north american intelligent buildings roadmap 2011 · 2020. 4. 9. · buildings roadmap 2011”...

NORTH AMERICANINTELLIGENT BUILDINGSROADMAP2011

Disclaimer

Frost & Sullivan takes no responsibility for the incorrect information supplied to us by industry participants or users. Qualitative and quantitative market information is based primarily on interviews and secondary sources refer-enced at the research phase and therefore are subject to fluctuation. The scope of this research does not include quantitative market sizing or projections. Intelligent building solutions, cases, capabilities of products and technologies and building-related processes eval-uated in the report are representative of the market, but not comprehensive, and inclusion in the study does not imply endorsement. Research evaluations are aligned with the agreed scope of work of this project and findings are subject to best-e!ort analysis and availability of information. All directional statements about the expected future state of the industry is based on consensus-based industry dialogue with key stakeholders, anticipated trends and best-e!ort understanding of the expected future course of the industry. The views expressed in this report accurately reflect Frost & Sullivan’s views based on primary and secondary re-search with industry participants, industry experts, end-users, regulatory organizations, and other related sources. In addition to the above, Frost & Sullivan’s robust in-house research models and processes, along with the reposi-tory of Industry Research and Decision Support Databases, have been instrumental in the completion of this report. The trends identified in this report are based on discussions with industry participants and Frost & Sullivan’s ongo-ing research in building technology, energy and related markets. Conclusions drawn are anticipated only, and do not imply prediction of events in the future. These conclusions are based on best judgment of exhibited trends, expected direction the industry may follow and consideration of a host of industry drivers, restraints and challenges which represents the possibility for such trends to occur over a timeframe. All supporting analyses and data, as permissible within contractual time and budget are provided to the best of ability. Information provided in all segments is based on availability and the willingness of participants in sharing these within the scope, budget, and allocated time frame of the project. All information provided in Appendix A - Case Studies is based on information provided by case study participants and reflects the views of vendors associated with these projects. While the document is believed to contain correct information, Frost & Sullivan does not make any warranty, ex-pressed or implied, or assume any legal responsibility for the accuracy, completeness, or usefulness of the informa-tion, product, technology, solution, company names or process discussed in the report, or claims that its use would not infringe any privately owned rights. References made to products, technology, solutions, trade names, vendors or otherwise, does not necessarily con-stitute or imply its endorsement or recommendation. No part of our analyst compensation was, is or will be, directly or indirectly, related to the specific recommenda-tions or views expressed in this service. Frost & Sullivan consulting services are limited publications containing valuable market information provided to Continental Automated Buildings Association (CABA) in response to an information request. Our customers ac-knowledge, when ordering, that Frost & Sullivan consulting services are for customers’ internal use and not for general publication or disclosure to third parties. No part of this consulting service may be given, lent, resold, or disclosed to non-customers without written permis-sion of Frost & Sullivan and CABA. Furthermore, no part may be reproduced, stored in a retrieval system, or transmit-ted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permis-sion of the above parties.

© 2010 Frost & Sullivan. All rights reserved. This document contains highly confidential information. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan and CABA.

NORTH AMERICAN INTELLIGENT BUILDINGS ROADMAP 2011© CONTINENTAL AUTOMATED BUILDINGS ASSOCIATION

TABLE OF CONTENTS

1 Executive Overview ........................................................................................................7 1.1 Background ...................................................................................................................................7 1.2 Key Objectives of this Research Project ...............................................................................8 1.3 Research Methodology..............................................................................................................8 1.3.1 Primary Research Methodology - Key Respondents and their Feedback ...................9 1.4 Definition of Intelligent Building .............................................................................................9 1.5 IBRM 2011 – Key Area of Focus .......................................................................................... 11 1.6 Summary of Key Findings ...................................................................................................... 11 1.6.1 Current Status of the Industry ............................................................................................. 12 1.6.2 The Energy Relationship – Intelligent Buildings and the Smart Grid ......................... 14 1.6.3 Towards Optimized DR in Intelligent Buildings ............................................................... 14 1.6.4 Convergence of Technology & Competition ..................................................................... 15 1.6.5 Collective Influence of Stakeholders................................................................................... 16 1.6.6 Suggested Work Stream Partnerships ............................................................................... 17 1.6.7 Time Line for Major Issues .................................................................................................... 17 1.6.8 Concluding Remarks ............................................................................................................... 18

2 Snapshot of the Intelligent Buildings Industry in North America ........................ 19 2.1 Brief Introduction and Definitions ....................................................................................... 19 2.2 Taxonomy of an Intelligent Building .................................................................................... 20 2.2.1 Market Definition and Detailed Taxonomy Diagrams ................................................... 20 2.2.2 Highlights of Intelligent Building Systems - Segments and Applications ................ 21 2.2.3 Mapping the Intelligent Building Taxonomy ..................................................................... 23 2.2.4 Overview .................................................................................................................................... 24 2.2.5 Intelligent Building Transformation ..................................................................................... 25 2.3 Industry Trends and Dynamics ............................................................................................ 27 2.3.1 Key influencers and their respective impact on technology adoption ...................... 27 2.3.2 Market Drivers .......................................................................................................................... 27 2.3.3 Market Restraints..................................................................................................................... 29 2.3.4 Key Technology Adoption Influencers ............................................................................... 31 2.3.5 Developing a Business Case for Intelligent Buildings .................................................... 35 2.3.6 New Construction .................................................................................................................... 35 2.3.7 Existing Buildings ..................................................................................................................... 36 2.4 Technology Commercialization ............................................................................................ 38 2.4.1 Evolution Analysis .................................................................................................................... 38 2.4.2 Market Life-cycle ..................................................................................................................... 39 2.4.3 Market Barriers to Commercialization ............................................................................... 40 2.4.4 Positioning a Sustainable Service Platform ....................................................................... 41

3 Evolving Trends in Integrated Buildings ................................................................... 43 3.1 Systems Interoperability and Adoption of Open Standards ........................................ 43 3.1.1 Current Status Review ............................................................................................................ 44 3.1.2 Building Automation Systems and Controls Market Developments ......................... 45


3.1.3 The IT/IP Influence and Challenges in Convergence .................................................... 49 3.1.4 The Premise of Complete IP Network Systems Convergence ..................................... 50 3.1.5 Enterprise Convergence is the Immediate Market Requirement................................ 52 3.1.6 Automated Fault Detection and Diagnosis (AFDD) ...................................................... 53 3.2 Move Towards Completely Open Protocols ..................................................................... 55 3.2.1 Overview of Building Automation Protocols .................................................................... 55 3.2.2 Current Adoption of Open Standards ................................................................................ 56 3.2.3 Wireless Technology Trends ................................................................................................. 59 3.2.4 Wireless Adoption Trends ..................................................................................................... 61 3.2.5 Using Wireless Technology at Field Level ......................................................................... 62 3.2.6 Wireless Network Applications ........................................................................................... 62 3.2.7 Assessment of Potential for Integration of Wireless Systems .................................... 64 3.3 Automation of Demand Response to Enable Integration with the Smart Grid ...... 65 3.3.1 Role of Intelligent Solutions in Enabling Automated Demand Response ................. 65 3.4 Need Assessment for Next Generation Intelligent Building ........................................ 65 3.4.1 The Ability to Address Integration Gaps........................................................................... 66 3.4.2 From Physical to Virtual Integration ................................................................................... 66 3.5 Long-term Outlook and Implications on the Roadmap ................................................. 67 3.5.1 Assessment of Potential for Full IT-BAS Convergence .................................................. 67 3.5.2 The Premise for Converged Networks ............................................................................... 68 3.6 Status of Communication Infrastructure to Enable Full Integration .......................... 70 3.6.1 Expected Alignment of Mechanical and Communication Infrastructure ................. 70 3.6.2 Device and Systems Connectivity ....................................................................................... 70 3.7 Intelligent Building Roadmap Alignment of Industry Structure .................................. 71 3.7.1 Current Alignment of Industry Players .............................................................................. 71 3.7.2 Expected Future Alignment of Players for Optimum Value Delivery ........................ 72 3.7.3 Anticipated Evolution in Value Chains for Intelligent Solutions ................................. 73 3.7.4 Technology Integration Requirements and Market Opportunities ............................. 74 3.7.5 Concluding Remarks ............................................................................................................... 76

