marketing technologies

Smart technology offers timely payback

Effective management of energy-efficient technology is the new frontier of carbon reduction
Friday, October 24, 2014
By Jiri Skopek

Energy conservation programs, from audits to cost-effective measures for savings, have been a mainstay of consumption reduction strategy. However, existing buildings have the potential to conserve 30 per cent more energy, which will likely be necessary to meet climate and carbon reduction targets.

Roughly speaking, savings can come from three sources: more efficient systems and equipment (approximately 40 per cent); improved management and operation (another 40 per cent); and tenant engagement (20 per cent).

Most energy audits focus on identifying the need for more efficient systems and equipment including building envelope, lighting, high-efficiency heating and cooling equipment and hot water, building controls, variable-speed drives and other efficiency features. Some upgrades, such as a lighting retrofit, typically have more rapid return on investment.


Deeper retrofits require significantly more investment and are appropriate when maintaining the building’s long-term value is important to the investors. The Empire State Building project provides a good example of a deep retrofit. Valued at $106 million, it included eight integrated measures selected on the basis of their life-cycle cost, resulting in 38 per cent reduced energy.

Tenant engagement and occupant behaviour can also have an impact on energy. Occupancy conditions and practices include more efficient use of space, plug load and demand response. Tenant sub-metering and a green lease also provide a framework that encourages conservation.

Notably, Skanska, a multinational construction company that relocated its U.S. headquarters to the Empire State Building, surpassed the building’s efficiency standards and reduced its energy consumption by 57 per cent compared to its previous space in another building, achieving an estimated $500,000 in energy savings over the life of the lease and a payback of its initial 4.7 per cent incremental investment within five years.

While deep retrofits and tenant engagement play a significant role, the area which offers the greatest potential to reduce energy consumption at the lowest cost is to be found in the operation and management of buildings. An analysis of BOMA BESt data shows that management and operations have a greater influence on energy performance than efficiency features.

An Energy Star Portfolio Manager Study, Building Performance Defined, similarly reveals that buildings with similar equipment often perform quite differently. “This finding challenges a longstanding misconception that building efficiency can be defined by the presence of efficient equipment,” the study states.

Although energy-efficient equipment can significantly contribute to whole-building performance, it can be a double-edged sword. So-called energy-efficient equipment can often be a primary source of energy inefficiency if it is not being properly operated.

Other studies quoted by the US Environmental Protection Agency support this assertion. Lawrence Berkeley National Labs found that in a sample of 60 buildings, half had system control problems, 40 per cent had HVAC equipment problems and 25 per cent had economizers and/or variable-speed drives that were not functioning properly.

Another ESource study estimates that economizers have failure rates of 50 per cent and higher. As a result, more energy was wasted from poorly running equipment than would have been saved if the equipment had been working properly.


Smart building technologies can help to eliminate such inefficiencies. The ongoing stream of data from pulse meters and sensor points is monitored, aggregated, normalized and then analyzed in real time, applying artificial intelligence.

If equipment is found to be functioning below optimum efficiency, notification occurs via an alarm system and/or a user-friendly dashboard portal. Expert analysis can also be carried out by remote expert building engineers, who monitor the data and either provide on-demand support to an on-site building management team or carry out the corrective and predictive maintenance remotely.

Smart building technologies come in a range of complexity depending on their size and functions. For smaller buildings such as retail, this may consist of just a smart controller with wireless real-time monitoring and control over the web built into a rooftop unit.

Smart building technology can also support tenant engagement. Information on a building’s performance can be shared directly with building occupants, thereby influencing their behaviour.

The opportunities are enormous. For example, P&G deployed energy monitoring and ongoing commissioning systems across 12 buildings, totalling 3.2 million square feet of real estate, including its global headquarters campus in Cincinnati and numerous laboratories and manufacturing operations. The combination of cloud-based, smart-building continuous commissioning and performance adjustments, along with a mobile team of experts, provided P&G with 24/7 real-time facilities management that dramatically reduced energy consumption and costs by 10 per cent within five months and provided a return on investment the first three months.

In spite of these achievements, there are some barriers to the uptake of smart systems. When the IT and real estate departments work in silos, smart building solutions can fall between the cracks. If property managers are not familiar with the IT component of smart buildings and IT people are not familiar with real estate aspects, often neither department is willing to take ownership.

Misperceptions about cost are another significant barrier. Yet, generally, smart building and technology investments pay for themselves in 12 to 18 months, thanks to energy savings and other operational efficiencies. Payback can even be immediate in cases where systems identify significant operational issues at the onset.

Caution is advised, however. As more providers discover the power of smart building technology, the sudden race to market concepts with varying degrees of proven capabilities may be confusing to potential buyers.

Like the boom earlier in the 2000s, many providers are jumping into this arena with products that are being develop on-the-fly. The best advice is to work with proven systems that have a track record of real building performance.

As Jigar Shah points out in his book, Creating Climate Wealth, the key lies not just in new technology, but in developing a sound business case. Smart upgrades have made immense impacts on manufacturing and infrastructure, and the timing looks right to apply it to real estate. This is the new frontier in the effort to achieve the energy and emissions reductions needed to stabilize the climate change. It also makes business sense.

Jiri Skopek is Managing Director, Sustainability, with Jones Lang LaSalle. For more information, see or