Smarter Buildings: The Executive View, Part 1

[Editor's Note: This is part one of a two-part series on Smarter Buildings; you can read part two here, and see all our coverage of smarter buildings at GreenBiz.com/SmarterBuildings.]

At the State of Green Business Forum in Chicago, we convened a luncheon to talk about the buildings that aren't just greener, but smarter. The lunch, sponsored by IBM and moderated by Marc Gunther, brought together senior executives from a number of industries to talk about how to make the most of the emerging smarter building market, a market that promises both rapid growth and big impacts on greenhouse gas emissions.

We convened a similar event at our forum in Washington, D.C. A report on that event is here.

The event featured a panel of experts from some of the leading companies in the field -- among them, IBM, Johnson Controls, Eaton and Schneider Electric. The wide-ranging discussion brought in the deep expertise of the audience as well.

Although the event focused on the development of smarter buildings -- as simply put as possible, buildings that incorporate energy and environmental management controls as a way to boost energy efficiency, indoor environmental quality, and employee productivity -- it started by looking at and beyond those buildings certified under the U.S. Green Building Council's LEED standard. Marc Gunther kicked off the discussion by asking what, if anything, having a LEED-certified building guarantees.

Clay Nesler of Johnson Controls responded: "That's been an area of pretty interesting debate over the years. From time to time there have been retroactive studies of LEED buildings. It's been predominantly applied to New Construction, whlile the Existing Buildings standard has been in place for almost as long as NC, the marjoity of projects have been focused on NC."

He continued: "Some folks have decided it'd be interesting to check on those buildings that have been certified since 2001 -- and lo and behold, there's a wide diversity; some perform much better than they had predicted, most perform better than code, but there are always those few, some of which don't even meet code. When you have the big plaque on the wall, it's sort of like the Good Housekeeping seal, which has led to some controversy. Now, no one at the USGBC wants that to happen. It isn't like anyone is pushing it under the rug, it's just the reality of the construction process."

The USGBC has recognized this, and with the new versions of the standards, performance data will need to be submitted to the USGBC for LEED certification, although it won't necessarily need to be disclosed, even though some areas of the U.S. are pushing for laws that will require that information to be disclosed for all buildings.

The USGBC will publish a study next month that looks at where buildings fall on the spectrum of above, at or below code. But what it comes down to for any building owner or operator, LEED-certified or not, is how the building is commissioned and managed. Building owners and operators need to train their managers on making the most of a LEED-certified building -- and at the very least making sure it meets code.

What Is a Smart Building?

The state of the art of buildings is that they aren't just green, but "smart" -- structures that go beyond simple resource efficiency and indoor air quality, built with the latest technology for building controls and automation.

Beyond that overarching definition, there are a range of definitions as to what constitutes a smarter building.

Dave Bartlett, IBM's vice president of building solutions and a presenter at the State of Green Business Forums in Chicago and Washington, D.C., said that a smart building is one that encompasses the entire lifecycle:

"Buildings, unlike a lot of other manufacturing or how we do software development, is really siloed in its lifecycle. A smarter building brings together those aspects, how it's architected, how it's designed. When the keys are turned over for operation, hopefully can have an operating dashboard to do the real-time measurement of the building and be able to go back and inspect how it's operating.

"Thinking about how retrofit is going to occur and how sustainable is that building? Is it going to have to be ripped down, or is it designed and built in a way that it can be retrofitted and multipurposed. That's the thing about smarter buildings: Not just that they're energy-efficient, but they're efficient in a way that can maintain their operating efficiency, how you do facilities management, and how you do space management. After all, one of the best ways to manage energy is to manage your space very well."

"To me a smart building is a building situation where the occupants, the people, the O&M, the design, the technologies are operated in a sort of integrated way to react and respond to changes in the environment, either to the internal environment or to the external environment, so that somehow that building can essentially adapt itself and be as efficient as it can be along the way," explained Don Davenport, National Business Development Manager of Eaton's Energy Solutions Group.

"Coming at this from an engineering perspective, one of the challenges I've seen in the marketplace is that I haven't seen too many smart buildings. In general there are a lot of challenges. At the owner-operator level, a lot of people don't grasp that each building is dynamic. Each building is unique, you can't apply one silver bullet that will be applicable in every instance. As we have become smarter at understanding the dynamics of how systems are integrated or not within an existing building and how they function well together or not, we find that the dynamics of the building from a smart building perspective.

"In certain industries, in particular, school districts have an approach to maintenance of schools on a day-to-day basis, which have generally relied on the existing staff. And they're handed the keys to a LEED Platinum school and they're told, 'here, run it.' So you have to change the fundamental thinking of an organization about how will you approach the operations and maintenance and tracking of a truly smart building and a smart building inventory."