4 Intelligent Buildings and the Smart Grid ................................................................. 79 4.1 Brief Introduction and Definitions ....................................................................................... 79 4.1.1 Brief Overview of and Concept Definition ........................................................................ 79 4.1.2 Buildings and the Smart Grid ............................................................................................... 80 4.2 Taxonomy of the Smart Grid................................................................................................. 81 4.2.1 Definition and Highlights of Smart Grid Systems – Segments and Applications .. 81 4.2.2 Mapping the Smart Grid integrated Intelligent Building Taxonomy to Industry Players ........................................................................................................................ 84 4.3 Current State of Smart Grid Deployment ......................................................................... 87 4.3.1 Overview .................................................................................................................................... 87 4.3.2 Integration of Intelligent Buildings to the Smart Grid.................................................... 88 4.4 Industry Trends and Metrics ................................................................................................. 89 4.4.1 Key Influencers for Smart Grid Deployment and Integration of Intelligent Buildings ................................................................................................................. 89 4.4.2 Challenges Associated With Smart Grid Integration .................................................... 93


4.5 Grid-enabled Applications for Integrating Intelligent Buildings ................................. 96 4.5.1 Current Status of Integration Via Advanced Metering Infrastructure ...................... 97 4.5.2 Monitoring Energy Use and Management ........................................................................ 98 4.6 Demand Response Adopted in Intelligent Buildings ...................................................... 99 4.6.1 Demand Response Programs and their E!ectiveness ................................................... 99 4.6.2 Automated Demand Response for Buildings – The Next Wave of Smart Grid Integration ..........................................................................................................100 4.7 Technology Improvements and Future Vertical Integration .......................................102 4.8 Gap Analysis ...........................................................................................................................106 4.9 Smart Grid Standards and Their Implication on Intelligent Buildings .....................107 4.10 Analysis of the Current Regulatory Situation – Smart Grid Rulemaking ................108 4.11 Interference of Existing Interoperability Standards ......................................................109 4.12 Grid Security and Information Sharing ............................................................................109

5 Convergence of Technology & Competition .......................................................... 111 5.1 End-to-End Infrastructure Deployment and Intelligent Buildings ............................111 5.2 Emerging Needs and Roles of Cross-Domain Partners ...............................................113 5.3 Role of Energy Analytics and Energy Information Systems (EIS) ............................116 5.4 Evaluation of Competitive Advantages ............................................................................119 5.5 Core Areas of Competitive Advantages Emerging in the Ecosystems ...................121 5.6 Delivering the Next Wave of Intelligence .......................................................................122 5.7 Repositioning for Competitive Advantages ....................................................................125

6 Collective Influence of Stakeholders ...................................................................... 127 6.1 Key Stakeholders and Their Roles .....................................................................................127 6.2 Influence of Stakeholders ....................................................................................................129 6.3 Potential for Collective Interactions..................................................................................131

7 Intelligent Building Roadmap – Conclusion & Recommendations ...................... 135 7.1 Summary of Key Findings136 7.2 The Layout for Immediate and Long-term Milestones138 7.3 Recommendations for Technology Vendors144 7.4 TimeLine for Major Issues145

Appendix A ............................................................................................................................... 147Case studies of North American intelligent building projects, spearheaded by technology providers and integrators, that demonstrate value derived from incorporating intelligent building technologies. I) 750 Seventh Avenue Commercial O0ce Building, Manhattan, NY ........................149 II) Van Andel Institute Research Cancer Center, Grand Rapids, Michigan, U.S. ......153 III) Bell Trinity Square Toronto, Canada .................................................................................157 IV) Johnson Controls, Inc. Corporate Headquarters, Glendale, Wisconsin, U.S. ......163 V) Westside Elementary School, Milwaukee, Wisconsin, U.S. ......................................167

Appendix B ............................................................................................................................... 169


1

1.1 BACKGROUND

The Continental Automated Buildings Association (CABA) is a not-for-profit industry asso-ciation dedicated to the advancement of intelligent home and intelligent building technolo-gies. The organization is supported by an international membership of more than 320 orga-nizations involved in the design, manufacture, installation, and retailing of products relating to home automation and building automation. Public organizations, including utilities and government organizations, are also members. CABA’s Intelligent & Integrated Buildings Council (IIBC), through various collaborative industry discussions, commissioned this research project titled “North American Intelligent Buildings Roadmap 2011” (TBRM 2011) with the objective that it could assist in building industry knowledge base and perspectives on intelligent and integrated buildings. The Proj-ect Steering Committee instituted for the specific purpose of funding and overseeing this collaborative research, commissioned Frost & Sullivan to undertake the project on behalf of CABA. Organizations that participated in the research project included: Belimo Air Con-trols, Consolidated Edison Company of New York, Distech Controls, Inc., Echelon Corpora-tion, Honeywell International, Ingersoll Rand/Trane/Schlage, Johnson Controls, Lawrence Berkeley National Laboratory, Natural Resources Canada, Ortronics/Watt Stopper/Legrand, Optimum Energy, Pacific Northwest National Laboratory/U.S. Department of Energy, Philips Electronics, Schneider Electric, Siemens Industry, Inc. and Sloan Monitored Systems.

EXECUTIVE OVERVIEW

EXECUTIVE OVERVIEW8


1.2 KEY OBJECTIVES OF THIS RESEARCH PROJECT

The key objectives guiding this undertaking are as follows:

buildings-

ergy e0ciency, renewable technology, IT convergence, and the integration of build-ings with the smart grid

-ing for integration Aand e0ciency, gaps in integration aspects, and the trends to-wards Integrated Design Process

solutions, market preference and acceptance, commercialization roadmap-

ligent building products and technologies

North America and the opportunities it represents for participants of the value chain

1.3 RESEARCH METHODOLOGY

Frost & Sullivan used a combination of primary and secondary research methodologies to compile the necessary information for this project. Information provided in all segments is based on availability and the willingness of participants in sharing these within the scope, budget, and allocated time frame of the project. The trends identified in this report are based on discussions with industry participants and Frost & Sullivan’s ongoing research in building technology, energy and related markets. Conclusions drawn are anticipated only, and do not imply prediction of events in the future. These conclusions are based on best judgment of exhibited trends, expected direction the industry may follow and consideration of a host of industry drivers, restraints and challenges which represents the possibility for such trends to occur over a timeframe. All supporting analyses and data, as permissible within contractual time and budget are provided to the best of ability.

Primary ResearchPrimary research formed the basis of this project. It also formed the basis for analysis of the case studies that best demonstrate the capabilities and benefits of intelligent solutions in the real world. Primary research interviews were conducted with technology providers who are supporting this project, as well as competitors in each of the technology markets. To provide balance to these interviews, industry thought leaders who track the implementation of the outlined technologies were also interviewed to get their perspective on the issues of green and intelligent technologies. Furthermore, primary research included interviews with selected facility managers to collect information for case studies. This was supported and consolidated with documented materials provided by the technology providers.

EXECUTIVE OVERVIEW 9


Secondary ResearchSecondary research comprised the balance of the research e!ort that included published sources such as those from government bodies, think tanks, industry associations, Internet sources, Frost & Sullivan’s own repository of research publications and decision support da-tabases. This information was used to enrich and externalize the primary data. Data sources are cited where applicable and a list of research sources are provided under Appendix B.

