Connecting BEMS in smart buildings to smart grid

By Allan McHale, Memoori Business Intelligence

Just look down a listing of enterprise energy management suppliers and you will find a mixture of some of the world's leading IT organizations and start-up software companies fighting hard to get established in this burgeoning market.

The two major prongs of this business lie in making smart buildings much smarter and the smart grid fully ADR right across the transmission and distribution network by providing a real-time analysis of supply and demand. These two markets alone have the potential to spend upwards of $225 billion by 2030 with smart buildings looking the more attractive and robust business. Installing smart grid is highly dependent upon changes to the regulatory control procedures and the utility companies finding the $2 trillion investment needed to deliver a fully operational smart grid around the world.

In the meantime, the utilities are coming under increasing pressure to reduce carbon dioxide emissions and are being forced to phase out their fossil fueled generating plants. In the U.S. particularly, they are encouraging their major consumers, coincidentally smart building owners, to join demand response programs and are entering arrangements to take their distributed power.

This provides a ready an fast-growing market for all those companies that have the software products and skills to interface buinding energy management systems (BEMS) in smart buildings to deliver demand response and distributed energy. This is therefore becoming a niche market, not least because we can't wait for ADR to produce a fully operational smart grid.

This market is currently worth around $350 million but the technical market potential to retrofit these two functionalities to smart buildings has a potential value of $30 billion and we forecast it should reach $2.65 billion by 2017. This is therefore a sizable business, but it is made much more attractive by the fact that by far the biggest component is the unrealized potential in existing smart building stock. It may be a smaller market, but it delivers a solution to a problem that must be solved — it can't wait for smart grid to be in place or smart buildings to incorporate a comprehensive enterprise energy management.

So for all of the budding energy management suppliers, that's the good news. The bad news is that there are some other suppliers out there that are hungry for this business. These are BEMS suppliers and energy service companies (ESCOs). Although not particularly well-known for their energy management prowess, they have been acquiring companies with this expertise for the past half-decade. These companies include Johnson Controls, Honeywell, Schneider Electric, Siemens and ABB. They are the world's leading suppliers and the last four are also leading suppliers of smart grid products and services.

This puts them in a very strong position for two reasons:

• They are in daily contact with the owners of smart buildings who are existing clients both through installing their BEMS and also taking their ESCO service. This gives them a massive heritage estate to work with.
• They have the practical ability to bring all the various electrical loads in the building together and not all are being controlled through BEMS. Both are important factors that will influence buying decisions.

Despite their strong potential hold on this market, energy management suppliers have an important role to play. This is likely to be unrealized unless they form alliances with BEMS and ESCO companies or their system integrators. This is particularly true for smaller energy management companies where they will need to target priority markets. This is a fragmented market with hundreds of thousands of smart buildings and identifying the buying influence will not be an easy task.

It is a different matter for major energy management companies because most of their clients will be owners of large smart building real estates and they will have contact with sources that will influence buying decisions on energy management purchases. These companies will be targeting comprehensive energy management systems in smart buildings. However even here, the interest in forming partnerships with the major BEMS companies.

Schneider Electric has just signed a strategic technology agreement with one of the world's major software companies, OSIsoft. OSIsoft will provide their PI System, a leading infrastructure technology for the management of real-time data and events while Schneider Electric, a global specialist in energy management, will provide innovative energy management solutions.

Connecting BEMS in smart buildings to smart grid to deliver demand response is a niche market that is needed now. It could be provided through smart buildings installing comprehensive energy management or waiting 10 to 20 years before ADR is operational within smart grid in the developed countries of the world.

The cost of installing it is less than 1 percent of the investment needed to deliver smart grid. The return on investment is attractive and it reduces the carbon dioxide emissions and gets the utilities companies out of a hole.

One thing liberals and conservatives agree on

We're often told how far apart the red states and blue states are. Aside from the obvious stalemates and squabbles in Washington, conservative and liberal Americans watch different TV shows, eat different foods, drive different cars and listen to different music. But there is one thing lefties and right-wingers seem to agree on: Using less energy is a good thing.