Slicing the Pie of Buildings' Energy Use

Even though there are relatively few smart buildings in the world today, one of the lunch's panelists, Richard Widdowson, Schneider Electric's Vice President of Safety, Environment & Real Estate, said his company has built one smart building, outside Montréal, and was able to create the smart building of their dreams.

"We were able to build it with everything we wanted to do: It's LEED certified, we're operating it, we're monitoring it on a global basis, we have our own software to help us -- Enterprise Energy Manager, which helps us keep track of how the building is using energy against its targets.

"It was designed to meet the needs of the users of the building, to accomodate them; space, planning, looking at the need of how it's going to be used -- whether it would be manufacturing or office or whatever your needs are. We truly looked at it that way from the design forward.

To make an existing building smarter, Widdowson said, you start with the basics of installing meters, setting up a monitoring program and fixing the basics. "The biggest part of the journey then is understanding the pie of energy from a building. Where does it go? What's going to fabrication, to lighting, to HVAC, etc. Once we understand it, we can go in and start adding and improving the building overall."

Of its 53 locations, Schneider Electric has complex metering systems in place at 44 already, with the rest of them put in place by the end of 2011.

Clay Nesler talked about the metering Johnson Controls has put in place at its new corporate headquarters complex in Glendale, Wisc. The buildings at that campus last year earned a record four LEED Platinum certifications, and Nesler said that the campus has about 175 submeters onsite. "That's a lot of metering for one site, but it's been a very effective tool to fine-tune the operations of the building. We meter lighting, HVAC, we meter everything can think of, essentially, and we do it on a frequency of at least every 15 minutes, and it all gets consolidated together. That's an important thing to do, if you actually have people or software watching it. That is one of the key things -- my definition of a smart building is that smart is as smart does -- but it's not the number of sensors you have, it's what you do with it. It's what am I doing with the information to monitor, control, take action, respond to utility prices, respond to weather and things like that. I think that's the key point."

Widdowson also echoed this point: "The key with managing a building smartly is remoniitoring. As you make improvements you need to keep tracking and watch it; people have a tendency to revert and they won't stay on top of energy usage without remonitoring."

Nesler talked about the findings of Johnson Controls' most recent Energy Efficiency Indicator, a survey of executives and building managers around the world. "One of the big findings of last year's study was how frequently they monitor energy use in their faciliies. We were fascinated in that it's sort of a bimodal distribution: People are looking at energy use typically on a monthly basis or longer -- they're basically looking at their utility bills. This is like going to the grocery store, buying all your items without seeing a bill, putting them in your car and going home, and then getting a bill for all the groceries the next month. It's just not a good way of reducing energy -- it's a rear-view mirror, and it's not granular enough."

The energy survey from JCI found that companies that monitor energy use more than monthly invested twice as much in energy efficiency, and expected twice as much in returns on their investments. "When you measure the people who measure, they produce significantly better results," Nesler said.

Real-World Results for Energy, Costs and Productivity

Among the biggest drivers for green buildings are the emissions savings from increased energy efficiency. But going hand in hand to that benefit are cost savings from the same energy efficiency, and a boost in productivity from workers. Rob Watson, executive editor of GreenerBuildings, writes and researches the Green Building Market and Impact Report, an annual look at the many benefits of green buildings. And the panelists and attendees at the Chicago smarter buildings lunch talked about some of the savings they'd seen or helped their customers achieve.

IBM's Dave Bartlett, after explaining how IBM evolved into building management by way of data center management, talked about a project started a few years ago with a major multifunctional peripheral manufacturers to help drive down the amount of energy used by the hundreds or thousands of printing and imaging devices inside a building.

"We found that we can not only monitor right down to each of the devices; being able to monitor and do real-time adjustment can be significant in terms of the adjustment. You have to understand how they are being used, when they are being used, when they should be going into power saving mode, and who's using single vs double sided mode. Trying to think about the work being performed in the building as well as the energy intensive parts of the building like in the data center."

Depending on what sector you're looking at, there is a widely varying amount of sophistication about energy management and building automation. Don Davenport gave his take as to what managing energy use by looking at utility bills is just note useful.

"One of the big reasons is that, when you think about the cost, you're doing cost mgmt. Energy efficiency and energy savings are great and noble. But when you start to look at your costs, most facilities, especially larger facilities, are operated under a rate structure that penalize you for how much you use at any peak time. It's called demand. And the only way to deal with management of demand is to look at further means to automate the facility and react and respond in such a way that you can control that cost. There's tremendous savings to be made in your bottom line if you know how to manage demand. It's not an energy issue.

"Many times the energy costs is just a fraction of the energy use and cost for demand. You can't manage demand by looking at your energy bills; it's impossible. Because it's already come and gone. And the sad part is that many of you may be paying for that demand for the next 6 to 11 months; it's a peak set that is a fixed charge that now you pay for a long period of time. So you want to be able to have the means to have something in place that allows you to react and respond in a more dynamic fashion, because you can achieve tremendous savings by doing so."