1.3.1 Primary Research Methodology - Key Respondents and their FeedbackTechnology vendors comprised the majority of the total respondents contacted. Due to broadening of core competencies and consolidation among industry participants, the inter-actions undertaken by Frost & Sullivan did overlap in some cases. This is reflective of the trend among industry participants to develop end-to-end capabilities. For instance, there are industry participants who specialize in building automation, system integration, smart grid-enabling technologies as well as other intelligent building solutions and services. Where necessary, multiple discussions were conducted among various parts of the same organiza-tion, in addition to interviewing their alliance partners, end-users and other value chain in-termediaries. A breakdown of respondents by their role and responsibility and key feedback obtained is included as part of Appendix B.

Chart 1.1 depicts the composition of target respondent categories contacted for primary research.

Utilities 10%

Agencies 12%

Intelligent TechnologyVendors 22%

Communication Infrastructure/GatewayProviders 6%

IT Solution Providers 6%

Installation & Service Providers 6%

Intelligent BuildingOwners/Managers 8%

Smart Grid-enablingTechnology/Apps Providers 8%

Energy Information & AnalyticsProviders 4%

DR Service & OptimizationProviders 6%

BAS & SI Providers 12%

Source: Frost & Sullivan

1.4 DEFINITION OF INTELLIGENT BUILDING

Following Frost & Sullivan’s previous project with CABA—The Convergence of Green and Intel-ligent Buildings1—the following definition was adopted to define an ‘Intelligent Building’: “A building that uses both technology and process to create a facility that is safe, healthy, and

EXECUTIVE OVERVIEW10


comfortable and enables productivity and well being for its occupants. An intelligent building provides timely, integrated system information for its owners so that they may make intel-ligent decisions regarding its operation and maintenance. An intelligent building has an im-plicit logic that e!ectively evolves with changing user requirements and technology, ensur-ing continued and improved intelligent operation, maintenance, and optimization. It exhibits key attributes of environmental sustainability to benefit present and future generations.”

What can we expect of such a building?

mission)

Key intelligence attributes including:

Intelligent buildings transcend integration to achieve interaction, in which the previously in-dependent systems work collectively to optimize the building’s performance and constantly create an environment that is most conducive to the occupants’ goals. Additionally, fully interoperable systems in intelligent buildings tend to perform better, cost less to maintain, and leave a smaller environmental imprint than individual utilities and communication sys-tems. Each building is unique in its mission and operational objectives and, therefore, must balance short- and long-term needs accordingly. Intelligent buildings serve as a dynamic environment that responds to occupants’ changing needs and lifestyles. As technology ad-vances, and as information and communication expectations become more sophisticated, networking solutions both converge and automate the technologies to improve responsive-ness, e0ciency, and performance. To achieve this, intelligent buildings converge data, voice, and video with security, HVAC, lighting, and other electronic controls on a single IP network



platform that facilitates user management, space utilization, energy conservation, comfort, and systems improvement.

1.5 IBRM 2011 – KEY AREA OF FOCUS

The main focus of the IBRM 2011 project is ‘energy in the context of an intelligent building.’ From this standpoint, the project takes a deeper dive into understanding the developments around energy e0ciency in intelligent buildings, energy performance enhancements owing to incorporation of intelligence, and most importantly, a building’s ability to interact with the smart grid. While this research advocates the traditional scope of IBRM projects conducted in the past, it makes a distinct departure from merely investigating adoption and acceptance rates of intelligent building solutions to the larger issue of a building’s ability to use, store, and generate energy. This focus is aligned with key industry trends that are emerging in the intelligent build-ing space, wherein the need for buildings to become ‘net positive energy’ assets is heavily emphasized through policy directives and think tank-led initiatives, as well as technology innovations that are working towards this ‘net positive energy’ goal.

1.6 SUMMARY OF KEY FINDINGS

An intelligent building is capable of providing its owner and occupants a flexible, adaptive comfortable and secure environment. This is accomplished through the incorporation of in-tegrated building systems, communications, and controls. A building automation system is at the core of an intelligent building by virtue of its ability to regulate and manage the key functional units from sensors to software, into a single control system to achieve seamless flow of data and control actions. Intelligence embedded in systems are capable of enhanc-ing operation performance and resulting significant saving in energy use, resource use, and operational and maintenance costs. Energy savings and e!ective reductions achieved in resource consumption as well as greenhouse gas emissions though the use of intelligent building systems directly contribute towards making a building environmentally sustainable. This attribute has been instrumental in helping building owners understand the business case behind investing in intelligent sys-tems and for technology vendors to achieve commercial acceptance of their products and solutions. Initiatives and mandates from the respective departments of energy and environment, both in the U.S. and Canada, are increasingly being directed at reducing energy consumption by buildings. With commercial buildings accounting for nearly two-fifths of the region’s total energy, there is a serious need for this sector to reduce its energy consumption. This requires rigorous energy retrofit and digital intelligence activity to make buildings more e0cient. The intelligent building product and technology vendors are consolidating capabilities to make intelligence more accessible to end-users. However, the adoption rate of such solu-tions is inadequate – attitude and perception changes are necessary to create acceptance.



The key findings are summarized below:

1.6.1 Current Status of the IndustryThe idea of leveraging intelligence to enhance building performance, either for energy ef-ficiency or operational e0ciency, has been acknowledged throughout the research findings. By enhancing connectivity between building systems and users, intelligent products and technologies have been shown to balance operational objectives and the economic perfor-mance of buildings. Consequently, building owners and managers are beginning to accept the multifold financial benefits of intelligent building technologies, including:

All of these factors are providing the cost justifications to warrant end-users making invest-ments in the installation of intelligent and integrated building systems. While there are a few challenges concerning high capital costs, low awareness, and the sluggish economic conditions and construction market, intelligent technologies are projected to grow steadily as a result of their importance to energy savings and the desire to make buildings more op-erationally e0cient. The intelligent building concept entails advanced system integration to provide a com-mon platform that supports real-time control systems, enterprise applications and informa-tion flow. The increasing demand for managing the entire building as an integrated system in order to achieve a more energy-e0cient facility is creating demand for more sophisticated solutions. Open standards such as BACnet and LonWorks are being used over IP networks to facilitate enterprise network platforms with real-time information on building systems and operations. However, the current progression towards integration and the intelligent building also brings various challenges along. Not only do end-users need to be better educated about the potential benefits, but there is a need to transform the way the industry is segmented into isolated channels such as electrical, mechanical, energy infrastructure and information technology, which makes the concept of integration rather complex at the present time. As a result, system integration, technology convergence, and industry consolidation will play a key role in the evolution of intelligent buildings. Chart 1.3 identifies the convergence of interrelated markets, technology and competition expected to shape the intelligent building roadmap as part of the 2020 vision.



Chart 1.3 Convergence of interrelated markets


InteligentBuildings

BuildingAutomation &

Control

InformationTechnology

Energy &Infrastructure

Connectivityand

Integration

Energy andOperationE"ciency

AdvancedAnalytics

There are companies and technology suppliers delivering the various components, technolo-gies, and services to make buildings more intelligent from concept to operation. The role of system integrators and installers is crucial as they hold the key to the system’s success by creating the best mix and match, suiting individual applications and with considerations made to all disciplines. This research identifies the developments taking place on the technology front and ana-lyzes their implications for intelligent buildings. The following are some of the key observa-tions made on the evolving trends towards integrated buildings:

with IP enabling an e!ective medium to interface with a plethora of components and protocols, and most importantly, communicating the data to a central control interface. From a technology perspective, the involvement of open protocols and IP-based enterprise systems is currently the biggest trend in the building automation industry.

yet to be overcome despite the benefits o!ered by wireless technology. Adoption of wireless sensor technology is expected to increase through increased end-user awareness and demonstrating the ability of this technology in real-world applica-tions.

