Industry Tech: Building High Performance from Innovation
Who are we
Industry Tech is a local distribution company in Australia and New Zealand for innovative, efficient, global technologies that can be used across multiple sectors. Their application in the management of commercial real estate portfolios and buildings minimises wastage of energy and outgoings to maximise profits. Industry Tech’s focus is on how local businesses can benefit from these new technologies that are changing the way buildings and facilities are managed worldwide.
What we do
Industry Tech is at the cutting edge of how buildings and facilities are managed. Its innovative products and systems use complex algorithms to deliver high quality, actionable information. This enables more accurate decision making that results in savings on energy and maintenance costs. It also greatly improves sustainability by extending equipment life, raises the productivity of operations staff, increases tenant satisfaction, enhances transparency across portfolios and provides more environmentally friendly outcomes. The management of buildings and property portfolios is easier and highly efficient. Overheads and outgoings are lower. Profits are higher.
How we do it
Industry Tech specialises in sourcing and evaluating international innovations to ensure that these new technologies have local applications for Australia and New Zealand. With roots in London, Hong Kong and Shanghai, affiliates in Taiwan and Singapore, along with strategic alliances across Europe and North America, Industry Tech receives access to technology at an early stage of development. This has made them the pre-eminent provider of innovative products and systems that enable businesses across the region
Building owners and operators, facilities managers, service contractors, energy consultants and auditors, tenants, occupants and the environment all benefit from Industry Tech’s innovative technologies.
For building owners and operators, increasing energy efficiency increases profitability.
Facilities managers have effective labour management tools, efficient, streamlined processes they can run remotely 24/7 and highly accurate decision-making support. Energy consultants and auditors benefit from increased transparency and accuracy. The satisfaction of tenants and occupants improves markedly and using energy, particularly electricity, more efficiently reduces the carbon footprint.
AdOPT™, Automated Data Optimisation system, is an intelligent,
cloud-based data analytics software program that optimises building performance.
It augments and enhances Building Management Systems (BMS) by converting the vast amounts of data
from BMS into high quality, actionable information.
This enables highly informed and more accurate decision-making.
In turn, this allows optimisation of building operations and facilities.
That leads to savings from lower energy and maintenance costs and right across the full vertical.
It greatly improves sustainability by extending equipment life.
It raises productivity of building management staff, increases tenant satisfaction
and provides more environmentally friendly outcomes.
All operated from a customisable, user friendly dashboard with key features that are outlined below.
AdOPT™ makes managing buildings and property portfolios easier and highly efficient.
Overheads and outgoings are lower. Profits are higher.
Detection & Diagnostics
Utilising historical and real-time data
on a continuous basis, AdOPT™ analysis detects faults or incorrect operation of equipment and systems. Its diagnosis pinpoints the actual cause without requiring any interaction with building staff.
AdOPT™ is a complete online energy solution. It includes energy audit, benchmarking and diagnostics, measurement & verification, ROI analysis, automatic reporting and more to maximise energy efficiency and minimise costs.
Easy to use and accurate real time and historical reporting tools record regular maintenance, equipment use, and more. This improves sustainability by extending equipment life with significant savings on maintenance and labour costs.
AdOPT™ automatically drives actions from raw data. It tracks and visualises the entire process of detected faults by monitoring and processing equipment status and efficiency.
With each detected fault, AdOPT™ automatically initiates a work order.
A system can be customised to manage KPIs so that it visualises critical operation parameters and automatically diagnoses, in real time, KPIs that are not achieved. Regular reports are also automatically generated and delivered to users.
Data Analysis Tool
An intelligent, cloud-based data analytics tool that converts the vast amounts of data from BMS into high quality, actionable information. This enables highly informed and more accurate decision making.
So overheads are lower, profits higher.
The problem with thermostats.
The thermostat in air-conditioning and refrigeration units controls the compressor with a simple logic. If the temperature is above the set point by a certain margin, it goes on. Once it’s cooled to below the set point by the same margin, it goes off.
The time taken to achieve this set degree of cooling is called the hysteresis.
There are periods at the end of each run when the compressor has delivered sufficient refrigerant, but the room temperature hasn’t reached the bottom end of the hysteresis, so the compressor keeps running.
It tries to draw unavailable vapour from the evaporator to ram it into a hot, full and highly pressurised condenser.
It is working under high load to achieve little, and is therefore inefficient.
The solution with Coolnomix.
