March 2012

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EMAIL INTERVIEWWalter Levesque, Ross Malme and Ken Sinclair

Walter Levesque, business development director energy management systems, Digi International and Ross Malme, partner, Skipping Stone LLC

Walter Levesque
Walter Levesque, Business Development Director Energy Management Systems, Digi International Inc., has held utilities positions such as: Director of CIS, Vice President Finance and CFO.  Levesque has worked for these prominent companies: EnScan, Itron and Hunt Technologies in roles of CFO, Director of Regulatory Affairs, Business Unit Manager, and Vice President of Global Sales. Levesque prior to joining Digi was Executive Consultant for Smart Grid with SAIC.

Ross Malme
Ross is an Owner, Partner and Member of the Skipping Stone Board of Directors. Ross joined Skipping Stone in May of 2011 and leads Skipping Stone’s Smart Grid and Demand Response Practice. This practice includes leading Skipping Stone’s engagement with the US Green Building Council (USGBC) which is enabling LEED points for commercial buildings participating in wholesale and retail electricity demand response programs.

A Wireless “Electricity Internet”?

In the future we expect that essentially every major energy consuming subsystem or device within a building will be IP addressable and will be passing information continuously to the building automation.

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Sinclair:  With all of the buzz about Smart Grid and machine-to-machine (M2M) communications, what are the implications for the buildings industry?

Levesque / Malme:  The evolution of the electricity industry to Smart Grid will be a remarkable transformation. The electricity industry in most developed countries represents the first or second largest capital investment by that nation and historically has not been all that efficient. Just like the financial services, transportation and healthcare industries have gone through an automation process to increase efficiency and effectiveness, the electricity industry is poised to do the same. This will not only consist of a highly intelligent electricity and distribution network but also much faster real-time communication to and from customers. This two-way communication will constitute an explosion in the amount of data to be transmitted and managed by the industry. For building owners this is going to create opportunities to take what was once a power bill from the utility and transform it into opportunities for cost savings and new revenue streams for the building and building owner by providing services to the Smart Grid. It will mean the availability of real-time electricity market and pricing information and the deployment of IP addressable devices on the customer side of the meter so that the customer will know on a detailed basis how the building is using energy and how the building can optimize around constraints like cost, carbon emissions and comfort.

Sinclair:  As a building owner or manager how will wireless communications help me manage volatile electricity prices and participate in revenues from electricity demand response programs?

Levesque / Malme:  There have been numerous case studies on how a building can be connected to the “electricity Internet” through automated demand response (Auto DR) and how buildings can generate significant new reoccurring revenue streams by participating in wholesale market and utility demand response programs. For example, the US Green Building Council (USGBC) last year launched a new commercial building LEED Credit for buildings that participate in certain demand response programs. In addition USGBC is launching a new Demand Response Partnership Program (DRPP) in conjunction with several large investor-owned electric utilities to drive participation rates of LEED buildings in demand response programs. Since buildings consume approximately 40% of the power in the US, this is being viewed as a potential game changing initiative; one which could dramatically change the way buildings are managed and controlled in the future. In fact, the Chairman Wellinghoff of the Federal Energy Regulatory Commission (FERC) has called demand response the “killer application” of the Smart Grid. The problem with getting buildings connected to the electricity Internet has been the cost of retrofitting buildings with the sub-metering and controls. Up to half of the cost of the building retrofit can be attributable to running cable to connect the metering and controls to the building automation system. New wireless technologies like ZigBee and others can now dramatically reduce the cost of the building retrofit, improving the ROI, and the payback period of the project.

Sinclair:  I have heard about machine-to-machine communications from the utility or market side of the meter to my building automation system or subsystems. How does this work and how does wireless help me?

Levesque / Malme:  As mentioned earlier, wireless communications within buildings can dramatically reduce the cost of building retrofits. In the future we expect that essentially every major energy consuming subsystem or device within a building will be IP addressable and will be passing information continuously to the building automation or control system which will be then connected directly through a network operations center (NOC) to the utility, energy service company, retail energy company or demand response aggregator who will then in turn be sending pricing and dispatch signals to the building control system. In this way there will be a constant flow of two way communications between the building and the market. The building will automatically be able to sense a need for service from the market and determine the best way to provide the service while maintaining the comfort and service levels to the building occupants.

Sinclair:  Who are the companies that can help me monetize this opportunity in assessing my potential to reduce my energy bill or generate revenues with wireless communications?

Levesque / Malme:  Many utilities offer programs directly to their customers. Most frequently direct reductions in utility charges are provided to customers who permit the utility to implement an ADR or other peak energy reduction program. Utilities with these programs provide monthly credits directly to participants and, in turn, the utility has the right to reduce the participant’s energy use at peak times. Often the participant provides an alternative source of generation to maintain critical functions. The machine-to-machine communications provide the means to start, stop and monitor the performance of these alternative generators. In the future, the expansion of communication capabilities will enable finer degrees of control, such as non-critical lighting, that maintain the functionality of processes and occupant safety for longer periods of time. This expansion will lead to more efficient use of energy beyond the responses required at critical peak events.

Companies such as Comverge, EnerNoc, Constellation Energy and others contract directly with users. These and similar companies aggregate demand response capabilities and negotiate with utilities or Independent System Operators (ISOs) to provide energy reduction as an alternative bid to the higher cost of supply during a peak event. Machine-to-machine communication and measurement is an important element in load reduction and verification.

Some utilities provide energy efficiency rebates to offset the cost of equipment for both peak reduction and year-round energy efficiency. Efficient Energy America is an example of one of several companies assisting fast food restaurants and other smaller, but important, energy users to automate communications and controls that enable energy efficiency and peak reduction. Utility rebates are often key to making the business case for these smaller enterprises to install the technology and systems. Larger energy users such as office buildings and campuses have long had EMS systems obtained from large industry players with wired technology such as Honeywell , Johnson Controls and Siemens. Machine-to-machine communications enables both automation at smaller locations and the entry of smaller companies with more direct expertise dealing with these specific applications. 

[an error occurred while processing this directive]Sinclair:  How do cloud applications enable automation technology?

Levesque / Malme:  Cloud applications provide near real-time control of devices and access to local information directly to a central site enabling secure management of systems beyond the expertise of local managers. The sophistication of large EMS systems is now applied to smaller businesses that previously could not justify the cost to implement the savings.  Cloud communication eliminates a geographic challenge to companies offering these services by leveraging their expertise and resources across a broad geography. Cloud technology permits a company to remotely monitor and manage energy use. The cloud provides a level of security and scalability that will continue to make energy monitoring and control systems more cost-effective to broader groups of users.

Sinclair:  What examples are you seeing of automation?

Levesque / Malme:  The reporting of information from lower cost sensors continues to improve efficiency in many and subtle ways. LEED buildings are demonstrating the value in monitoring energy use in areas that were previously not of interest. As lower cost sensor technology becomes more widely distributed we will begin to gather data about how energy is used and wasted. This information will lead to changes in design for new construction and retrofitting of existing facilities.

One exciting example of the future is the inclusion of residents in the improved efficiency of a building complex. Apartment building developers are going beyond LEED standards and are now including residents in the process of managing energy use. Certainly the initial construction of an energy efficient building is the critical first step; but by including residents, the ongoing management of energy use provides a significant opportunity to leverage the results. This inclusion of residents will have an impact beyond the initial building. As residents move they will take with them the understanding that technology is not a single application, but rather the ongoing integration of technology into an energy efficient lifestyle.


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