-tocols. The industry is not about choosing one protocol over the other, but about cost-e!ectively integrating a multitude of protocols. To achieve interoperability and optimum energy e0ciency, there is a need for professionals who can properly de-sign and install integrated building automation system projects.

-come more sophisticated, networking solutions both converge and automate the technologies to improve responsiveness, e0ciency, and performance. Advanced de-cision-making algorithms are finding numerous applications in buildings; however,



their presence is minimal. As the building industry begins to aim at ‘higher degrees’ of intelligence in buildings, the presence of advanced decision-making algorithms should increase.

1.6.2 The Energy Relationship – Intelligent Buildings and the Smart Grid Continued development of an end-to-end communications layer is responsible for taking the utility grid to the next level. Although applications such as demand response are perhaps the most visible component right now, it is primarily manual in nature. A key prerequisite for intelligent buildings to connect to the smart grid is the ability to link demand response (DR) in a building to the utility’s price and demand-side management signals. However, the potential to include the installed base of buildings as DR participants is vastly being ignored or inadequately addressed at present. In most cases, utilities are not ready to facilitate auto-mated DR signals and dynamic pricing. However, there are some cases of buildings that are currently equipped with automated processes and intelligence and are considered “smart grid ready.” Frost & Sullivan’s interactions with various stakeholders in the industry suggests that most utilities today are reluctant to cater to DR needs of a single building in the range of approximately a million square feet, as utilities perceive the addressable load reduction in kilowatt hours from such a building as far less compared to the significant megawatt hours of energy they can take advantage of from large commercial and industrial users of energy. In most cases, aggregators such as EnerNOC or independent service providers (ISO) are engaged to provide such DR capabilities for individual customers. However, commercial and institutional buildings customers with a smaller real estate footprint find the cost of engag-ing with ISOs prohibitive as they feel their local utility should be able to cater to this need.

1.6.3 Towards Optimized DR in Intelligent BuildingsThe combination of increased DR options and increased response time has led to the de-velopment of automated demand response (ADR) across multiple vendors. ADR programs will translate DR event information (from reliability to pricing signals) from the utility or independent service providers (ISO) and automate a preprogrammed DR strategy across the interruptible and curtailable end-use devices such as the HVAC or lighting. Traditional building management solution providers such as Honeywell are also actively looking at ADR as a way to enter the DR market. However, in its present form, there are several shortcom-ings associated with ADR, prominent among them being the following:

the specific situation on the day of the event

In addition to the above issues, not all utilities are geared to trigger ADR signals and therefore the need for a ‘simulated utility’ is critical for building owners. This issue can be gradually overcome as utilities speed up the various stages of their smart grid deployment, particularly their networks and communication interfaces2. As traditional equipment manufacturers roll out solutions with intelligence built directly



into the component level of these solutions, the industry expects to witness more systems and devices that can enable DR and other smart grid functions. New entrants are expected to enter the DR market, enabling new services with advanced technologies or fulfilling a niche that was largely ignored by the original vendors. A prerequisite for the above to materialize is the need for a fundamental increase in the intelligence of ‘inside-the-meter’ DR systems, and better integration of these systems with their ‘outside-the-meter’ counterparts. Discussions with industry participants and think tanks indicate that the next generation of DR should be predictive energy optimization with DR. This will not only lead to energy plans for buildings tailored to comply with the DR event and tenant comfort, but will also enable dynamic adjustments to energy plans, as well as result in real-time validation of actual load shed versus target. If the industry is to deal with these major barriers to adoption and achieve its potential in terms of the smart grid, it must move from current forms of DR to an optimized DR for intelligent buildings3.

1.6.4 Convergence of Technology & CompetitionThe coming together of the intelligent building and the smart grid will bring about significant repositioning of both suppliers and solutions. There are two critical aspects that intelligent solutions would have to embrace towards this objective:

by enabling intelligent devices to intercommunicate and control each other

manage vast streams of high-resolution and meaningful data

For buildings to embrace ADR, enabled technologies would need to include smart devices that allow the technologies to be self-sensing, self-controlling, and self-optimizing. While existing and emerging building technologies can address all the technology re-quirements of creating building intelligence, it is clear that the delivery models themselves will have to undergo fundamental changes from where they are at present. Silo approaches to solution and business delivery will have to make way for increasingly networked and inte-grated delivery models. The role of system integrators and installers is crucial in addressing these issues and challenges, and Frost & Sullivan expects this to remain a dominant feature over the next decade. Cross-domain partnerships and collaborations will mark the trajectory of the roadmap as players from interrelated domain come together to deliver optimized solutions and ser-vices. The energy infrastructure partners, building automation providers, and the IT partners are emerging as the three major groups of players characterizing this competitive conver-gence. However, the landscape could potentially change over the next decade as new apps and services make their way to further facilitate this convergence. Among key emerging seg-ments of partners, the following appear to be particularly aggressive:



Industry partners will comprise a broad spectrum of product, technology, and service seg-ments that will work closely to deliver intelligence as well as redefine an intelligent building’s relationship with the smart energy grid. The implications of these trends and a converging ecosystem of partners are enormous. Frost & Sullivan expects vertically defined, stand-alone products and application markets to increasingly become a part of a larger ‘horizontal’ set of standards for hardware, software, and communications. For intelligent building solution providers this represents an opportunity to embrace a ‘networked’ product model that could potentially cut across multiple value chain partner domains.

1.6.5 Collective Influence of StakeholdersThe prospects for intelligent building solutions and their potential market acceptance depend on various stakeholders and influencers that formed a core part of the research process for the intelligent building roadmap. The role of these stakeholders in creating market need and customer awareness round adoption of intelligent solutions has been enormous. However, there is a need to align common goals and leverage initiatives among various stakeholder groups for faster market adoption of intelligent solutions. Chart 1.4 provides an overview of the key stakeholder initiatives required by 2020 for better penetration of intelligent building solutions.

Chart 1.4: Stakeholder Initiatives Required by 2020

Stakeholder Initiatives needed from present to 2020Building Technology Vendors

Active collaboration on an open-source basis with adjunct industry partnersCreating scalable solutions with cost e0ciencies

IT Partners Active participation with physical system vendors from conceptual stagesDelivering scalable solutions and compatible interfaces Working toward policy change

Utilities Creating dynamic operational framework and partnershipsEndorsement of intelligent solutions for customers’ adoptionAdoption of progressive incentive structures

Service Providers, Integrators, Consultants

Advocate vendor neutrality; Participate through integrated design approaches Take active role in influencing policyActive participation in lobbies and standards committees

Regulatory and Standards Bodies

Mandating intelligent solutions prescriptively as part of building codes and standardsHelp push adoption and commercialization through initiatives and policies



Stakeholder Initiatives needed from present to 2020Think Tanks/ Research Organizations

More collaboration with technology vendors and solution providers to help demonstrate the value of intelligent solutions Active participation in creative business cases and role in influencing policy changes

Financial Partners

Assuming stake in open-source collaborations through financial assistance


1.6.6 Suggested Work Stream PartnershipsFor ubiquitous change in customer perceptions and progressive market acceptance of intel-ligent building solutions, these stakeholders can collectively play a very dominant role along the course of the roadmap. Frost & Sullivan suggests a set of work stream processes that could help align the objectives and initiatives of various stakeholders for developing concep-tual framework and processes as well as active technology developments. In addition, to technology vendors and operational framework influencers, the financial community has a crucial role to play in advancing the market adoption of intelligent building solutions. Collaboration for technology innovation will largely depend upon financial part-ners willing to fund such collaborations and assume the early-stage risks associated with such ventures. Partnerships with both institutional funding agencies and promoters of other financing mechanisms (private equity placements, venture capital financing) will have to be actively explored and integrated into the stakeholder influence model. An area of focus for technology vendors, standards bodies/rating agencies as well as utility partners is the creation of standardized criteria for measurement and verifica-tion of energy savings. The current verification processes followed do not result in any standardized range of energy saving that can be attributed to systems of similar capacity and performance features. This makes it challenging for utility-led assessments and reg-ulatory policy-driven energy e0ciency evaluations to incentivize the adoption of a spe-cific intelligent building solution, or mandate it as part of demand-response programs. The ultimate goal is to work collectively towards a faster commercialization strategy for intelligent building solutions that tie in with the individual goals and objectives of all stake-holders.