Because when you inform an American about exactly how much energy they are consuming, it doesn't matter whether they voted for Barack Obama or Mitt Romney. Either way, they want to use less electricity.

Given the news stories about compact fluorescents vs. incandescent light bulbs or hybrid cars vs. sport utility vehicles, this might come as a surprise. However the evidence — as gathered by Opower — backs it up.

The survey examined the energy use habits of customers across party lines (conservative, liberal and unaffiliated) from several regions of the country. The differences between political ideologies and geographical locations were quite close. All saved energy, and it didn't much matter how they were affiliated politically.

In the Mountain West region, liberals saved a little more than others, but only by a single percentage point. In the Northeast and Southeast, conservatives saved a little more than the liberals or the unaffiliated. So, in the end, people will save energy when they participate in programs that inform them of their electricity use, but the exact percentages can vary a bit from place to place.

There is, however, a "backfire" effect the surveyors noticed that is exclusive to conservative users. It seems that when a customer learns they are using less energy than average, the liberal-minded customer will continue doing what they are doing. The conservative-leaning one, however, will sometimes increase their energy use — perhaps feeling they're off the hook. This behavior was not observed in liberals or the unaffiliated.

The reason for this backfire effect was not fully explained by the analysis, but it appears that providing detailed information on energy use to customers who are already energy efficient is still well worth it. The more information people have, the more behavioral changes they will make in the interest of using less energy.

When it comes to trying to encourage customers to make positive behavioral changes on energy use, tech firms and energy companies can leave politics out of the equation. This is good news because making human beings of any ideological bent change their behaviors is already difficult enough.

DR the talk of DTECH

Every year, the editors of POWERGRID International and Electric Light & Power magazines, our conference chairs, our logistics people and our conference staff work hard to put on an informative show at DistribuTECH. Every detail is meticulously planned out. One thing we can't control, though is what people want to talk about when they finally do come to the show.

I did notice a few topics, though, that people wanted to talk about more than others. Here's my top five:

1. Demand response

The single most often-mentioned technology at DistribuTECH 2013 was demand response. Far and away, I heard more about good old automated DR than I did about any other smart grid technology. Silver Spring Networks introduced a demand-side management system meant to boost DR programs. Honeywell and Opower rolled out an energy management platform to help utilities in their efforts to manage peak loads. Also, Alstom Grid and Capgemini paired up on a cloud-based demand response management system. That doesn't include just the general "buzz" at the show about DR as an idea. Just about everyone I spoke with had something to say about the application of automated DR.

2. Analytics

"Big Data" is becoming quite a buzzword. At the show, exhibitors would often tell you (with a note of either apprehensiveness or excitement in their voices) about the brain-twisting volume of data that their systems are expected to take in, digest, slice, dice and finally serve up as something a grid operator can easily understand and use. In the press room, I was asked by another reporter who the "top" provider of data analytics for utilities is. While I wanted to be more helpful, I couldn't answer the question because this technology is still too new. There isn't really a Nike or an Apple for data big data yet and there are so many different approaches you could take, there might not ever be.

3. Last gasp capabilities

This is a phrase I learned shortly before the conference, and I heard some incredibly detailed conversations about it — including some high-level engineer talk that went a little beyond me, honestly. But it's easy to understand the advantage offered by smart meters with capacitors that can send out an information-packed "last gasp" back to grid operators in the microseconds before power is cut off. This information, which can include but is not limited to the customer's account, when and where the outage happened, etc., could be crucial to the development of a truly "self healing" smart grid.

4. A "bite sized" approach to smart grid

This is not to say that smart grid projects are becoming less ambitious. It's more like utilities and technology providers are approaching them differently — if not backwards, then at least sideways. Instead of trying to build out a smart grid meter by meter and creating a full-on AMI system from whole cloth, some companies are looking for a way to deliver the benefits of a distribution automation service to a utility in short order. Hence the phrase "bite sized" smart grid. What utilities want today is something they can quickly realize benefits from without a large capital investment, then turn around to their customers and say, "Look, we did X, Y and Z for you." Saving money is nice, but sometimes it's even better to be able to say, "We kept the lights on when other utilities didn't, and it's because we invested in this technology." 

