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Apr 4, 2013

How Real Estate Energy Managers Can Leverage Big Data Right Now

 

Over the past few years, capturing and storing data to create massive datasets—or Big Data—has captured the attention of business executives and energy experts alike. As discussed in McKinsey & Company’s 2011 report, “Big data: The next frontier for innovation, competition, and productivity,” big data presents numerous opportunities for several sectors in the years ahead. Yet, Big Data remains a fairly nebulous concept for many real estate professionals, including those who stand to gain tremendously from it right now: real estate energy managers.

What is Big Data?

McKinsey defines Big Data as “datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze.” We’re not talking about simple spreadsheets full of utility bills and asset information tucked away in various facility managers’ PCs. We’re talking about a single database of all that information and more, easily accessible to stakeholders.

Sound familiar to real estate energy managers? It should, because real estate managers at Fortune 500 companies and large governments are already using very large datasets for security applications, site selection and leasing, tracking real estate costs, and managing maintenance, capital, and other projects. Most of these managers use some form of integrated workplace management systems (IWMS) to analyze this data as a whole in order to optimize facilities management and real estate performance. Real estate energy managers can use such tools, coupled with emerging ones, to effectively leverage Big Data for big energy reductions.

Advanced Energy Benchmarking and Operational Savings

Advanced energy managers are already gaining insights into potential energy performance improvement by looking at monthly usage trends. Which buildings have the highest energy use per square foot? Are there similar buildings (square footage, space type, occupancy, HVAC type) that use less energy? What Energy Star rating do they have?

If hourly or 15-minute-interval energy usage is available through a building automation system, some managers can identify opportunities to save energy through better building operation. Are the lights shutting off when the building is unoccupied? Is the economizer turning on when it should? Are ducts leaking? Sophisticated software can identify problems, in many cases much more comprehensively than an on-site energy audit, and generate work orders if needed to reduce overhead time. The State of Missouri is currently taking this approach using Talisen Technologies for over 1000 of its state-owned buildings, saving over two percent in energy costs each year.

IBM is testing next-generation operational-savings approaches at a “Living Lab” where 2,500 sensors provide real-time data in a 35,500-square-foot building, reducing the electricity bill by 20 percent and enabling more accurate energy use projections and reductions verification than any industry-standard approach could provide.

Using Integrative Analytics for Deeper Energy Savings

To achieve deeper energy savings cost-effectively, timing capital-intensive energy retrofit measures with capital upgrades and other events is key. Identifying the measures up front—so you can plan ahead and act quickly when the opportunity arises—is the trick to implementation. Such planning and action requires new analytics that integrate numerous real estate components such as maintenance, capital projects, and space management.

To effectively time energy retrofit measures, energy managers can first develop those measures. New energy analytical tools such as FirstFuel identify and develop measures, and even estimate a range for capital cost. It does this analysis remotely over the course of a day just by analyzing hourly electricity data (which is sometimes also stored by the utility); no time-intensive on-site energy audit is required. Another new tool is Retroficiency, which provides a high-level look at energy performance improvement potential using the same interval data and, with minimal additional data from the IWMS, can further develop retrofit measures to investment-grade level.

After identifying energy-retrofit measures for the portfolio using remote energy analysis tools or more standard on-site energy analysis, energy managers can create a new retrofit measures database in the IWMS. Having this new database on hand enables managers to integrate energy retrofit opportunities with space management, maintenance and capital upgrade needs, and potentially other real estate issues. Such integration drives down the incremental cost of an energy retrofit, which is the gross cost minus the avoided cost of otherwise required capital or space upgrades.

Tactically speaking, managers can program the IWMS to alert staff when it is the right time for considering one or more of the energy retrofit measures, such as when a chiller or the windows are slated for upgrade or when the space will be fit out for new occupants. In addition, energy managers can create energy retrofit programs that systematically deploy one or two energy retrofit measures in a large group of buildings—each project getting planned and tracked in the IWMS.

Taking such an approach to minimize incremental cost is a good first step toward integrative energy management; the next big step is creating investment cases that comprehensively account for enterprise costs, revenues, and risks.

Identifying More Value with More Data

Managers are often underestimating the value of energy retrofit measures. Energy reductions save energy cost, but also avoid major business-as-usual capital upgrade costs, build enterprise leadership and reputation, drive down employee health and recruiting/retention costs, reduce risk, and sometimes drive revenue growth. A large body of evidence substantiates the existence of such value beyond energy cost savings, and is growing year-on-year.

The key to estimating this value—at least to an order of magnitude of enterprise value—is accessing more data than what portfolio energy managers are used to. Energy managers can gain access to or build databases that track employee absenteeism, insurance costs, promotions cost, sales revenue, tax subsidies, litigation risk, and other metrics that energy retrofits can affect.

Value Verification for Future Investment Cases

In addition to building investment cases and creating tactical plans, managers can use their big data capabilities to verify the capital costs and energy savings of deployed energy projects. To do this effectively, managers will need to follow the International Performance Measurement and Verification Protocol, and reference weather data sets, occupancy information, and other data. Building this set of verified saving data will mitigate future risk and could create an avenue for attracting third party investment. Energy managers can build even more robust investment cases by tracking all of those aforementioned metrics that indicate the value beyond energy cost savings.

That is a lot of value available for energy managers right now, just by using their own existing system and a little ingenuity. If you are an energy manager that is already using one or more of these approaches, we would love to hear from you at dr.retrofit@rmi.org.

This blog post also appeared on Building Operating Management.

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Images 1, 2 and 3 courtesy of Shutterstock.com.

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