Prabhu Ramachandran, CEO and co-founder of Facilio looks at the economics of smart buildings.
Picture a world where buildings are not merely concrete structures but living ecosystems that respond intelligently to the needs of assets, occupants, and the environment. The convergence of sustainability principles and technological advancements has given rise to smart buildings that minimize their ecological footprint and present substantial economic advantages.
This article explores the intricacies of smart buildings and their economics in terms of tangible and intangible ROI, long-term gains, and the indispensable role of technology in shaping a more sustainable future.
Why are smart buildings SO important now?
Buildings, whether built or made smart, with a harmonious blend of architectural ingenuity and technological prowess, minimize their environmental impact while optimizing energy consumption, promoting occupant well-being, and improving operational efficiency.
Think smart lighting systems that adjust based on outside weather conditions or intelligent HVAC systems that adapt to real-time occupancy patterns. Refrigeration systems that self-correct set-points to avoid excessive energy consumption and minimize product loss, elevating customer experience at retail stores.
With global concerns over climate change and resource scarcity, the demand for sustainable infrastructure has escalated, prompting commercial buildings responsible for a large share of global emissions, with over 70% of their emissions coming from electricity use.
Deconstructing core components of sustainable buildings
A sustainable building blends design, technology, and conscious choices, including energy efficiency, water conservation, waste reduction, indoor air quality, and material sourcing.
While energy optimization across such vast asset classes and buildings may sound expensive and complex, technology enables cost-effective testing and deployment of energy strategies across diverse asset classes.
Platforms convert data into actionable insights, eliminating guesswork.
For instance, imagine smart leak detection and control for refrigerants with a data-driven, centralized building management system that enables cloud-based optimization at a portfolio level; imagine the operational efficiency and cost savings you could achieve!
The energy saved not only lowers utility bills but can be sold back to the grid, creating a new revenue stream. Further, the accurate and real-time data insights with advanced analytics create a thriving ecosystem of efficiency and foster ingenious innovation, laying the path to decarbonization.
Recognizing the intangible value in smart building ROI calculation
Consider this: You invest in a sustainable smart office building with advanced air quality monitoring. Employees experience enhanced well-being, leading to increased productivity and reduced sick days.
How do you measure the ROI of healthier, more productive employees? The monetary value might be elusive, but the impact is undeniable. Intangible benefits like brand reputation and occupant satisfaction contribute to long-term gains that surpass immediate financial returns.
The question shifts from "What's the cost?" to "What's the value?"
Smart technologies enable real-time data collection, optimizing resource utilization and operational efficiencies.
Instant gratification vs. long-term gains: Understanding compounded savings
Long-term gains associated with smart buildings often outshine the immediate ROI. The concept of compounded savings becomes apparent as operational costs decrease over time with buildings that learn from their own data, optimizing energy consumption year after year.
Case in point: Aligned with the UAE government's 'Net Zero by 2050' vision, the Dubai World Trade Center (DWTC) is actively laying the foundation for a low-carbon economy.
However, challenges stemming from outdated systems - lack of real-time insights and isolated processes resulted in penalties, high energy usage, and unplanned downtime.
DWTC needed centralized AI and IoT-driven property management to optimize energy across its portfolio.
The implementation of this platform led to a rapid identification of 8% energy wastage reduction within three weeks, potentially saving $136,126.45 USD annually!
It's a virtuous cycle of economic efficiency and enhanced user experiences.
From hurdles to opportunities: Decoding investment barriers to a sustainable future
Any new initiative encounters a familiar foe: investment barriers and smart buildings can demand huge capital investments. Or that is the prevailing conception.
Here’s a perspective change that flips the narrative: these barriers are pathways to innovation.
Born to curb these barriers, platforms are absolute game changers for decarbonization. They integrate with existing systems to centrally deploy energy strategies, unlocking compounded savings.
Using simple and customizable dashboards, platforms allow you to drill down into portfolio-wide energy consumption by service usage, end-use breakdown, baseline comparisons, and cost impact.
It clarifies portfolio energy consumption and identifies optimization opportunities. This way, you optimize what’s already available and make newer investments only with data-backed confidence in what’s best for your organization’s unique structure and needs.
After adopting such a cloud-based IoT-led platform, real estate giants British Land and Brookfield recently achieved a Platinum SmartScore Certification for some of their iconic properties–a coveted win for many CRE portfolio owners.
- The platform-first technology tackled use cases across the O&M spectrum, seamlessly integrating all aspects of asset maintenance, energy optimization, and occupant experiences to take a holistic approach to decarbonization.
- This integrated ecosystem democratized operational data, enabling unified visibility across buildings and better decision-making.
- The ML-based, real-time data analysis and benchmarking provided actionable insights, shedding light on the most effective energy-saving strategies.
- They could maximize energy efficiency with powerful automated reporting and analytics.
- Cherries on top, the holistic approach enabled better tenant satisfaction, improved occupant comfort, reduced operational outlays, and fostered high-performing smart buildings.
The value of these outcomes and the cost savings compounded across the portfolio quickly offset the initial investment in technology, which sits at the heart of all things O&M, enabling teams to achieve operational excellence and sustainability goals–hand-in-hand, the way it was always supposed to be.
Shaping a sustainable future with a tech-driven approach
The more we delve into this topic, a fundamental truth emerges: technology is our guiding light.
Leveraging the power of the Internet of Things (IoT), buildings evolve into sentient entities, adeptly meeting occupants' requirements while finely tuning resource consumption. AI-fueled analytics unveil intricate energy usage patterns, empowering proactive measures.
Capitalizing on data-driven insights, building managers can meticulously calibrate operations, fine-tune energy utilization, and implement predictive maintenance protocols. These capabilities extend seamlessly across entire portfolios, effortlessly adapting to scale.
The urgency to act innovatively and promptly is paramount in a world grappling with heightened global concerns and intricate regulatory demands. Delaying action could lead to substantial penalties, soaring operational expenses, and reputational harm.
Smart, sustainable buildings transcend mere steel and circuits; they serve as channels for ingenuity, prosperity, and a more eco-friendly tomorrow. Enterprises attuned to this reality, pursuing a comprehensive tech-powered route to decarbonization, position themselves advantageously, safeguarding their ventures against the unpredictabilities of the future.