The Energy Transition: Buildings are Key in 2023
Building owners and utilities must unite on cleaner energy infrastructure. Incentives for behind-the-meter energy management and DR are crucial for two-way communication with the grid and driving existing/emerging technology to improve operations and costs, making the energy transition universally profitable.
Climate change, the transition to renewables, and electrification trends are major factors impacting energy costs and reliability today. Sustainable practices are increasingly demanded, inspiring action from governments, utilities, consumers, and the investment community to support a cleaner behavioral shift. While electrification is absolutely critical to achieving energy independence, in the short term it will lead to increased, unpredictable energy demand which changes the power curve and collides with the need to decarbonize as much as possible.
Earlier this month I was fortunate to attend CERAWeek, a massive energy conference organized by S&P Global, which brought together worldwide leaders from across the energy industry to share insights on the quickly changing landscape. This year’s theme of the energy trilemma was apparent – how do we balance energy security, transition, and affordability? It’s clear, despite the global movement to fight climate change we are not on track to meet our collective goals. Whether it’s a state-mandated renewable portfolio standard percentage for a utility to comply with or a publicly traded company pledging to have net zero emissions by 2050, the time to act is now. And commercial buildings, which are frequently overlooked, need to be a key part of the equation. As I reflect on my experiences at the event, some key takeaways stick out.
We must focus on energy supply AND demand
Efforts to decarbonize our energy supply are appropriately focused today on renewable generation technologies like wind and solar. Beyond that, the IRA will act as a catalyst for the expansion, research, and development of geothermal, nuclear, carbon capture, and hydrogen. This focuses on the supply side of the equation, but it is clear we also cannot forget about the demand side of the equation. Even a careful transition of supply is expected to result in energy price increases and grid reliability challenges. At the end of the day, we need to add more clean supply sources but to get to net zero we must also focus on demand at the edge of the grid and decarbonization. Disparities between planned supply and actual demand need to be coordinated and flexible. By focusing simultaneously on both sides of the meter, we can achieve this, providing the perfect opportunity for technology to make the connection.
Buildings are KEY, especially the small ones
A closer look at energy use puts the spotlight on buildings yet again. According to the International Energy Agency (IEA), the current built environment is responsible for nearly 30% of global energy consumption and over 90% of buildings in the US are under 50,000 square feet. Historically, energy efficiency programs for buildings have either focused on the residential sector (think smart thermostats) or on larger buildings (with heavy control systems), creating a major gap in programs for small- to medium-sized commercial buildings.
The U.S. Environmental Protection Agency estimates 30% of the energy used in commercial buildings is wasted, forcing building owners and operators to take a closer look at consumption. HVAC and lighting represent a significant portion of fixed costs for commercial facility owners and operators, creating a major opportunity to improve energy efficiency, reduce consumption and strengthen resiliency. The key is better understanding the energy profile of a building, and implementing smart technology can coordinate energy-consuming assets to maximize efficiency, minimize risk and identify future opportunities.
Building operations must adjust to pricing, extreme weather, peak demand, maintenance requirements, and other needs to maintain a suitable environment for those within. Smart buildings that incorporate an energy management system (EMS) enable facility professionals to make informed decisions about comfort, quality, energy efficiency, and sustainability – all in real-time.
While temperature is a large component of employee and customer comfort, simply changing the thermostat is not always the best path forward and could significantly raise building energy costs. An EMS is a group of hardware components that work together to monitor and control a building’s energy use. It typically includes sensors that monitor real-time data from key assets within a building, such as lighting, ventilation and heating/cooling equipment, which then process the data through software algorithms to control energy usage and generate alerts if any issues arise.
Technology can deliver continuous efficiency and virtual power
As we look at what it will take for grid modernization and digitalization, technological innovation presents an incredible opportunity to make clean energy impactful for everyone in a way that works on an individual level. One size doesn’t fit all, and the technology approach needs to be customizable and scalable.
Technologies that capture live energy data enable that granularity and empower stakeholders to visualize what’s happening in front of and behind the meter in real-time. On an individual level, this enables stronger decision-making for operation efficiency, empowers end-users to participate in grid interactivity, and provides insights to transform the existing power system.
Aggregating virtual capacity across multiple locations unlocks the decarbonization and resiliency required for a cleaner tomorrow on a wider scale. A network of grid-interactive buildings connects the energy market (suppliers, utilities and grid operators) with a variety of distributed energy resources. For utilities, it means ample on-demand capacity that can be called on within minutes to stabilize the grid during times of peak demand. For businesses, it means lower energy costs, lower operational costs, and more resilient buildings ready to withstand long-term energy infrastructure changes.
Scale is needed now and can be achieved through innovative finance models
Technologies that exist today could be making a much greater impact, however various barriers to adoption limit scalability. To make grid participation more attractive, there are three areas that need to be addressed: financing, affordability, and deployment. Business models matter and the key is making “the energy transition” profitable for those that need to participate. Innovative financing models, such as subscription-based or as-a-service options, can remove capital barriers to accelerate technology deployment and incentivize program adoption. Corporations will ultimately pick up the tab and must find ways to offset these costs—and risks.
Collaboration and partnerships are imperative.
CERAWeek displayed a genuine combination of leaders representing governments, oil and gas, climate activists, and emerging tech coming together to forge an all-of-the-above path forward despite numerous timing, technology, regulatory, and coordination challenges. The future of energy is a challenging, interconnected puzzle that bridges politics, policy, infrastructure, technology, geography, economy, and environmental goals. Seeing leaders representing these groups unite for an open dialogue on the path forward was encouraging.
Commercial buildings in particular are critical to the energy transition, and they need solutions that reduce complexity and costs. By incentivizing businesses operating these buildings to adopt technology and make their buildings grid-interactive, businesses can reduce costs, play an active role in grid stability, operate more efficiently, deploy cost-effective strategies, and become more resilient to quickly changing energy trends without impacting operations. There are a variety of existing and emerging technologies that can make the energy transition impactful, affordable, and easier to implement today to achieve impact.
Mark Danzenbaker is the CEO of GridPoint, a leader in building energy management and optimization technology that decarbonizes commercial buildings and accelerates a more sustainable energy future. Danzenbaker joined GridPoint in 2009 and has served in several leadership positions before being named to his current role in 2016.
Danzenbaker drives GridPoint’s efforts by creating a network of smart, efficient, grid-interactive buildings and working with commercial buildings, utilities and technology partners. To date, GridPoint has saved customers hundreds of millions of dollars in energy costs, reduced billions of kWh in electricity and eliminated billions of lbs. of carbon emissions.
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