May 2014

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4PLEX Energy™

Analytics and Business Success

Jack Mc Gowan
Jack Mc Gowan, CEM
The McGowan Group

Contributing Editor

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Those who have spent several decades around automatedbuildings have seen a number of technology waves.  For 15 years we’ve been fortunate to have my good friend Ken Sinclair running to chronicle those changes on this exciting venue.  Of course Ken could not accomplish that without his co-founder and able partner Jane Sinclair.  

This article is about one of those evolving technologies that are driving automatedbuildings, as the title implies.  A few examples of past technology evolutions are; the move from mini computers to microprocessors and distributed direct digital control (DDC) or energy management systems (EMS); legacy systems and proprietary protocols migrating to data communications standards like BACnet™ and then middleware (i.e. Tridium), Convergence, Web Services, the Cloud and now Analytics.

Analytics is the next monster trend that will impact energy, buildings and automation.  A primary interest for this author goes beyond the technology itself to explore the business model opportunities that it presents.  Leveraging these technologies with “know-how” can create sustainable competitive advantages for business.  This process will also be informed by how these technology evolutions occur in context with other challenges and opportunities for businesses in this space.  Think about how the advent of distributed DDC caused a business, which was dominated by three manufacturers with vertically integrated businesses selling direct and through distribution channels, to expand into a robust market with over 40 manufacturers selling through multiple channels.  The same was true when middleware spawned a new breed of specialty contractors called “System Integrators”.   Non-technology events like climate-change and the economic downturn that started in 2008, resulted in the resurgence of a retrofit market, driven by energy management and by building improvements.  The savvy business people among us are trying to determine what will be the next major market driver that shakes the industry.  Here is the answer, it is called “Big Data for Buildings” or “Analytics”.

Analytics presents significant opportunities for energy and buildings.  Whether managers own or manage buildings; it is key to optimize performance, control cost and find new ways to leverage greater value from that asset.  Analytics is exciting for the building community because it is a technology rich discipline, which requires professionals who understand every aspect of building operations, along with the complex technology deployed.  These building technology include; metering, Building Automation Systems (BAS), dashboards, middleware, web services / energy services tools, as they are all sources of data for analytics.  With content knowledge in these areas, System Integrators are better positioned for analytics success than anyone else in the building space.  This is also true because integrators have had a renewed focus, during the economic downturn, on; energy management, EnergyStar, utility efficiency rebates, meters, etc. The graphic below is a bit busy but it should provide insight into how these technologies, combined with the 21st Century Electricity Market offer exciting opportunity for integrators and building owners.

Many have come to associate Analytics with Fault, Diagnostics and Detection for HVAC, but they are much more than a software tool to predict when an air handler will fail.  Analytics can be combined, with various Dashboard tools, to provide an essential management tool to unleash value by optimizing building operations and energy, particularly electricity, cost. Electricity is the highest quality form of energy, and is essential for a 21st century quality of life, including education, business and entertainment technology.  Yet electric energy cost represents the largest controllable operation expense in commercial buildings, and the U.S. DOE predicts that these buildings will make up 80 percent of projected growth in energy consumption between now and 2040.  Analytics present an exciting technology to enable building managers to participate in an electricity marketplace that offers huge savings opportunity. The author calls this new market 4PLEX Energy, and it is worth defining.  As the title states, Analytics are the brain that enables this participation in and value generation from this market.  

4PLEX Energy Analytics are the Brain of 21st Century Building/Energy Management

The First 4PLEX Energy Type has been around for more than 100 years; electricity which is purchased from the local utility.  We have always said that the utility system was designed with the idea that energy goes one way and money goes the other, when the bill is paid. 

The Second 4PLEX Energy Type exists because electricity is deregulated in nearly half of the U.S. States, and natural gas is deregulated nationally, so either fuel may be purchased from a “Retail Provider”. Commercial customers are saving money buying through retailers, but again that electric and natural gas energy still goes one way only. 

The Third 4PLEX Energy Type is “Distributed Generation” (DG).  Over the past two decades, there has been extensive implementation of DG from solar photovoltaics (PV).  PV has been deployed at utility scale, but has also become very popular for installation on site by customers.  Solar caught the national consciousness and has been installed at all sorts of commercial and residential facilities.  The popularity has been stimulated by Federal / State subsidies and a variety of business models, like Power Purchase Agreements.  Dramatic decline in the cost of solar technology has further stimulated installation of renewable electric generation as well. Yet renewables are not the only form of DG.  There are still many buildings, often campuses, with combined heat and power systems, traditionally called cogeneration.  With deregulation, and the ever increasing number of “super storms”, cogeneration has seen resurgence, and these systems are now called “microgrids”.  After SuperStorm Sandy for instance, large parts of the eastern seaboard were without power for days, with the exception of places like Princeton University.  Princeton was able to insulate its’ facilities from long outages that occurred after the storm with a campus microgrid. This has also been referred to as Energy Resiliency, and these systems often use conventional energy sources like natural gas.  The author expects to see more and more hybrid systems as well that combine renewable and conventional fueled technology.  In any case it is typical to size these systems to provide part, not all, of a buildings energy needs.  When there is a major electricity outage this requires building managers to use the BAS to shut down non-essential equipment and operate on less power.  During all other times though, managers can operate this equipment to save money by reducing utility purchases. With effective analytics tools, these customers can sell power back to the grid at certain times.  This means that electricity and money can go two ways, and the building owner gets to add a second revenue stream to repay DG investments.  That revenue is from selling power back to the utility.

The Fourth 4PLEX Energy Type is really energy monetization rather than energy itself, and it concerns electricity predominantly in deregulated electric markets.  Electricity is a unique commodity because it is generated and consumed almost instantaneously.  As the reader knows, electricity cannot be stored in a warehouse for use later.  Technology, such as batteries, does exist to store electricity, but these are not yet cost effective at scale. What does exist however is a rich ecosystem of programs and strategies that will pay customers to change behavior and consumption patterns in return for payment.  A good example that requires BAS technology is Demand Response (DR), but the same technology can also be used sell power back to the grid under Electricity Bidding Markets. This type of energy is based upon the time value of electricity, and the use of analytics to develop new strategies.  These strategies allow consumers to be paid for changing electricity consumption patterns, and for implementing methods to sell power back to the grid.  This can begin with energy efficiency to reduce electric consumption profiles, but DR, bidding and market participation all present additional opportunities.  Blending these strategies with microgrid DG creates even greater opportunity for monetization.

[an error occurred while processing this directive] In a 4PLEX Energy market, all professionals will benefit from both understanding and leveraging the technology discussed here. Electricity markets and programs offer real economic value, but applying Analytics is the only way to unlock those benefits for building owners. Clearly the message here goes beyond dashboards to visualize the data and BAS to execute the sequences. These must be coupled with the power of analytical software (i.e. Skyspark™ or Analytika™) that can extract data from building systems, conduct analysis, and be integrated with BAS and other controls to execute sequences at the proper time to generate revenue. There are ample opportunities to gain knowledge in this area, beginning with There are also a host of other conferences like RealComm and IBConn coming up in June of 2014. Pay attention to opportunities for seminars and articles in other periodicals as well. The Association of Energy Engineers, is an international professional association providing conferences and training. Project-Haystack is a relatively new organization that focuses on helping drive standard approaches for sharing device data among applications, such as analytics and visualization tools. The open source community hosts an event called HaystackConnect on a bi-annual basis These are just a few great places to learn more about this exciting area, and this author believes that a voracious appetite for information about Analytics, and Electricity markets, will pay off with exciting opportunities for buildings and businesses.


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