5. Utility customer apps for smart phones

In handling the dozens and dozens of news releases sent from the exhibit hall floor, I saw several companies releasing brand new apps designed to help customers manage their energy use at home from anywhere they carry their smart phone. Most major utilities have already at least taken a stab at releasing a customer app that does things like let the customer pay a bill or view energy usage. The more savvy tech providers are building apps with functionalities such as remote smart thermostat operation, social media-based outage reporting ... or better yet, combining all of these things into one program. And of course bonus points for those providers who are able to roll out their apps to the most gadgets at once — not just iPhones, but also iPads, Androids and others.

Baby, it’s hot outside

When I was small, I used to march around our farmhouse in the winter singing a version of “Baby, It’s Cold Outside,” that old popular jazz tune that was revived multiple times by more artists than I can personally count. I still admit to humming that tune on occasion. Okay, yes, sometimes I still sing it, too, but this summer I’ve done my own adaptation of the chorus to “baby, it’s hot outside.”

As summer temperatures cook not just the relatively small percentage of sweaty people here in Oklahoma, who are rather used to summer heat, but also folks in places as far north as Minneapolis and Boston, concerns about whether our power infrastructure can keep up with the demand are inevitable. And, with a few minor exceptions, this major heat anomaly hasn’t really caused too much trouble for utilities. But, then again, utilities are planners. It’s the job of planners---you might even say their calling---to be prepared for anomalies.

And some of that planning includes demand response (DR) programs. This week, Con Edison's New York customers used a terawatt hour, or 1 trillion watt hours of electricity, according to the utility. (I love the wording of the press release on this heat wave response. They wrote: "That's a lot of juice. In fact, it's about the amount of electricity Vermont uses in two months.")

Con Edison gave credit to their DR program for curbing what could have been an even more record-breaking response. They assured people that, while a terawatt is a whole lot of power, things could have been worse if they didn’t have customers willing to respond to “calls for conservation,” as the company labeled them.

EnerNOC, Inc., a provider of demand response applications and services, announced that its DemandSMART network was dispatched at record levels this July as well in response to the heat wave---or “heat dome,” as the weather guys have been labeling it.

EnerNOC's network responded to a series of dispatches from grid operators and utility partners, providing about 1,230 MW of DR overall. One of the grid operators that EnerNOC works with, PJM Interconnection, set a new record for peak power use in July at 158,450 MW.

Demand response has been so helpful, it even got press in The New York Times this month. The paper discussed demand response options with North American Electric Reliability Corp.’s (NERC’s) John Moura, manager of reliability assessments. Moura labeled the DR available around the country as “imperative” in weathering the heat.

The Christian Science Monitor also did a piece on the wonders of energy efficiency and demand response in this oppressive heat, and they also quoted NERC, though they chose Mark Lauby, vice president of reliability assessment. (And, along with DR, they cited a weak economy as a factor. The concept is: We didn’t being this race at the starting line, but, instead, a few feet behind the starting line. So, the recession dip has helped demand not get too darn crazy, even with the heat. What they’re basically saying is that things would be a lot worse if the recession hadn’t already cut back on that power demand.)

So, worries about whether we have enough power seem unfounded, even as temperatures continue to break regional glass ceilings and power use sets national records. There are small issues in isolated pockets: Oncor is currently struggling to return power to a Dallas neighborhood for an outage cause by trees and not heat, though heat is exacerbating the problem. Baltimore Gas and Electric is getting complaints about their demand response program from people who think their air conditioning was turned off for too long during the blistering heat. And here in Tulsa, the local news is reporting record setting power use for the city and surrounding area.

Overall, though, we have to all admit that this old, cobbled together, partially updated, partially archaic power system that we have is doing very, very well for the stress we’re putting her under this summer. She keeps working, chugging along despite the desire we all have to sing “baby, it’s hot outside” and turn up the thermostat a couple of degrees.