Coolnomix has totally redesigned the thermostat logic to eliminate this inefficiency.
Its patented energy optimisation algorithm uses sensors to monitor both the room temperature and refrigerant supply performance. It prioritises comfort by ensuring the room is within a narrow set-point range.
Then it uses data from its sensors and advanced control logic to determine if the evaporator has sufficient cooling capacity to give the compressor a break.
Coolnomix continuously monitors the sensor temperatures and will restart the compressor when the system’s cooling capacity is exhausted. By then, the condenser has cooled and is at low pressure while the evaporator is full of vapour. Ideal conditions to operate the compressor efficiently and consistently achieve savings of 15% - 40%.
A perfect example of Coolnomix efficiency.
Without Coolnomix: A unit’s set point is 23C. The thermostat starts the compressor at 24C and stops it at 22c.
In these conditions, this takes 10 minutes, but the compressor has delivered the required refrigerant in 7 minutes.
In the extra 3 minutes, the compressor works under high load, but achieves little, over-heating the condenser.
In an hour, the compressor does 4 runs of 10 minutes on, 5 minutes off, for a total of 40 minutes.
With Coolnomix: the compressor may do 5 runs of 6 minutes on, 6 minutes off, for a total of 30 minutes.
Coolnomix saves 25% of compressor run time for the same or better temperature outcome.
By eliminating unnecessary compressor run-time, Coolnomix delivers:
• Unrivalled energy savings with significant financial and environmental outcomes.
• Improved temperature stability and comfort assurance.
• Reduced dripping and no icing up of evaporator.
• Saves up to 40% on air conditioning running costs. • Suits most air conditioning systems.
• Easily installed, particularly retro-fits. • Optimises compressor efficiency.
• Improves temperature stability • Ideal for tenants as well as owner occupiers. • Zero maintenance.
• Tried and tested. Over 6,000 units installed worldwide.
The following articles have recently appeared in newspapers, trade journals and reports around the world.
Our "Synopsis and Comments" provide an insight to the content and a view on the implications and opportunities for Australia.
Industry Tech Synopsis and Comments:
Highlighted here is the importance of energy efficiency and productivity increases across the built environment.
It's the utilization of big data in a Smart way which will be the largest contributor to carbon emission reductions
by 2030, not only in Australia but around the world.
Click here to read the full article.
Productivity gains will come from technologies and processes that moves energy around power grids, say the experts.
In 2016, Victoria's United Energy had two distribution transformers blow, fewer than had been the case about a decade ago.
In the past, there had been difficulties predicting where load issues would occur.
United Energy's networks engineer Andrew Steer puts the change down to 98 per cent of residential
and small business customers having smart meters.
"That saves us $4 million each year that would otherwise be spent on distribution transformers," says Steer.
"The difference with smart meters is that we capture data forty-eight times a day, not once every ninety days."
The smart meter is a key – but little discussed – component of Australia's energy-efficient and carbon-reduced future.
Wind turbines and solar projects are visible reminders of an Emissions Reduction Target that is supposed to take
between 26 and 28 per cent of greenhouse emissions from the atmosphere by 2030, but far less visible is the productivity
improvement that will carry most of the burden.
The report from the Department of Environment in early 2016,
Modelling and Analysis of Australia's Abatement Opportunities: Meeting Australia's 2030 Emissions Target,
identified 70 emissions abatement opportunities and concluded that 44 per cent of the Emissions Reduction Target promised
at Paris would be met by "energy productivity", or, creating more output from the same or less usage.
The second-largest contributor to the abatement task would be land-use change
(38 per cent, and managing industrial processes and renewable energy would each contribute 5 per cent).
"If we can show how households and businesses can use less energy for the same output and comfort,
then we will go a long way to fulfilling our climate commitments," says Dr Glenn Platt, Research Director – Energy at the CSIRO.
"The challenge is to show consumers that better use of energy doesn't mean cold showers and warm beers."
Platt's outlook for an energy system that does more with less (or the same) is consistent with another statement
from the Energetics report, which noted that from 1993 to 2015, the emissions intensity of the Australian economy
fell on average by 2.3 per cent each year, "suggesting that national emissions are decoupling from economic growth".
In other words, growth is not dependent on burning fossil fuels.
While consumers see productivity as a quest to do the same things but with lower usage, Platt says energy productivity
as it relates to the system involves the issue of 'capacity utilisation', a large and complex part of the equation.