1.6.7 Time Line for Major IssuesIn laying out the time line with the associated opportunities and challenges for IBRM 2011, Frost & Sullivan considered various scenarios from best-case to realistic, and investigated the achievability of these goals, given the present state of the industry. The major opportunity triggers between 2010 and 2015 include energy e0ciency, IP in-tegration and a move towards getting closer to the smart grid. Energy e0ciency will continue to dominate the discussions around adopting intelligent technologies. The ability to quantify energy savings and reduce operational expenses for building owners will help keep demand upbeat in the immediate period. The key challenges lie in the industry’s ability to standardize measurement criteria and demonstrate short-term paybacks with the right combination of solutions and services for end-users.


18 EXECUTIVE OVERVIEW

Between 2015 and 2020, opportunities would be triggered by other fundamental chang-es that could be brought about by strategic partnerships and industry convergence aspects. The delivery models and ecosystem will dominate the industry landscape. Industry partici-pants will have to prepare for addressing the issues around an intelligent building’s inte-gration with the smart grid with widespread adoption of automated DR and get ready for next level of end-to-end infrastructure deployment. As the time line approaches 2020, more integrated approaches to solution delivery are likely to be adopted. The challenges will ema-nate from issues such as the possibility of achieving complete convergence of systems and networks and whether or not that would be realistic and cost e!ective. However, as more strategic alliances are formed and stakeholder initiatives brought together, the acceptance and awareness for intelligent solutions could increase favorably. The technical challenges around convergence and integration could potentially be overlooked as new apps and tech-nology platforms make their way into the market that are able to deliver the next wave of intelligence with more open features and harmonized interfaces allowing for ease of integra-tion.

1.6.8 Concluding RemarksThe key takeaways of IBRM 2011 are the following:

predictive and self-sensing capability of solutions will continue to hinder value dem-onstrations.

-ers. Competitive advantages will, however, depend upon scalability of solutions to accommodate emerging demand in technology integration.

-ties of full convergence are questionable and not a near-term reality.

the ability of an intelligent building to integrate with the smart grid; however, opti-mized solutions in this area are currently only demonstrative in nature.

building solutions work together; however, both conceptual frameworks and tech-nology development initiatives should work simultaneously towards this end.


SNAPSHOT OF THE INTELLIGENT BUILDINGS INDUSTRY IN NORTH AMERICA

2

2.1 BRIEF INTRODUCTION AND DEFINITIONS

This chapter identifies the current market dynamics of the intelligent building industry in North America. These market dynamics are particularly significant because they form the basis for understanding the positive and negative factors that influence the acceptance and adoption of intelligent buildings.

Overview of key market trends and dynamics: -

duce energy consumption in buildings, driving rigorous energy retrofits and invest-ment in digital intelligence.

grid are major industry buzzwords. The intelligent building concept is a requirement in both cases.

-tem provides a common platform that supports real-time control systems, enter-prise applications and information flow.

more accessible to end-users. Resistance to change is a key barrier.-

efits of intelligent technologies, including lower energy and operational costs.


20 SNAPSHOT OF THE INTELLIGENT BUILDINGS INDUSTRY IN NORTH AMERICA

Chart 2.1 Intelligent Buildings Megatrends

Source: Frost & SullivanSource: Frost & Sullivan

Megatrends

EnergyMandates

GreenEconomy

Smart Grid

AdvancedAnalytics

ROI

SystemIntegration

Convergence

2.2 TAXONOMY OF AN INTELLIGENT BUILDING

2.2.1 Market Definition and Detailed Taxonomy Diagrams The Continental Automated Buildings Association (CABA) industry report, Convergence of Intelligent and Green Buildings, defines an intelligent building as “a building that uses both technology and process to create a facility that is safe, healthy, and comfortable and en-ables productivity and well being for its occupants. An intelligent building provides timely, integrated system information for its owners so that they may make intelligent decisions regarding its operation and maintenance. An intelligent building has an implicit logic that ef-fectively evolves with changing user requirements and technology, ensuring continued and improved intelligent operation, maintenance, and optimization. It exhibits key attributes of environmental sustainability to benefit present and future generations.” In short, an intelligent building can be defined as “a building and its infrastructure that provides the owner, operator, and occupant with an environment that is flexible, e!ective, comfortable, and secure through the use of integrated technological building systems, com-munications, and controls.” In line with that definition, a building automation system is at the core of an intelligent building by virtue of its ability to regulate and manage the key functional units from sensors to software into a single control system to achieve seamless flow of data and control actions. Even though the term ‘intelligent building’ is widely used in the industry, there is grow-ing consensus around what an intelligent building should be able to accomplish as shown in Chart 2.2.


SNAPSHOT OF THE INTELLIGENT BUILDINGS INDUSTRY IN NORTH AMERICA 21

Chart 2.2 Key Benefits of Integration

Integration Savings Analytics

subsystems means the subsystems interoperate to provide seamless and coordinated functioning

protocols that will use a mix and match of the best in class technologies

remote monitoring and control that should be fully integrated into one network

renewable energy technologies and demand-response programs

technology infrastructure

in capital expenditure (CAPEX) and operational expenditure (OPEX)

e0cient operation and maintenance process

economic performance

usage

or lease rates

comfort and productivity. Faster workflow and minimum database redundancy

supports automated demand response, automated fault detection and diagnostics.

buildings to detect its operational e!ectiveness and to make adjustments autonomously.

commissioning process and ongoing quality assurance of building functions.


2.2.2 Highlights of Intelligent Building Systems - Segments and ApplicationsThe key technology segments and applications that constitute the building blocks of an intel-ligent building are discussed in Chart 2.3.

Chart 2.3 Snapshot of Established and Emerging Intelligent Building Markets

Technology Segments Key FunctionsBuilding automation systems

Building automation systems or building management systems are designed to provide centralized oversight and remote control of HVAC systems, lighting, and other building systems.

Lighting controls Energy-e0cient lighting controls such as user interfaces, sensors, dimmers, and control modules can optimize lighting e0encies, improve the quality of light, and supplement the functionality of building automation systems.



Technology Segments Key FunctionsHVAC controls HVAC controls are critical to providing optimum comfort

to a building’s occupants and are an inherent part of the building automation system.

Physical security systems Security systems include access control, video surveillance, and intrusion detection. Access control is one of the most important security applications penetrating the building market.


Chart 2.4 Snapshot of Technology Enablers and Associated Imperatives

Intelligence Enablers Key ImperativesOpen protocols Open building automation systems are typically categorized

by common protocols such as BACnet or LonWorks. These protocols are open at the device/network level and facilitate the integration between devices of the individual protocols.

Enterprise platform Also referred to as middleware, the enterprise platform provides information across an enterprise, supporting real-time control systems, enterprise applications, and information flow between building systems and IT systems.

Web-based technology Web-based technology enables both external and internal control access to the building automation system through the Internet network. Web-based systems grant highly scalable remote control capabilities.

