It's no surprise that businesses can slash their energy bills with better building performance. But the upfront costs of the technology to boost performance can be a deal breaker: The American Council of Energy Efficient Economy predicts that $250 million dollars will be spent over the next decade on commercial and industrial building energy upgrades.
WIth its Building Dynamics wireless sensor system, newcomer Seldera hopes to help building owners who are struggling with performance woes – and watching their capital expenditure. The company has developed a lightweight, wireless sensor system to make existing buildings smarter.
It's not really free: Customers pay no upfront costs, but agree to pay Seldera an amount equal to half of their energy savings each month for two years. Still, customers get lower electric bills -- even after Seldera's cut is factored in -- without having to make an upfront investment. Essentially, Seldera provides the system and splits the benefits with its customers.
Of course, this is hardly the first sensor-based building system to hit the market. Many other companies -- including Siemens, Johnson Controls, Cisco (which bought Arch Rock in 2010), EnOcean and others -- also have developed sensor-based technologies to reduce buildings' energy use and improve their performance. But high costs have long been a barrier. It's one that Seldera thinks it can help remove.
According to Andreas Savvides, Seldera's lead scientist and an associate professor of electrical engineering and computer science at Yale University, the beauty of Seldera's system is as follows:
- It costs a third of a conventional building automation system. Savvides anticipates the cost of equipment to be less than $10,000 for a 65,000- to 80,000-square-foot building.
- It's expected to reduce yearly electricity costs by about 20%. This system saved the owner of a 65,000-square-foot building $30,000 in the first year after it was installed out of an original annual electricity cost of $150,000, Savvides says.
- No upfront cost to the building owner. The Company takes 50 percent of the savings for the first two years, which pays back the cost of the system.
- The system is wireless and battery operated for easy placement and installation.
- It provides real-time information to "fine-tune heating and cooling operations, adjust lighting conditions, shut off unused equipment and ensure that all systems are performing within their energy specification," according to a blog post by Savvides.
- It can automatically turn off equipment, such as copiers, at designated times.
- It uses less sensors than other sensor systems, reducing the cost and potential for failure.
- Because it reduces the wasteful use of building equipment, this system also decreases the cost of replacing that equipment.
- It compliments and enhances existing building automation systems. It can easily be installed to supplement older building-monitoring equipment, meaning there's no need to upgrade an old system. In that case, it can control the other system and streamline the process to make it easier for building owners to understand the data and manage their consumption.
He claims that his system goes after the low hanging fruit. For example, in buildings where this system has been installed, Seldera found fans, motors and heating and cooling systems that were running unnecessarily, at times when they weren't needed. I also found intriguing that the company monitors -- in fine detail -- how each subsystem consumes electricity.
Because of this, Building Dynamics is able to notify building managers immediately of equipment redundancy – two pieces of equipment doing the same thing – or unusual behavior that could signify a problem. Like your mother, a system like this always knows when something's not right. But compared to other building-monitoring systems, Savvides claims his is a "more straightforward and lightweight process for building owners."
Cost of the System
The company's most common model is a partnership, mentioned above, in which the building owner pays no upfront costs and enjoys immediate savings. Seldera takes a cut of the savings for two years, after which building owners receive more of the savings.
The company has found that buildings with continuous use -- such as hotels, nursing homes and hospitals -- are most interested in the accountability of Seldera's systems and equipment. These buildings tend to realize the most savings due to the high energy use that comes from 24-7 occupancy. In addition, these buildings tend to have more equipment, such as motors, copiers, freezers, and large heating and cooling systems.
However, the sensing system is still in the pilot phase. And that means it has still got plenty to prove in executing its business model. For example, it will need to prove the reliability of its system in many different situations, demonstrate that it can save building owners more money than other systems overall and figure out which buildings will yield it a profit.
Of course, paying zero down will reduce the risk for customers and make them more likely to give this system a chance. But with the ability to shut down equipment, too, buildings with "mission critical" equipment – such as hospitals, which also often have high energy bills -- are likely to be wary of new technology until they see a long track record of reliability with other clients.
Still, the value proposition is compelling, and Seldera should be able to find less mission critical buildings to be its early adopters until it can prove itself to potentially higher-value customers such as hospitals. In my opinion, with its low cost, easy installation, ease of use and cost savings, Seldera will be well-poised to take the building automation system market by storm if it can successfully emerge from the pilot phase.