September 2007

Innovations in Comfort, Efficiency, and Safety Solutions.

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Energy… how do you turn Buzz into Business?
The simple answer to that question is that automation is the “enabling technology” for demand response.


John J. "Jack" Mc Gowan, CEM
Energy Control Inc
GridWise Architecture Council Chairman

Contributing Editor

There are several comments I have made about energy in recent presentations, but invariably I have started a number of talks by asking a simple question…”do you remember when DDC (Direct Digital Control) systems were EMS (Energy Management Systems)? With $75 per barrel oil and dramatic price spikes forecast for electricity and natural gas costs, the subject of energy seems to resonate with everyone these days. Add to that the emphasis on global warming and initiatives like the American Institute of Architects (AIA) 2030 Challenge, focusing on improving buildings as a major way to positively impact the planet, and you have what we might call “buzz”. In fact it might be said that the new convergence is energy and building automation.

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Buzz is good, but how do you turn buzz into business? Combining energy and building automation with a profitable business model is the primary focus. In an industry that is in a death spiral towards least cost, there is a tremendous need for business strategies that allow integrators to earn income and revenue that reflects their skills. Readers, who have seen my articles before, already know that Energy Control Inc. (ECI) has put emphasis on these ideas for three decades. In addition to automation and integration, ECI is also an energy service company (ESCO) and does turnkey energy projects for its customers. All of that however may not seem to make sense as a business model for many integrators. Yet many integrators already provide controls to ESCOs as part of performance contract projects. This can be a great source of business, and it is not dependent on the new construction market. Energy retrofits can be expected to continue to grow in popularity. The first major business opportunity for integrators will be to rethink control sequences from an energy perspective. Over the last two decades, the emphasis with DDC has been to meet specs and to provide comfort. At a minimum, integration contractors should be mining their customer database to propose energy upgrades to optimize the performance and efficiency of their existing buildings. This makes sense, but it can also open the door to one of the most exciting new building industry business opportunities to come along in years: demand response.

Reliable Controls Over the past few years, I have written numerous articles on GridWise. Demand Response is the first business opportunity to grow out of this movement toward Smart Grid, or what some call electric system interoperability. Demand response is capturing tremendous attention right now and this edition of is full of articles on the topic. The question however is how do automation integrators make money with demand response? The simple answer to that question is that automation is the “enabling technology” for demand response. In order to automate a response to a request to reduce electric demand, a customer must have an automation system that can sequence off or reset strategic loads. Unlike performance contracting where there are very long sales cycles and the company must have engineers on staff and relationships in the financial industry, demand response has a straightforward sales process. Independent System Operators (ISO) are wholesalers for electricity and they are driving the utilities, or retailers, to develop programs that leverage automation technology to help take pressure off of a strained electricity system at critical times of energy use. The media is beginning to report more and more brown outs and black outs across the country, but this is just the beginning. Demand Response is a critical utility strategy to avoid power interruptions by leveraging the customer side of the meter as a critical way to relieve pressure on the system by reducing electric demand and sequencing on-site generation.

In this brief article, it is impossible to completely outline how to get into this business, but the must attend event on this topic is coming up in October. The Demand Response - DR Expo will be in Chicago on October 16 and 17 of 2007. Constellation New Energy, a leader in the energy and demand response business is a platinum sponsor of this event and they along with others will be on hand to share critical information. This event will be a cross between an educational event and a sales meeting that will offer integrators an unparalleled opportunity to capture new profitable business. Don’t miss the DR Expo and take advantage of the resources provided at and the GridWise Architecture Council site


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