Converged networks A converged network allows a higher level of connectivity for a variety of products from multiple manufacturers, embedding network connectivity in devices to the Ethernet or Internet.

Wireless technology Wireless technologies such as ZigBee, which are based on IEEE 802.15.4, can augment the application of wireless sensors in areas such as building monitoring, metering, HVAC, lightning, and access control.

Commissioning and Recommissioning

Commissioning and re-commissioning should be an ongoing quality assurance method to improve the functioning of a building through field testing, maintenance practices, training, oversight, and monitoring.

Automated Commissioning

Automated commissioning provides assessments of systems performance by checking operating equipment continuously using enhanced diagnostic capabilities to deliver actionable information and allowing operators to manipulate live data.



Intelligence Enablers Key ImperativesAutomated demand response (ADR)

ADR facilitates the provision of innovative demand-side management strategies that enable controls to track and respond to energy prices as they change over time and adapt to external situations in order to reduce energy use and costs.

Automated fault detection and diagnostic (AFDD)

AFDD provides a highly accurate assessment of systems performance and maintenance status based on a virtually unlimited number of independent variables. It also provides actionable and proactive information management.

Software-as-a-Service (SaaS)

The SaaS concept o!ers integration of technologies o!ering mix and match of services for individual applications. SaaS is supported by sophisticated Web-based tools that can provide value-added services.

Smart metering Smart meters are physical meters that allow for two-way communication between a home/building network and the utility LAN/WAN by means of a communications infrastructure layer (FAN) that transports energy use data from one end to the other.


2.2.3 Mapping the Intelligent Building Taxonomy Chart 2.5 maps out the intelligent building taxonomy

Chart 2.5 Taxonomy Intelligent Buildings

Building systems and controls

Information technology

Wireless technology Utilities and infrastructure

DomainMechanicalElectrical distributionHVAC&RLightingSecurityFire and life safetyControls/sensorsWaterElevators

IP NetworksRouters/switchesDigital TechnologyNetwork SecuritySoftware

ChipsNetworksIntegrationSoftware

Energy/powerT&D TechnologyRenewable EnergyAMI/metering



Building systems and controls

Information technology

Wireless technology Utilities and infrastructure

FunctionsAutomation and management Control and monitoringCommissioning and re-commissioningSystem integrationElectrical distribution

CommunicationAnalytics AppsConvergence

ConnectivityRadio frequencytransmission

Rate structureLoad management Distribution Demand response

GatewaysField Bus Power over Ethernet

VoIP/IPTVMESHWSN

Utility Network

WAN / HAN / NANProtocols

ProprietaryLonWorksBACnetModbus

TCP/IPHTML / XML / SOAPoBIXSQL

ZigBeeEnOcean6LoWPANWi-FiIEEE

ProprietaryOpen Protocols

Integrated Enterprise from Device to Meter to PlantIntelligent Building Smart Grid


Current State of the Industry 2.2.4 Overview

Initiatives and mandates from the U.S. Department of Energy (DOE) are directed at reduc-ing energy consumption by buildings. With buildings accounting for nearly two-fifths of the country’s total energy and a CO2 emission profile as high as 35 percent, based on finding by the Commission for Environmental Corporation1, the sector needs to seriously reduce its energy consumption. This requires rigorous energy retrofit and system upgrades to make buildings more e0cient, as illustrated in Chart 2.6. Although much of the focus in the green and intelligent building industry to date has been on new construction, the existing buildings sector could trigger exponential growth in intelligent buildings due to the relative size of that segment.



Chart 2.6 Potential Scenarios to Reduce Energy in Buildings

With a business as usual approachenergy consumption expected toincrease by 30-50% by 2020.

Moderate penetration ofenergy e'cient equipmentand technologies likely toreduce energy use by 30%.

Aggressive penetration of energy e'ciency,renewable and smart electricity estimated toimpact energy consumption by 50-80% by 2020.

Source: Frost & Sullivan Analysis

2005 2010 2015 2020

Energy

Con

sumption in Buildings

Business A

s Usual

Moderate Penetration

Aggressive Implementation

By changing controls management practices and instituting intelligent technologies de-signed to optimize energy e0ciency, building managers can reduce energy consumption by up to 35 percent, according to Energy Star2. Key systems upgrades and retrofits include, but are not limited to, HVAC controls, lighting controls, energy management, and building au-tomation systems. Based on industry discussion with technology providers, there is poten-tial to obtain 30–50 percent energy savings at the engineered system level alone—lighting, heating, cooling and ventilation—for commercial buildings. This type of reduction would be a logical first step. An aggressive approach to integration of intelligent systems and renewable energy, based on Frost & Sullivan’s research analysis, could possibly reduce energy usage by as much as 50–70 percent over conventional buildings. Ultimately, these energy e0ciency goals need to be supplemented by alternative energy technologies such as photovoltaics to get to net-zero energy. But to set the stage for 2020, the DOE believes in e0ciency optimization to reduce energy consumption.

2.2.5 Intelligent Building TransformationThe green economy is gaining financial value and the terms energy management and smart grid are now industry buzzwords. Interest in intelligent buildings based on industry growth trends is also on the rise. Building automation systems are taking the intelligent building roadmap into new territory through deployment of sensor networks, embedded intelligence



in field-level devices, greater device integration, and more accurate and real-time decision-making control strategies. With energy e0ciency a key o!ering of intelligent buildings, the ’greening’ of buildings with Web-enabled automation systems is set to transform the indus-try. Chart 2.7 shows the intelligent technologies concept stages towards fully integrated net-work solutions. However, one could characterize some buildings today as being intelligent, so the implication is that there is a spectrum of intelligence, with the highest level being at-tained in the long run.

Chart 2.7 Intelligent Building Solutions Stages from Concept to Fruition


Immediate Trends Convergence Stage Vision 2020

Eliminate energy wastein existing buildings

Convergence of green andintelligent technologies Integrated network

Short-Term Horizon Mid-Term Horizon Long-Term Horizon

open protocolssensors

vendors

and cities

Intelligent buildings transcend integration to achieve interaction so that previously indepen-dent systems work collectively to optimize the building’s performance, including monitor-ing comfort levels, security systems, energy systems and operations. However, the building automation market needs to consolidate its capabilities to make these concepts a reality. For example, electrical and mechanical trades communicate and consolidate e!orts toward integration of systems. From a technology perspective, the involvement of IP protocol and IT in buildings, and adoption of wireless technology are expected to play a significant part in the future architecture of intelligent buildings. The integration of systems and services into one IP-based enterprise management platform is an approach that many of leading building automation system providers are adopting.



2.3 INDUSTRY TRENDS AND DYNAMICS

2.3.1 Key influencers and their respective impact on technology adoptionOne of the goals of this research was to identify and explore the current industry trends impacting the adoption of intelligent buildings. These influencers are particularly significant because they represent key challenges, drivers, and restraints to the industry in the accep-tance and adoption of intelligent buildings, illustrated in Chart 2.8.