"Australia has a very 'peaky' power supply system where maybe five or 10 times a year, depending on where you live,
loads are extreme because it's very hot and everyone turns on their airconditioners," says Platt.
"So we build poles and wires and generation to cover these extreme days that occur five or 10 times a year.
It's not economically sustainable to build the infrastructure just to cover these infrequent, extreme loads."
Platt says a different kind of "peaky" problem is created by solar PV on roofs. "We get a certain degree of self sufficiency
from local generation, but then a cloud comes over and the PV systems revert to the grid, creating sudden load.
"Our major grids are not designed to be safety nets or back-up power for solar PV. They manage, but it's very inefficient."
The solution, says Platt, comes from both the consumers and the system operators.
Productivity gains will come from technologies and processes that learn to move energy around power grids
in time and place, so that power load on the grid can be shifted to where it is needed rather than building expensive
grids to deal with load peaks a few days each year.
One of the technologies that will aid in shifting load is storage: with sufficient storage,
PV-enabled consumers do not revert en masse to the grid when cloud blocks the sun.
They revert to their storage, removing some of the back-up power role that the grid is forced to play.
In its 2015 report Future Energy Storage Trends, the CSIRO acknowledged that most of the benefits of storage accrued to
the system as much as to the user. "The appeal of energy storage in the Australian context is its ability to solve multiple challenges.
These challenges include smoothing out intermittencey, mitigating peak demand,
maximising the value of on‐site generation, integrating renewables into the grid through voltage and frequency support,
and increasing the reliability of use of renewables off the grid."
In Victoria, one of the central weapons in the energy productivity fight has been the smart meter.
The meters' installation has been mandated.
Smart meters have been criticised as invasions of privacy, but their uptake is also crucial to making power consumption
more productive and ensuring that capital expenditure is properly targeted.
Victoria rolled out smart meters from 2008, and the network operators were using the data from them by 2013.
A smart meter is a digital device that connects the business and household to the power network provider via a radio signal.
The smart meters also talk to one another in a "mesh" radio network system.
The signal from the smart meter allows the network operator to capture data down to every five minutes
if the operator wants it, and in United Energy's system it is sent every 30 minutes.
"We capture network data forty-eight times a day, which allows us to make decisions about demand,
about where we upgrade and where the infrastructure has to be replaced," says Steer.
Because United now tracks usage in a virtually real-time fashion, it can see where transformers are being overworked,
before they blow, and replace them. It can see where demand is peaking and voltage is low.
Steer says the smart meters allow the utility to build big data systems and use algorithms
to be more predictive about demand, especially in summer.
The network can be analysed more accurately so high-usage houses and businesses can be spread out among
the different "phases" in a street or a neighbourhood, spreading the loads and reducing strain on the network.
Steer says the smart meter system is so efficient that linesmen are often sent to a problem before the users even complain about it.
"The last gasp is when the power actually goes off.
We now capture 70 per cent of last-gasp events in the control room without the consumer telling us about it."
He says the biggest benefit, in financial terms, is that large capital expenditure is targeted to where it is needed.
Steer says the most controversial abilities of smart meters are also the most powerful: capacity limiting and demand response.
In capacity limiting, households and businesses can opt for plans where if they exceed
an agreed kilowatt-per-hour level, they are switched off.
In demand-response, the consumer uses the smart meter data to stay beneath an agreed kilowatt usage.
Steer says both have been trialled in Melbourne with good results.
"In our capacity-limiting trials, it was amazing how quickly people learnt to close down appliances to stay under their limit," says Steer. "Demand-response was also quite positive: consumers actually like to know about their usage."
He says the political and social aspects of smart meters are complex.
"If you have a focus group of 20 people, two are really keen to learn about power usage and become more efficient, and another two think it's a terrible thing that someone controls what they use in their own home. The other 16 have not really thought about it."
Steer says the small but vocal opposition to smart meters is unfortunate because, in a network,
most peak demand problems are created by just 10 per cent of users.
In other words, if one-tenth of the consumers could be better identified and managed, the rest of the network would work more efficiently.
At CitiPower-Powercor – a Victorian network operator in Melbourne and west to the South Australia border
– the smart meter installation is 99.2 per cent across 1.2 million customers.
Luke Skinner, head of network technologies, says the smart meter is one of the most powerful tools in managing a network.
"We do 30-minute meter reads on the network," says Skinner. "In 2013, we identified 35,000 defects that could have caused fires.