Moderator Marc Gunther asked the question of the corporate real estate executives in the room about their level of interest in adopting building management technologies.

Dan Probst, Jones Lang LaSalle's Chairman of Energy and Sustainability Services, said, "Metering is great, and very valuable and can be a huge step forward for managing energy loads and consumption of energy, but if we're going to make smart buildings let's not stop there. What I want to know is about energy, lighting, plug loads, i also want to know about how the chiller is operating right now, current water temperatures, and how that building is really performing so you can dynamically respond 24/7 and make real-time operating decisions based on that information.

"But you can put great engineers in a building, but you can still have situations where things creep up not so far as to create an alarm, but you can still have an impact on performance. Today, the technology does exist to tell us about that," where now you're reliant on the building operators and managers.

Another question among attendees had to do with ways to measure how a smart building can affect performance and productivity of the workers.

Dave Bartlett said that there have been some studies that show a correlation between smarter buildings and productivity, and JLL's Probst agreed, citing a study from Michigan State last year that found a boost of productivity among workers in green buildings.

"Don't say, 'prove to me that my workers are more productive,'" Clay Nesler said. "The ratio of salary to energy is about 100:1. If my workers are 1 percent more productive, that covers the entire utility bill. So then you back-calculate: How many hours a year would it take to get a 1 percent improvement in productivty? I don't know, it's a couple days. Do you believe that if you had adequate ventilation and nice plants and good lighting and a healthy enviroment, the average employee might take one or two days less off? Well then you've just paid for the energy bill. But it's arguments like that, until we have good metrics for this, that I think make the environment a tiebreaker. Everyone knows you need a return on investment, but all the ties go in the direction of smarter, greener buildings."

How to Create the Future of Smart Buildings Today

After a discussion of some of the financing challenges around green buildings (particularly the PACE financing program that was in the news throughout last year), Gunther asked if financing, or legislation about financing, is the only thing that can bring smart buildings to the fore.

Eaton's Don Davenport said that, having watched the buildings industry over the past 35 years, he's only seen one thing move the market dramatically: Legislation.

"What I've seen dramatic market change in people's awareness or people's willingness to make a change, most of that gets driven when there's a regulatory requirement that says you have to do something. If you want to wait for things like sustainability plans to drive that, it'll happen, but it won't happen in a market-transformational way.

"I saw an application at Greenbuild that goes on an iPad that lets everyone in London walk down the street and see the energy performance of any building, and how that building is doing, in red, green or yellow. And the public has access to this information -- that all comes about because the government requires you to report this information.

"Once we have requirements to report information from this building, and that building has to report the same information, and two different companies own those buildings, there's going to be some really keen attention paid to doing something about the problem. But my experience is that customers are generally reluctant to make those purchases unless they're being mandated, even if it's a mandate within the company, especially in lean times, because it's more critical to maintain jobs. But until it gets pushed that way, that's how it is.

"In new buildings we're already doing this; ASHRAE's standards are good for new construction -- if youre doing something new, it's going to be more energy efficient. For existing buildings, very little is done to get energy efficiency going on a broad scale. Until we get some regulatory push, we're not going to see transformational change on the level that you're seeing at the Empire State Building.

"We have customers around the world who get 30 to 60 savings on their energy efficiency projects. Those savings levels are achievable in almost any building I've been in in my life, it's just a matter of figuring out how to make it happen, and putting it in place.

"We have a long way to go on energy efficiency, and the challenge I see is that it's not sexy, it's not visible. We don't want to the meters, we don't show you that yesterday the building did a good job or not so great a job. That's the kind of stuff that makes efficiency visible. If we made it a little more sexy, and more visible, we could get a little more traction."

Schneider Electric's Widdowson echoed Davenport's point, saying that his company sees the same kinds of savings possible -- and the same challenges to making efficiency visible -- in almost every building they approach, new or old.

Although there is a long way to go in building energy efficiency to levels where real impacts will be felt around the world, all the session's panelists had some optimism about making progress.

Bartlett explained that the technology is out in the world today to build the building of the future, and that IBM and other companies are creating dashboards that give easy visibility to events in smart buildings that would otherwise be lost in a data storm. "The technology is there, it's just a matter of applying it."

And Nesler said: "There's a lot of people still around the world looking at monthly utility bills. I mean, we [JCI] are in the business, and we're just installing meters now. We've even got one of the companies that makes the meters and they're just installing the meters now. So there's a large base of building owners around the world and in the U.S. that aren't taking advantage of this. They get the bill, someone pays it, and someone might look at it. There's a tremendous opportunity here."

Photos by Goodwin Ogbuehihttp://flickr.com/photos/yoshikatsu