Chart 2.8 Force Field Analysis - Drivers and Restraints


EnergyE!ciency andOperationalCost Savings

Green andSustainabilityMeasures

CentralizedManagementand RemoteControl

UtilityIncentivesDemandResponsePrograms

Life CycleCost

Models

PolicyImpetus

and EnergyMandates

GrowingAcceptance ofNon-energyBenefits

Future-ProofInfrastructure

Drivers

Restraints

Drivers

Restraints

Perception ofHigh Cost and

Risk

Lack of CommonProtocols

Denotes Current Impact Denotes Long-Term Impact

Lack of PublicEducation

Absence ofSupporting Codesand Standards

Lack ofQualified

Contractors

2.3.2 Market DriversEnergy e0ciency and operational cost savings drive integration of intelligent building tech-nology With energy costs fluctuating and the building sector consuming more energy, operating costs are expected to continue rising unless energy consumption is more e!ectively man-aged. Building owners and managers are realizing the many financial benefits of intelligent technologies, such as lower energy costs, lower maintenance costs, and lower repair and replacement costs. Building owners and operators are leveraging the energy-saving aspects in order to fund intelligent technology projects. The energy e0ciency paybacks have been attractive enough to continue the momentum for e0ciency retrofits even during weak eco-nomic conditions. While energy conservation is a prime factor in intelligent buildings, ROI determines the level of building automation system implementation. Building owners require cost justifica-tions to warrant making significant investment in the installation of integrated building auto-mation systems. In developing a business case for intelligent technologies, a building owner/



manager must be convinced that by implementing the technologies, the payback period will be significantly less than the expected working life of that asset. With proven reductions in energy consumption and long-term cost savings on operating expenses, energy e0ciency measures are critical adoption factors for intelligent technologies that generate short- and medium-term paybacks.

Green and sustainability measures drive adoption of intelligence in buildings A catalyst for many companies to commit to more intelligent building systems may also be found in the green building movement, which is gaining momentum daily. Building owners are investing in better building performance as a way to reduce energy costs. There is also pressure to provide detailed accountings of their greenhouse gas (GHG) emissions with tax-ation proposals or legislation (as in California) intended to limit or tax emissions of carbon dioxide and other gases. Many companies have been a!ected by changes in consumer preferences and demands resulting from increased awareness of climate change. If stakeholders can show that they are green and socially responsible, it can improve business e0ciency, creating a di!erent ROI equation where value additions become much broader than just energy savings. Motivated by the desire to appear environmentally conscious, many commercial facilities have adopted intelligent technologies in order to earn “Green and Sustainable” certifications from entities such as Energy Star and the U.S. Green Building Council’s Leadership in Energy and Environ-mental Design (LEED). Building owners can include that information in their corporate social responsibility (CSR) reports. The need for centralized management and remote control is promoting integration Boosting e0ciency, removing ad hoc applications and implementing necessary changes to address ine0ciencies is a challenge faced by many facilities managers. That’s why integrat-ing intelligence is becoming a mandatory requirement for clients seeking the best automa-tion solutions with the simplest connections to real-time data, Web-based data, and the organization itself.

Utility incentives through demand response programs driving acceptance In an e!ort to reduce the stress on the utility grid and take advantage of demand response in-centives, building owners are seeking means to take advantage of special rates structures of-fered by utilities and obtaining credits under the LEED criteria. Demand response programs o!er financial and operational benefits for end-users, load-serving entities and grid opera-tors. These benefits include reduced utility bills, incentive payments earned by customers, lower wholesale market prices, operational security, adequacy savings, and utility market performance. At the U.S. federal level, the Energy Policy Act of 20053 proposed the realiza-tion of demand response throughout the country.

Life-cycle cost models driving further justification of intelligent buildings Large buildings have to exhibit high operational e0ciency and low cost with respect to fac-tors such as energy consumption and operating costs. Based on EPA’s Energy Star4 esti-mates, the operating costs for a facility represent approximately 50 percent of a building’s total life-cycle costs over an estimated 40-year life span. By reducing operating costs, the asset value of a building can be enhanced. Using life-cycle costing models, building owners



and managers can determine how resources will be used in the future and how to promote long-term economic growth while lowering utility costs over the life of the building.

Policy impetus and energy mandates taking gradual measures towards intelligent buildingsUtility rebates and incentives are gradually giving way to mandatory compliance with state and federal energy codes with more and more states adopting these codes. The California Energy Commission’s (CEC) Title 24, as well as industry prerequisites such as the American Society for Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) 90.1 standard, are providing a boost to intelligent systems and technologies. USGBC’s Leadership in Energy and Environmental Design (LEED) and Energy Star certi-fications are emerging as other key drivers. As an update to USGBC’s LEED v3 guidelines, ef-fective June 27, 2009, building owners have to routinely document their operational perfor-mance data in order to obtain certification. This entails the ongoing monitoring and reporting of energy and water usage data on an annual basis. The aim is to provide performance met-rics by continuously monitoring, diagnosing, and taking preventive actions. The U.S. government’s American Recovery and Reinvestment Act5 (ARRA) has laid out a comprehensive plan to invest in alternative and renewable energy projects. The stimulus package planned investment is $5 billion for smart grid, interconnection, and transmission and $30 billion for renewable energy and energy e0ciency projects.

Growing acceptance of non-energy benefits such as comfort and productivityWhile the benefits of comfort and productivity are economically less tangible, they can shorten the ROI period for energy capital costs in owner-occupied buildings. Creating opti-mum comfort to increase productivity levels remains under-recognized by the broader build-ing industry. Due to the relative size of sta0ng expenses compared to building energy and investment costs, building owners can leverage e!ective building management to produce significant administrative savings making it a significant rationale for enhancing productivity.

The desire for a future-proof infrastructure is driving awareness Building owners want their facilities to be adaptable to future requirements, including new technologies and process changes. They also want the facilities to handle increased demand without major physical modifications. New technologies need to be scalable, interoperable and o!er scope for future innovation.

2.3.3 Market RestraintsPerception of high cost discourages building ownersMost customers believe integrating subsystems in a building involves huge investment. This belief prevents builders from making the heavy initial investment. A cost-benefit analysis is likely to help owners understand the long-term value of the investment. The financial and operational benefits of these solutions go unnoticed due to a lack of awareness. While great technical solutions exist, they are not being demanded by the market. Increased rental op-portunities and reduced operating costs can o!set the initial investment. It is essential to educate the owners about the benefits of intelligent buildings, since they are responsible for making the investment.



Lack of common protocols adversely a!ects growthA major barrier for the adoption of intelligent buildings is the lack of common communi-cation protocols and standards. In buildings, probably more than other convergence areas, standard definitions of data are critical. The dream of interoperability, of true plug-and-play, requires that a common set of standards be created and adopted widely by the industry. The current trend is separate systems for fire, HVAC, lighting control, and security, which are maintained by separate suppliers. The building owner has to depend on multiple suppli-ers for installation and maintenance of these systems. At the insistence of owners, operators and design engineers, suppliers have realized the need for a common interoperable solution. Some suppliers are developing interoperable software solutions to make seamless integra-tion possible. The adoption of interoperable solutions to replace proprietary communication protocols will pave the way for intelligent buildings.

Lack of qualified contractors adversely a!ects the intelligent buildings marketThe intelligent building market lacks qualified and skilled contractors who can ensure proper integration of building subsystems. Design engineers complain there are few contractors and engineers capable of completing the entire integration work single handedly. And there’s confusion as to what individual groups need to do to make intelligent buildings a reality. Lack of technical expertise is one of the major reasons for poor building performance. Change resistance remains a common problem associated with the building industry. This resistance coupled with market confusion over competing standards makes the adop-tion of integration very challenging. The main sectors of the building industry, such as elec-trical and mechanical, tend to be conservative and tend not to communicate with each other. Communication is necessary for the integration of the di!erent building systems where chal-lenges originate at the user interface, application, software, and communication levels.

Absence of supporting codes and standards deters implementation of intelligent buildingsExisting building codes and standards are a major restraint for intelligent buildings. For in-stance, the National Building Code of Canada has electrical and fire codes that often have conflicting requirements, hindering the implementation of building automation. Similarly, the American National Standard Institute (ANSI) standard for commercial buildings and certain certification requirements for cable component vendors can be a hindrance since these codes are amended at the national and state levels, adding to the confusion. However, the industry is aware of this shortcoming and is developing an objective-based code system, which emphasizes functionality without restricting the way it can be achieved.

