Why smart buildings are so essential to the smart grid
By: SGN Staff
Quick Take: I've talked about Demand Response 2.0 - also known as Advanced Demand Response - for some time. Here's the problem - it's complicated and it's slow to emerge. But we can get part of what we need via smart buildings, as market researcher Jim McHale explains below. What he refers to as Enterprise Energy Management (EEM), we might call building energy management or even smart buildings. - By Jesse Berst
By Jim McHale
Consider today's Enterprise Energy Management (EEM) suppliers. You will find a mixture. Some are world-leading IT organizations. Others are small startup specialist software companies fighting hard to get established in this burgeoning market.
The two major prongs of the business lie in making 1) smart buildings much smarter and 2) the smart grid fully compatible with advanced demand response (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. Smart buildings looks to be the more attractive and robust sector. The advanced smart gird is highly dependent upon changes to the regulatory procedures and the utility companies finding the $2 trillion investment needed to deliver a fully modern smart grid around the world.
A ready market... for those with the products and skills
In the meantime, the utilities are coming under increasing pressure to reduce CO2 emissions and phase out their fossil-fueled generating plants. In the U.S. particularly, utilities are encouraging their major customers, coincidentally smart building owners, to join demand response (DR) programs. They are also entering into arrangements to take distributed power from those customers. This provides a ready and fast growing market for companies with the software products and skills to interface management systems (BEMS) with smart buildings to deliver demand response and distributed energy. This is therefore a growing niche market, not least because we can’t wait for ADR to produce a fully operational smart grid.
This market, which we have been tracking for the last 18 months, 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 $2.3 billion by 2017. This niche market is made even more attractive because the biggest component is the latent potential in existing smart building stock. It may be a smaller market but it delivers a solution to a problem that has to be solved. The world can’t wait for the smart grid to be fully in place or for smart buildings to have a fully comprehensive EEM.