operations through intelligent rules and self-correcting systems.
By developing a comprehensive energy strategy powered by a software platform that provides real-time visibility and control, customers can change their view of energy from an avoidable cost of doing business, to a strategic asset that can reduce their costs while improving sustainability and resiliency.