You can't do that on the old meters."
He says, aside from the safety aspects, smart meters have allowed Powercor to work more closely with emergency services.
"When the system went down in South Australia, a circuit breaker was pulled which affected a whole area. During an event in our network, we can isolate what is shut down, so we can keep hospitals, traffic lights and boom gates operating.
We're at the leading edge of global technology in that regard."
He says the smart meters are also proving important in integrating renewables.
There is a 14 per cent installed capacity of solar PV in Powercor's network and 3 per cent in CitiPower's.
The feedback from smart meters allows the utility to keep voltage consistent around heavy-use solar PV areas,
managing loads and voltage between bright sunlight and when clouds come over.
He says the demand-response and limiting capability of the smart meters is available to the company but not used.
He says the ability to be predictive about demand and the capacity to identify and react to problems on the grid are the most important money savers and service-improvement outcomes from smart meters.
"We're incentivised by keeping people on supply, and smart meters help us do a good job of that.
"The smart meters give us information and they're also a communications network," says Skinner.
"Victorians are very lucky to have this technology
– it's given us a smart network at a time when networks have to be smart for the changes ahead."
Click here to read the full article.
Industry Tech Synopsis and Comments:
Big data and analytics are two very different things.
There is few big data requirements which are needed to get it the same recognition as solar
now has in terms of the benefits to help achieve the emission reductions by 2030.
We have worked hard over the last 8 years to create a product which not only positively effects Sustainability
and Tenant satisfaction but also helps clients reduce energy, maintenance and operations costs.
There is a few major distinctions which help achieve this; superior correlation algorithms which can detect and diagnose data integrity as well as equipment and operational faults to improve accuracy and reliability,
an easy to use dashboard so that all segments of the operation (FM, Building Manager, Contractor, Portfolio manager) can engage and utilise the data produced, automated reports and real time push notifications to allow targeted preventative and proactive optimisation of buildings and portfolio’s.
Once portfolios are using big data efficiently, it won’t take long for it to get the recognition it deserves.
There is a lot of hype around energy efficiency right now and it’s coming from a range of different sources.
The federal government has ratified the Paris climate change agreement,
committing Australia to reduce emission reduction by 26-28 per cent below 2005 levels by 2030.
A big part of this is directly through energy efficiency measures identified in the National Energy Productivity Plan.
Energy efficiency also forms a part of the current Emission Reduction Fund (ERF), the post-2020 ERF and Safeguard Mechanism,
and the broad “technology improvements” category.
Indicative emission reduction sources 2020 to 2030. Source: Department of Environment
The NSW government recently announced their Energy Efficiency Action Plan,
which was lauded as one of the most comprehensive policy plans by the Energy Efficiency Council.
Amongst other targets, the action plan is aiming to have 50 per cent of NSW commercial floor space
to have a NABERS rating of 4 stars.
The reason why I use the word “hype” is because on the ground the amount of action
happening in energy efficiency isn’t quite matching all the talk.
And unfortunately, it has been like this for some time. Particularly in comparison to its more popular side-kick, renewable energy.
Part of the reason for this lack of action, particularly in comparison to renewables, is the historical lack of certainty
in energy efficiency as an investment. Renewable energy has a straightforward investment proposition
– if the sun shines, electricity is produced and measured in the same way we’ve always measured electricity.
You sell the electricity or use it to offset your bill. For energy efficiency, every project is different and uses a raft of different technologies, with little quality control or consistency between projects.
But I see three elements that are going to start to increase the quality of energy efficiency as an investment. They are automated measurement and verification (AM&V), energy analytics (or energy intelligence), and the Investor Confidence Project.
Investor Confidence Project
The Investor Confidence Project is aiming to standardise energy efficiency
by creating a transparent and consistent process for projects in commercial and multifamily buildings.
Those in the industry will be aware that every energy efficiency project is unique, and can have its own nuances.
Because of how unique projects can be, creating energy efficiency as a “bankable” resource is a challenge.
This is where the Investor Confidence Project is stepping in by creating a process for developing and delivering energy efficiency projects in conjunction with completing independent quality assurance.
By certifying a project as “investment ready”, financial investors know that a consistent process has been followed
and the quality of the project has been independently verified.
The Investor Confidence Project is gaining traction in the United States and Europe and,
hopefully, it won’t be long before we see a similar program in Australia.
Automated measurement & verification
Measurement & verification is the process of proving how much energy has been saved following an energy efficiency upgrade.