Lack of public education hinders adoption of intelligent buildingsLack of public awareness and knowledge about the benefits of intelligent buildings has been one of the main challenges for the market. Decision makers and building automation practi-tioners need to understand the advantages of intelligent buildings so necessary investment can be made. Design engineers play a role in this education process. Building owners and builders need to understand that the intelligent building provides increased value in terms of resale and leasing. It is the responsibility of the manufacturers and building designers to ensure that all the stakeholders are educated. This will help erase skepticism among the building owners about new, high-tech systems.



2.3.4 Key Technology Adoption InfluencersOne of the primary goals of this research is to identify and explore the benefits associated with intelligent buildings as a way to justify investment in intelligent technologies. The overriding benefits inherent in an intelligent building include:

-faction

Having identified the key benefits listed above, we have examined each one in the section below and assessed their individual impact on the adoption of intelligent technologies. Energy e0ciency savings Retrofits are frequently driven by the desire to reduce energy and operational costs. In developing a business case for intelligent technologies, it must be clearly demonstrated that this investment will be favorable to the investor and that energy savings can be achieved. The Energy Star program estimates that an intelligent building can reduce energy consump-tion by up to 35 percent over the national average. Chart 2.9 highlights some current examples of energy savings possibilities based on the results of projects examined for the case studies included in this research service. (For more information please refer to Appendix)

Chart 2.9 Examples of Energy and Cost Savings from Case Studies

Case Study Payback and/or Energy Savings

Key Technology Highlighted

Van Andel Institute Research Cancer Center

- Annual Operational Savings $100,000

- Annual Energy Savings $130,000

- Simple Payback 1.6 years- ROI (over 5 years) 178

percent

Building management and controls system and advanced lighting controls systems

750 Seventh Avenue O0ce Building

- Annual Savings $ 600,000

- Payback 1.8 years

Advanced computer-based energy management system and dashboard



Case Study Payback and/or Energy Savings

Key Technology Highlighted

Johnson Controls, Inc. Headquarters

- Annual Energy Savings $315,000

- Annual Operational Savings $88,000

Intelligent building solutions, energy-e0cient retrofits and upgrades, renewable energy integration

Westside Academy - Payback in two years based on sewage water savings

Electronic urinal flush system

Bell Trinity Square - Reduce energy use by 400-800 kwH during DR events

Automated demand response and ‘smart grid ready’

Source: CABA IBRM 2011 Case Studies

Reduction in operating and maintenance costsAccording to EnergyStar4, the ongoing operating costs represent 50–80 percent of a build-ing’s total life-cycle costs over an estimated 40-year life span. The remaining costs are linked to construction, retrofits, and financing. Therefore, even a modest reduction in lifetime op-erating costs can enhance a building’s asset value. Controlling operating expenses a!ects more than cash flow, since building net operating income decreases when operating costs rise, increasing costs lower the building’s asset value. Energy Star estimated that where a building’s energy use is reduced by 30 percent, net operating income (NOI), and building asset value are increased by about 5 percent. With intelligent buildings, operating costs are significantly lower as a result of more ef-ficient operations and better control. However, most buildings lack the ability to collect data and turn it into actionable information. Parameters such as temperature, flow, pressure, and actuator positions can be used to analyze information associated with operating equipment. This data helps determine whether equipment is operating incorrectly or ine0ciently, mak-ing troubleshooting easier.

Lifetime return on investment (ROI)Building owners and managers have been reluctant to invest up-front funds in intelligent technologies because of concerns about payback, especially in cases where the payback on capital outlay may be longer than the typically desired two- to three-year investment horizon. A life-cycle cost model o!ers a comprehensive view on factors such as capital expenses, total cost of ownership, energy and operating costs, maintenance and replacement costs over the life of the system/project. Based on the operations and maintenance best practices guide published by the Federal Energy Management Program6 (FEMP), Chart 2.10 highlights the cost savings potential using a life-cycle cost model to determine ROI on energy retrofits. A life-cycle cost model would yield a payback of 3 to 6 years, relative to including only en-ergy savings where the project would yield a 10- to 15-year payback.



Chart 2.10 Energy E*ciency Life-cycle ROI Model

Source: FEMP Guide

Life-cycle ROIInvestment Model

Return on investment: 10 times

Reduction in maintenance costs: 25 to 30%

Elimination of breakdowns: 70 to 75%

Reduction in downtime: 35 to 45%

Increase in production: 20 to 25%.

Water conservationDue to artificially low prices for municipal water, water conservation often has a limited im-pact on overall operating costs. However, significant savings can be accrued through lower energy costs resulting from a reduction in the amount of energy used to pump and heat water. Water shortages are expected to be an ever-present challenge in several regions in the near future that will likely increase the value of water conservation technologies and products. One such technology segment that has displayed potential for future growth is the use of sensors to monitor and control water use. For example, an automated electronic urinal flush system can reduce and monitor the number of times a urinal flushes per day and save water. The system is installed with a sen-sor that communicates with controllers and a water meter and even a Web address that can be viewed online. This type of technology installed in a public school can yield a two-year payback on investment based solely on the sewage water savings.

Reduction in greenhouse gas (GHG) and carbon dioxide (CO2) emissionsThe buildings sector needs immediate action to help reduce GHG emissions. Buildings in North America contribute up to 35 percent of the national CO2 emissions1. Intelligent build-ings reduce the overall demand for energy, helping to limit the need for new power plants and limit associated emissions. Intelligent buildings make several contributions to reducing GHG emissions:

Building transparency, visibility and reportingFrom an end-user perspective, having a building’s operational data be visible is extremely valuable. The goal is a seamless integration, leading to transparency and visibility. CIOs and CFOs benefit from increased visibility of real-time data, enabling them to make informed operational decisions, such as reducing redundant expenses and maximizing resource out-lay. Besides building owners and facilities managers, other end-users, such as transmission



operators and tenants need to make decisions on electricity consumption, fuel availability, prices, reliability, overloads, etc. and need data to help them identify patterns and anomalies. To better manage a real estate portfolio and reduce cost of ownership, building owners have to determine what they own in terms of facilities, locations, conditions, o0ce space (both leased and vacant), energy usage, and cost. Seamless communication between enter-prise software and building systems can enable more actionable reporting that can be used for timely and accurate decision making. Furthermore, as an update to USGBC’s LEED v3 guidelines, e!ective since June 2009, building owners must routinely document their opera-tional performance data in order to obtain certification. This entails ongoing monitoring and reporting of energy and water usage data on an annual basis. The aim of this revision is to facilitate performance e0ciency by continuously monitoring, diagnosing and taking preven-tive action. Components of such technology include advanced diagnostics, real-time fault-tolerant data acquisition, and flexible reporting capabilities.

Comfort, indoor environmental quality (IEQ), productivity and overall tenant satisfactionThe non-energy benefits of upgrading new construction and existing buildings impact build-ing performance and occupant comfort. Since occupant costs command the greater propor-tion of building life-cycle costs in owner-occupied buildings, enhancing occupant produc-tivity in intelligent buildings—often measured through reduced absenteeism—can result in major operational savings. Intelligent buildings have innovative qualities that can help building owners, developers, and managers provide better services to the tenants and occupants, attract and retain tal-ent, and increase production and sales. Further, if a building contains a converged intelligent information network, tenants can create virtual workspaces, providing more flexible and ef-ficient work environments anywhere on the premise.

Corporate social responsibility Property owners are under pressure to provide detailed accountings of their GHG emissions. Investors are concerned about the risks and opportunities associated with changes in tem-perature and weather patterns, as well as

north american intelligent buildings roadmap 2011 · 2020. 4. 9. · buildings roadmap 2011”...

Documents