Building Automation: Unlocking the Built Environment
By Georgia Kossoff, with insights from Lincoln BLEVEANS
Gigaton Potential
We already know automation is probably the key to our next wave of efficiency gains. But could it also be the next sustainability unlock? With a carbon reduction potential of 9-14 gigatons by 2050, it’s definitely possible. Read this article to discover how we can live more sustainably within our existing infrastructure.
For reference: in 2019, the world emitted 51 gigatons of CO2-equivalent greenhouse gases. Project Drawdown estimates we need to cumulatively eliminate 1,000 GT from 2020-2050 to keep global warming below 2 degrees Celsius.
You Might Be Interested If...
You get excited about engineering, architecture, or IoT
You’re passionate about cities or urban design
You believe in the power of software to change the world
You’re committed to improving the built environment
Sergii Khandozhko / Shutterstock.com
What You Should Know
The built environment is a massive source of carbon emissions - up to ~40-50%. And because our world is unlikely to ever function without buildings (in fact, the opposite is likely - the total square footage footprint of our built environment is on track to nearly double in the coming decades - discussed here in more detail), it’s critical that we find a way to make them more sustainable.
(Data Source: Architecture 2030, Global ABC Global Status Report 2021, EIA)
Building automation systems (BASs) make buildings run more efficiently. They automatically optimize efficiency by controlling functions like HVAC, lighting, security, and appliances.
For example: Adjusting down the lighting in an office on sunny days, turning off the lights in vacant rooms, and automatically adjusting temperature throughout the day. Smart thermostats alone have a carbon reduction potential of ~7 gigatons!
A BAS can take many forms, from fairly basic systems with significant manual effort (e.g., setting schedules for A/C) to Industry 4.0-esque, IoT enabled “smart buildings” that continuously learn to further optimize energy consumption.
BASs have applications in residential, industrial, and commercial buildings, though the most advanced systems (and significant energy / cost savings) are typically found in large, modern buildings that consume the most energy (think factories, industrial plants, hospitals, and large office buildings).
The impact potential of building automation is huge. Energy waste can account for up to 50% of energy bills (and of course, a huge portion of carbon emissions) and a well-run building automation system can reduce emissions by nearly 40%, since getting to true zero-waste would be infeasible.
Size estimates for the global building automation market vary widely, likely because of the wide scope of products and services that can be included in this market, but typically range between ~$50-150B. However, across sources, strong growth is projected, with average 5-10 year annual growth estimates between 7-12%. This growth is driven by a number of factors, including growing IoT capabilities, increased importance of carbon neutrality, and more advanced technological capacity of new construction.
As shown in the data below (from McKinsey), building automation incorporates multiple products serving a wide variety of functions.
(Data source: 2018 McKinsey report with data from Frost & Sullivan, IHS, Navigant)
It’s important to understand that building automation system deployments are not solely sustainability decisions. A BAS can serve many purposes for a building or company, including:
Comfort and convenience: With a BAS, building occupants can enjoy better air quality, more comfortable temperatures and humidity, and less interference from alarm sounds and maintenance.
Cost efficiency: BASs can reduce costs by improving efficiency and eliminating manual labor in running the building.
Sustainability: Making buildings more energy efficient reduces the carbon footprint of the built environment.
Different products will impact these dimensions differently. For example, the enormous (~$200B) security systems segment is a huge value-add for cost efficiency and comfort, but matters less for energy efficiency.
The good news is that building automation is full of win-wins. Turning off lights during the day is great for both cost and energy efficiency (not to mention the positive mental health effects of daylight exposure!) Load optimization can reduce costs, emissions, and strain on the overall grid. These win-wins are likely reasons why this solution has seen such strong growth.
Key Players
Large BAS providers: Large, often multinational companies like Johnson Controls, Honeywell, and Schneider Electric offer end-to-end building automation systems, typically for large commercial or industrial buildings. These services are often comprehensive, including consulting, planning, equipment, installation and integration, and ongoing service, maintenance and operations.
BAS startups: Building automation startups often offer cutting edge solutions using new developments in IoT, sensors, and AI/ML. For example, Dabbel is a solution that takes over HVAC controls using AI-enabled predictive analytics leveraging weather and usage data. Phaidra provides AI-driven controls for plant operators. Scanalytics deploys sensors in the floors of buildings to capture foot traffic and optimize space and energy management. Arloid uses Deep Reinforcement Learning to optimize energy efficiency, leading to 30% CO2 emissions reduction. While start-ups may be at the forefront of tech innovation, supplanting legacy providers will be challenging, especially for large-scale implementations with extensive RFPs.
Opportunities for Innovation
🏠 Making a case for smaller buildings: Building automation systems have a clear economic and sustainability value-add for large commercial or industrial buildings, but there remains runway to develop solutions and lower capex business models that make sense for small businesses and homes. Currently, only 11% of smaller commercial buildings have a BAS installed. Newer business models including energy-as-a-service and risk-sharing (vendor assumes performance risk and / or keeps capex on its balance sheet so the customer only handles the opex) may help accelerate growth for smaller customers - and the industry overall.
💻 Integrations: Often the installation and integration process for a BAS is daunting or even impossible. Work remains for IoT and cloud technologies to unlock easier pathways to installation and communication across equipment and infrastructure.
🤖 Service model: Many BAS providers have a revenue-model based on recurring service and maintenance. However, the ongoing need for service is a deterrent for customers and at-odds with the ultimate goal of creating a light-to-no touch system. Companies will need to rethink their business models as developing technologies require less and less human intervention.
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Author Bio:
A strategy consultant from Bain & Co with nonprofit experience in clean energy, ocean sustainability, and conservation.
With insights from Lincoln BLEVEANS