In simple terms this could be done by comparing utility bills, but variations in weather, occupancy, production all need to be considered.
Typically, this has involved an engineer spending hours creating complicated spreadsheets, which required the customer to be an engineer to interpret. And engineers aren’t the cheapest folks to have trawling through spreadsheets (although it’s great business for engineers).
The issue with this manual M&V approach is that to justify the costs the project must be large.
So, smaller projects miss out on the certainty of energy savings afforded by M&V. Even on large projects there has been limited consistency, and vastly different levels of confidence around the energy savings achieved.
Automated measurement & verification, or M&V 2.0, takes the bulk of the manual spreadsheet manipulation out of the equation.
First, this makes M&V a cheaper proposition, opening a wider marketplace to benefit from certainty in energy savings.
Second, it creates a level of consistency and accuracy between projects opening the option of pay-for-performance energy efficiency. Finally, AM&V systems also add a portal for users to view energy efficiency in the same way they view a normal energy bill.
How does AM&V achieve this? It starts with big data, smart meters and artificial intelligence.
Smart meters, and other connected sensors, have enabled data scientists to compile huge amounts of data to train and test artificial intelligence algorithms to model energy savings. The artificial intelligence algorithms can be tested on data sets for hundreds of buildings to refine the models and improve accuracy.
Thanks to the improved accuracy and confidence, AM&V lends itself to pay-for-performance energy efficiency.
With traditional energy sources, there is a cost per unit of energy consumed ($/kWh).
For pay-for-performance energy efficiency, this would be a cost per unit of energy saved.
As an end user this creates the possibility of $0 upfront cost and only having to pay for energy savings if they are actually achieved.
Finally, quality AM&V systems also provide an approachable interface so non-engineer users can interpret the performance of their energy efficiency upgrade.
Remember old energy management systems? They were epitomised by a computer sitting in the darkest corner of the most dimly lit room, under a pile of old energy audits, gathering dust. While their intention was good, the manual intervention that was required to get anything meaningful out of the data was prohibitive. Not only did you have to be a spreadsheet and energy guru, you also needed a lot of time.
Energy analytics or energy intelligence is the big data/artificial intelligence evolution of the energy management systems of yesteryear. At a minimum, these systems “understand” your usage patterns, alert you if something abnormal has occurred, and provide an insight on what you need to do to fix the issue. If you want a more advanced system, they can even detect a specific fault and diagnose a remedy to bring the systems performance back to expected standards. On top of that, it works in near real-time so facility managers have a chance to rectify any issues shortly after they occur, not months later after the utility bill arrives.
Energy analytics makes staying on top of energy savings so much simpler. Whether the service is managed in-house or outsourced, it brings more certainty to energy savings being achieved.
Bringing it all together
There is now a process for creating consistency and transparency across energy efficiency projects, incorporating independent quality assurance, that improves investor confidence. Energy savings can be accurately, and easily, measured with automated measurement and verification, opening the option of pay-for-performance energy efficiency. Analytics can identify anomalies in energy consumption meaning any loss of savings can be quickly rectified, restoring the investment quality.
For a building owner, it puts energy efficiency on the same quality and certainty level as investing in solar or a solar power purchasing agreement. The challenge is getting the same level of engagement with energy efficiency that solar now has.
Kieran McLean is a certified energy manager, certified M&V professional and founder of energy efficiency consultancy EQ esco.
Click here to read the full article.
Industry Tech Synopsis and Comments:
There is no doubt that governments are continuing to support regulation to shape
the future of energy consumption in the built environment. The UK is particularly motivated in this space.
However, since the signing of the Paris agreement in 2016, although some governments have been
slow to act, the private sector has been leading the charge. Particularly in developed markets where the cost
of energy is highest, Australia is one of those developed markets where this has been happening.
The private sector will always be conscious of cost savings and profits, so since NABERS ratings were introduced,
the first phase was to satisfy this criteria to enhance rental return.
The use of monitoring to meet sustainability requirements helped achieve this, however, often it was neglected because the cost to achieve increased ratings was too high and ROI didn’t make sense.
The built environment makes up 40% of the world’s energy consumption. So the next phase will be
how to reduce energy costs and the overall carbon footprint, while achieving a commercial ROI. This will become
an imperative as countries and cities move towards net carbon positive in the next two decades.
Big data software with powerful algorithms that use existing data from building management systems
will create the necessary efficiencies across the asset management vertical to achieve these savings.
