Initially the driver was to reduce operating costs by minimizing energy consumption. Making the building more comfortable inside and newly introduced legislation and standards are outpacing that previous driver.
Building energy management systems now installed provide the interface with smart grid to deliver further energy cost reductions through load management programs that can reduce operational costs. The rationale for interfacing demand and supply foes much further because without it, the smart grid's ability to play a major role in cutting carbon dioxide emissions cannot be achieved. To make this market move forward, though, there has to be a commercial gain and a viable return on investment.
In most developed countries, industrial and commercial buildings consume 40 percent of all generated electrical power. The vast majority of these buildings are already fitted with fully automatic DDC controls. Many of these already generate their own power and many are investing in more efficient systems, including renewable power.
Virtual power plant technology provides the opportunity to aggregate supply and demand. EMSCOs and other third parties that manage large real estate properties are in a strong position to move this business forward on the demand side.
This fits in pretty well with what major electric utilities want: A fine-tuned system that automatically receives the data from the smart building control systems and balances supply and demand in real time. Also many smart buildings can provide a clean source of distributed electrical power to meet its carbon reduction targets while reducing the investment that they would need to make in new generating facilities.
It would be to the advantage of utilities to achieve this through aggregating electrical generation and consumption by joining together a large number of plants. This can be achieved by EMSCOs by having contracts at many sites by treating them as virtual power plants.
But what makes this proposition even more attractive is the investment needed to achieve this represents only 1 percent of the total investment needed to deliver a fully operational smart grid and the return on investment in the short term looks much more attractive. Equally important is that private money will be available for about 70 percent of the investment.
There is an almost perfect case for interfacing smart buildings with smart grid because all the stakeholders win. But while utility companies are fully behind interfacing to achieve load management control they are less attracted to buying distributed power from the commercial and industrial sector.
Their business model is to retain central power generation for as long as they can, and load management control will help them achieve this through the first phase of decommissioning their coal-fired generation plant. This program may well be delayed as the introduction of carbon emissions policies are relaxed are relaxed while the present poor economic conditions persist and this gives them a little more time to hold on.
In the long-term, they will be forced to accept power through distributed generation because utilities will not be able to finance both the investment in new generating facilities and the smart grid at the same time. Nevertheless, this policy of "beggar thy neighbor" in the meantime will prevent the adoption of the best solution.
Distributed energy can be operated in several power exchange modes — import and export as well as "islanding" — to achieve operational energy independence from the grid. The flexibility and redundancy provides a huge increase in capability for how and when energy is consumed and purchased. Smart building control architecture is essential for achieving real-time adjustments to the various components of the facility and to optimize the benefits and savings potential.
There is a massive latent potential waiting out there to be exploited by the building controls hardware and software manufacturers. There are strategies that can be adopted to take both the market for load management control and the distributed power interface systems business.