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How to push buildings to new levels of efficiency

A new wave of building efficiency that uses data collection and machine learning to make a building’s appliances use power more efficiently, is being led by San Francisco startups Carbon Lighthouse and Redaptive.

Unlike other efficiency providers  also known as energy service companies  that manufacture and sell appliances or sell electricity, the companies don't sell anything except their ability to reduce a building’s energy use and power bills.

Both companies have been growing rapidly and recently raised venture capital investment to expand.

Redaptive said Monday that it raised $20 million from CBRE and other investors. Carbon Lighthouse announced in March that it raised $27 million from GRC SinoGreen and other investors, including Tesla co-founder and chief technical officer JB Straubel, whose company is also a customer.

Carbon Lighthouse is helping Tesla cut electricity use at the electric vehicle maker's Palo Alto, California, headquarters, by using sensors, data collection, software algorithms and technical sleuthing.

Since work began in 2015, the improvements are bringing Tesla about $91,000 a year in savings and cutting energy usage to avoid more than 100 tons of carbon dioxide per year, according to Carbon Lighthouse.

The company does not generally replace windows, doors or big appliances. Instead, it uses engineering, physics, data analysis and sleuthing to figure out smaller fixes that will improve the operation of a building’s existing appliances. In some cases, the company will recommend and install solar panels or batteries to cut power bills even more.

Helping companies shrink their carbon footprint while also helping them save money on their power bills is a winning combination, said Brenden Millstein.

"For everyone we work with, we make it very profitable and easy for them to reduce emissions," he said.

For everyone we work with, we make it very profitable and easy for them to reduce emissions.
Technical sleuthing is the key, especially in a newer building such as Tesla's headquarters. Carbon Lighthouse engineers got to know the building’s biggest appliances — two large cooling towers, two chillers and some pumps — and found a glitch in the way that two systems were communicating with each other. They figured out how to run the three systems in a way that uses less energy but produces the same amount of cooling.

Electricity sales to the U.S. commercial sector fell 1.3 percent in 2017, to about 1.3 billion megawatt-hours, compared to the previous year, thanks in large part to efficiency measures such as greater adoption of efficient lighting, according to the U.S. Energy Department.

With commercial properties accounting for slightly more than one-third of U.S. power consumption, reducing their usage could help slash the nation’s power usage and greenhouse-gas emissions.

Redaptive has saved one of its bigger customers, a telecommunications provider, $13 million in savings per year, said John Rhow, Redaptive's chief executive.

The company focuses first on replacing lighting across a customer's portfolio of properties. Replacing old lighting with new technology, including automated controls, is a good way to start cutting, Rhow said. Based on the results of the lighting change, the company then suggests additional changes, such as replacing heating, ventillation and air conditioning technology to reduce power use and monthly utility bills even more.

"Size matters," Rhow said. "The way you get size, is you pick the technologies that have the biggest bang for your buck and install it across your portfolio. You get sizable numbers that really get to your sustainability goals."

Size matters.
While Carbon Lighthouse and Redaptive offer similar services and both finance their customers' building improvements, the companies have different product offerings.

Carbon Lighthouse charges a fixed monthly fee and in return provides a guaranteed financial benefit above a certain amount. For example, it might charge $100,000 a year to deliver financial savings of $250,000 a year to a customer. If the savings are greater than the guarantee, the customer keeps the extra. If the savings are less than what was promised, Carbon Lighthouse writes the customer a check to cover the difference. Having worked on more than 500 buildings, the company has had to write a check just three times, Millstein said.

How does it do it?

Carbon Lighthouse crews attach hundreds or  thousands of sensors to appliances, air duct valves and other equipment throughout a customer’s building. This enables the company to collect millions of data points that show how the machines in the building are operating, how much power or other fuel they’re using and how they’re performing on an hourly, daily and annual basis. Anything that uses energy gets monitored and recorded, and the device’s performance is reported to a central program.

The crews also talk to building managers to ask them about the machines in the building and get their views on which appliances might be using more electricity than they should.  

Carbon Lighthouse engineers use data from the sensors, information from the building managers and look at weather, temperature, humidity and other factors to perform forensics on a building’s appliances and devices, and overall operation. They nearly always find something wrong with one or more building functions that, with some tweaking, can cut energy usage.

Alexander & Baldwin (A&B), a real estate investment trust based in Hawaii, recently hired Carbon Lighthouse to make efficiency improvements at three of its properties — a large industrial building in downtown Honolulu, a suburban mall nearby on Oahu and an office building in Maui. While it’s too early to have a full year’s result, Carbon Lighthouse recommended installing better lighting, lighting controls, HVAC zone controls, variable speed drives and monitoring equipment to ensure everything is working well.

"It’s been mostly focused on lighting and HVAC, because those are the biggest electricity draws for us," said Kit Milan, senior vice president of asset management at A&B. "We had some real inefficiencies."

We had some real inefficiencies.
One-fifth of the usual savings that Carbon Lighthouse can obtain for a customer comes from small changes, such as swapping out pipe valves and lighting devices. The rest of the savings comes from watching every device in the building every day to ensure they're working as they should, and if they're not, notifying the customer to ensure the device gets fixed.

Redaptive takes a similar approach: Installing new lighting and other energy-saving technology to reduce power use, measuring the building's power use before and after, and continuing to monitor operations to ensure that energy-using devices in the building are operating properly.

Redaptive charges its customers a price for every kilowatt-hour that it saves the customer from the building upgrades and monitoring. The price is less than what the customer pays its utility for electricity, so the savings accrue right away.

For example, if a company is paying its utility 10 cents a kilowatt-hour for electricity, Redaptive will charge 8 cents a kilowatt-hour, for every kilowatt-hour it saves. The difference is visible in Redaptive's analytics and also when the customer compares its bills from its utility and from Redaptive. The pricing and contract approach is similar to a  residential solar power purchase agreement.

"It’s a matter of finding out what the potential unlocked value of a kilowatt-hour is, and a way to bill for that so the customer feels like they’re truly paying for a service," Rhow said. "We provide saved kilowatt-hours."

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