Grosvenor and Cambridge University Centre for Sustainable Development have joined together to undertake research into energy efficiency in the built environment (EEBE). EEBE’s focus is on the reduction of primary energy use and carbon emissions in the built environment. According to the International Energy Agency (IEA), existing buildings account for approximately 40% of the world’s total primary energy consumption and 24% of the worlds C02 emissions. There is a great opportunity to make significant reductions in demand, thereby reducing the need for supply, together with the energy costs. Our specific interests are policies to promote energy efficiency in the built environment and developing strategies for the future of energy management. Current and planned research activities target existing buildings and new developments as well as residential and commercial properties, with case studies from the UK and around the world.
Explore possible future scenarios for energy efficiency in the built environment towards 2050.
Examine the interventions needed to overcome the barriers to energy efficiency.
Contribute to the understanding of the current policy landscape, regulations and performance of energy efficiency in the built environment.
Promote knowledge exchange between thought-leaders in research, government and business on the theme of energy efficiency in buildings.
The EEBE Consortium
The work is based in the Centre for Sustainable Development which is part of the Department of Engineering, University of Cambridge. Dr Alison Cooke is leading a multidisciplinary team of researchers in close collaboration with other researchers across the university who are undertaking research of relevance to energy efficiency in the built environment. Grosvenor is the principal sponsor of the research programme. Resources are made available from members of the consortium which include: Grosvenor; EPSRC; SIG; Jones Lang Laselle. Other contributors have included; Arthur D Little, Arup, AEA Technology, London Development Agency, Westminster City Council, Cambridgeshire County Council, and Cambridge City Council.
Inform public debate that will lead to more effective regulatory action.
Deliver research outputs that have practical relevance which will help property owners/developers and other stakeholders establish optimal strategies for energy management.
Provide data-based tools which will facilitate the decision-making processes for key personnel, working to improve energy efficiency in the built environment in order to gain competitive advantage.
In July 2012 the Centre for Sustainable Development organised a presentation of the research conducted in the Centre and the University of Cambridge regarding Built Environment Energy Efficiency at Cambridge. The presentations involved energy efficiency in a wide context, the technical aspects of the subject, as well as the management and policy issues involved.
Click here to read the full article.
Industry Tech Synopsis and Comments:
Some brilliant energy savings technologies that have been developed in recent years
are now in the marketplace, LED lighting for example.
When it comes to HVAC, given the central plant is often complicated and in need of constant maintenance,
the hardware applications to roll up into Energy Performance Contracts have not been prominent.
This is often due to long lead times for approvals, difficulty in measuring performance because of the many
variables such as equipment failures, and often expensive capital outlay to achieve the upgrades required.
In saying this, we believe big data software has superseded the EPC model in several ways.
Firstly, by offering a supervisory platform of smart services, softwares can provide more comprehensive applications. Secondly, by providing transparency across the full property portfolio, there are many opportunities for savings
such as a more productive work force, enhancing equipment lifecycle leading to less capex, a more efficient facility leading to lower energy costs, far happier tenants as well as efficient and accurate reporting.
Operating as a software-as-a-service, this model still effectively shares in the savings,
but since it’s not JUST energy savings, the client is far better off and achieves a faster ROI.
In terms of the motivations of the actors involved, the market for energy efficiency services is close to being “pure”. It brings together companies that sell comprehensive service packages to improve energy efficiency and customers willing to pay to improve their energy efficiency. The services are often marketed with reference to other benefits of such investment, but as the motivation to improve energy efficiency increases – and the share of spending on actual energy efficiency increases – the market becomes increasingly pure (Figure 6.1). This analysis focuses on this pure market to provide a more reliable assessment of the specific market factors affecting energy efficiency investment.
Business models in this pure market vary across countries, reflecting differences in national markets and policy contexts. A common denominator is delivering energy services to clients while reducing energy consumption and thus energy bills. This aspect is supported by energy performance contracts (EPCs) in which the service providers are repaid for the work carried out by the energy bill savings such work delivers to clients. Around 70% of ESCO revenue in the United States was generated.
THE MARKET FOR ENERGY EFFICIENCY SERVICES
through EPCs in 2011 (Stuart et al., 2014). Market actors include energy efficiency consulting firms, equipment installers and others.
Energy savings can also be monetised in capacity markets, carbon markets or energy savings markets through energy efficiency obligation (EEO) schemes. Until recently, such schemes have focused mostly on clients with large energy bills and large project sizes in order to achieve economies of scale. Different types of EPC contracts exist, depending on local conditions. For example, either shared savings or guaranteed savings can be agreed between the ESCO and the customer. In France, the dominant form is the heat supply contract (chauffage).
A distinct and important group in efficiency markets are ESCOs, which typically provide energy efficiency services paid for by an EPC guaranteeing either energy or monetary savings. While traditional energy savings are at the heart of ESCO activity, they usually try to bundle diverse services (such as technical solutions and financing) for their customers. In some cases, the service package may include measures not related to energy at all. Given their readily identifiable nature and potential to stimulate the pure energy efficiency market, this chapter investigates ESCOs in depth (excluding those lacking a clear energy efficiency orientation).
The performance component of the ESCO model is a major advantage as it creates an economic incentive to deliver energy savings; this ensures the investment is made while relieving the customer of the burden of paying up-front costs. Notwithstanding this, EPCs do have transaction costs and further contractual requirements, as savings have to be verified and ESCO services paid for. In some circumstances, ESCOs – as economically motivated actors seeking to run a profitable business – may tackle only simple, low-cost actions and avoid more complicated measures or deeper retrofits. Strong and targeted policy and market maturity may mitigate that risk. Recently, for example, some ESCOs have begun to offer even more comprehensive services encompassing building operations, maintenance and facility management in order to promote behavioural and cultural change at the individual, group and organisational levels to explore new business opportunities in mature markets. The range of expertise that ESCOs bring to a project provides a strong case for contracting them rather than trying to achieve similar energy savings using in-house teams.
Click here to read the full article.
Industry Tech Synopsis and Comments:
The world is spending far more money on energy efficiency than ever before,
however, a large majority of this spend is on new buildings. When it comes to achieving net carbon positive,
there are a few major considerations - renewable energy and energy efficiency.
To be Net Carbon Positive, effectively you need to consume less electricity than you produce.
Advances in technology and the cost of application are providing excellent alternatives for households and some commercial buildings, however, most are installed at the construction phase, retro-fit is still barely cost effective.
Reducing the overall consumption of commercial buildings, even those that are built with the best that technology
can provide, still requires a strong supervisory overlay to sustain the performance and accurately report on data integrity which then leads to best practice equipment maintenance and operation sequence.
To do this, it’s important to engage sophisticated big data software to make the best use of the large amounts
of data available to help facilities managers complete this task effectively.
In the newest buildings, they are producing more data than ever before, and with the right platform, this data can
be very powerful, helping to save significantly on energy and operational costs.
Where large portfolios are concerned, you can begin to compare the latest and greatest buildings to the older
buildings to help with future design and construction. Therefore, a retro fit solution for existing buildings is paramount as this makes up a huge portion of our built environment and often these buildings are the most inefficient.
• Global incremental energy efficiency investment in buildings, including appliances and lighting, has been increasing
and was USD 118 billion in 2015. Total spending on energy efficient products and services in buildings worldwide was
USD 388 billion in 2015. This is 8% of total building construction spending, a share that has been rising.
Global market size of energy efficiency in buildings
Incremental energy efficiency investment in buildings, including appliances and lighting, was USD 118 billion in 2015. The United States (US), China, Germany and France accounted for more than USD 86 billion or 73% of this investment (Figure 5.2). Total spending on energy-efficient products and services in buildings was USD 388 billion. This is less than 8.5% of the USD 4.6 trillion spent on construction and renovations of new and existing buildings globally.
Energy efficiency investment in buildings is driven by policy more than by end users (owners or landlords). In other words, government policy and utility programmes directly induce most of the incremental investment in those countries with the largest investment. Direct spending by governments, though less than 6% of the total incremental investment, induces much more spending by end users, typically through energy efficiency policies and leveraged investment. The building envelope accounts for the largest share of investment in buildings energy efficiency, at USD 237 billion of spending on products and services and incremental investment of USD 56 billion (Table 5.1). This is primarily accounted for by insulation and windows.
Market trends for energy efficient buildings
In non-residential buildings, a 37% improvement was achieved globally in energy consumption per square metre during the period 2000-15. In residential buildings, energy efficiency improvements of 26% were made, primarily in space heating, cooking and water heating (Figure 5.3). Still, several factors put upward pressure on energy use, including population growth, increase in the size of dwellings and a reduction in the number of occupants per home, often associated with rising income. The following subsections evaluate the trends that prompt increases and decreases in energy consumption by end use.
Growing use of appliances, space cooling and lighting have all pushed up demand for energy service, although the effect has been moderated by improved technology efficiency. With growing populations and rising incomes, developing and emerging economies are expected to dominate global construction of new buildings, accounting for 85% of total floor area growth through 2050. As many of these countries have hot and humid climates, they will also dominate future growth in space cooling demand.
China and India have seen the largest efficiency increases in space cooling equipment over the past decade. Japan has the smallest spread between the minimum available technology and the best available technology (BAT), with minimum energy performance standards (MEPS) at 67% of global BAT (Figure 5.4). Many countries have made only incremental improvements to MEPS for space cooling equipment over the past ten years, and remain far from global BAT given recent technological advances. A large gap remains between the lowest (32%) and highest (69%) proximities* indicating that international harmonisation of space cooling equipment standards is limited and has not been a priority for many countries. It also suggests significant potential energy savings, particularly in hot countries.
* The proximity to the BAT is an indicator of the stringency of existing MEPS. The performance level of a specific MEPS is compared
with the performance level of the BAT. The percentage difference between the MEPS performance level and the BAT is the proximity.
Space heating and water heating
Heating energy use (for both space and water heating) accounted for 50% of total buildings energy consumption in 2015, a decrease from 60% in 1990. This downward trend is a result of improved efficiency standards for buildings and heating equipment.
In terms of standards for space heating equipment, policy makers have made significant performance improvements over the past decade. However, as 50% of the market remains unregulated, significant potential exists to increase efficiency towards BAT performance levels and to cut energy use in half (see Chapter 3). Canada has the highest-performing MEPS for regulated space heating equipment, at 48% of global BAT. In many countries, however, not all heating equipment is regulated by MEPS. When considering regulation coverage across all heating equipment and fuel types, the proximity of existing MEPS to global BAT is significantly lower for countries that allow the purchase of unregulated equipment. This difference in performance levels by regulated equipment is most stark in China (declining from 41% proximity to global BAT to 31% when all fuel types are considered) and Korea (39% to 26%).
Note: Proximity to global BAT for each country is weighted based on the country-specific share of space heating or water heating fuel types over the 2005-15 period. For fuel-based heating, the most efficient boiler or water heater is assumed. For electric space heating or water heating, the most efficient heat pump is chosen. In all cases, only regulated fuel types are included.
For water heating equipment, the European Union achieved the largest performance increase between 2005 and 2015; its plan to implement new standards in 2017 will continue this trend. By contrast, Korea has not strengthened its MEPS though the performance level is among the highest of countries reviewed. In China and Korea, regulated equipment is relatively close to global BAT, but a significant proportion of unregulated equipment remains in circulation. For China, factoring in non-regulated equipment, the minimum performance of water heating equipment is only 27% of global BAT.
Emerging issues for energy efficient buildings
Global commitments to reduce GHG emissions create major challenges and new opportunities for the building construction and renovation sector. Existing buildings, usually built to much less energy- efficient building codes, will account for 45% of buildings heating and cooling energy demand to 2050. Over the same period, demand for space cooling will rise rapidly as populations and incomes increase in relatively hot regions of the world. These two trends affect member and non-member countries of the Organisation for Economic Co-operation and Development (OECD) very differently. For example, OECD countries are primarily located in climates that have limited space cooling needs and have a high share of buildings that will still exist in 2050. Many non-OECD countries are in climates that are likely to see significant increases in space cooling demand, but new construction dominates through 2050 (Figure 5.6). Thus, there is opportunity to take on the new challenge with more assertive new building energy codes and equipment standards in non-OECD countries.
Another emerging trend in building energy efficiency is the move towards ‘zero energy buildings’ (ZEBs). Such ZEB policies are in their infancy in most countries and yet USD 15 billion of investment occurred in 2015, including USD 12.5 billion for energy efficiency and 2.5 billion for renewable energy (Navigant, 2015). To achieve global climate targets, policies are needed to integrate energy efficiency and renewable energy investment to achieve ZEBs in new construction although under current market and policy conditions this is not cost-optimal for investors. The European Union currently dominates the market for ZEB construction at more than USD 14 billion (Navigant, 2015); this reflects the enactment of a nearly zero energy building policy framework that prompted recent growth and is expected to stimulate further growth through to 2020.
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