By Dan Probst
From the November/December 2015 Issue
Think older buildings can’t handle modern equipment systems? You’re not alone—but this is a misguided notion. Many facility owners and managers assume that retrofitting older buildings with smart building systems and management tools involves too much capital investment and not enough return. While that may have been true in the past, cloud computing and affordable technologies like real-time data and analytics software, submetering, and wireless sensors have changed the financial equation.
On average, intelligent buildings offer lower operating costs than those with legacy systems. According to the McGraw Hill Construction SmartMarket Report, intelligent buildings use 20% to 40% less energy and result in 8% to 9% lower operating expenses with valuations 7.5% higher than those with legacy systems. While return on investment (ROI) varies widely among individual buildings, every building type and nearly all historic buildings can benefit from smart systems and management platforms.
Precise definitions of a “smart” building—otherwise known as an intelligent, automated, high-performance, integrated, or advanced building—vary, but these terms generally refer to a building in which at least some vital systems, such as life safety, telecommunications, security, HVAC, and the like, are controlled by computers and are programmable. Building automation systems (BAS) are a familiar staple of modern office buildings, but today’s technologies make it possible to boost building performance and energy efficiency more than ever before in all types of facilities.
It’s Payback Time
Retrofits come in all shapes, sizes, and investment levels. However large or small the scale, technological advances have made for less complicated, less expensive retrofitting today than even just a few years ago.
The Internet of Things is creating powerful new capabilities for building management, while the components are becoming cheaper and more available. The cost of automated building technology has fallen as adoption has increased. For example, intelligent lighting components can be purchased today for approximately $50 per unit—compared with an average of $120 per unit a few years back.
Smart building management systems have become more flexible and affordable as well. The price of wireless sensors used to gather data from building automation systems has dropped below the $10 per unit average cost threshold, significantly lowering the cost of data driven management.
Combining wireless monitoring with predictive analytics, smart building management software boosts facility performance with constant commissioning and data driven decision-making. This enables staff to address equipment problems remotely before these become failures. Some platforms combine remote monitoring and control with on the ground experts to address problems that cannot be fixed remotely.
As a result, the break-even payback for retrofit investments can occur in less than a year, according to JLL research. That equation means a retrofit investment becomes an operating expense, rather than a capital expense—a much more attractive prospect for those who control corporate real estate budgets.
With fast break-even on investment now a reality, it is little wonder that interest in strategic retrofits is growing. The Changing Face of Smart Buildings: The Op-Ex Advantage, a report from JLL found that investment in energy efficiency retrofits in 2011 was no more than $20 billion—but it could reach nearly $300 billion over the next 10 years.
Meanwhile, new local and federal government regulations, including mandatory energy consumption disclosure in some cities, are pushing building managers in the direction of smart buildings.
Can Old Buildings Really Learn New Tricks?
A smart retrofit can go a long way, and it doesn’t have to mean total replacement either. Smart building management technology can be deployed in any building with at least a few automated systems.
For example, a global manufacturing company was interested in a new smart building management platform but was concerned about the level of investment required to retrofit its portfolio of manufacturing, office, and technical facilities. By strategically investing only in certain, carefully selected equipment upgrades, such as HVAC, and implementing the smart building management service, the company was able to achieve energy savings between 8% to 11% in its pilot portfolio in less than a year.
Limited retrofits pay off quickly in terms of energy savings and building performance when combined with a smart building management system, while allowing facility leaders to make more accurate budget forecasts and repair and procurement plans.
Selections From The “Smart” Retrofits Menu
The appeal is clear. Investing in smart building technologies can yield tremendous value quickly, from energy savings and more accurate budgeting to happier occupants and better building performance. Some common places to start:
Smart elevators: Automated elevators make travel faster and more pleasant for the occupants while using less energy than legacy models and giving technicians access to real-time data and control to prevent breakdowns.
Smart lighting: Smart lighting systems can produce significant energy savings, with automated controls, plug upgrades, occupancy sensors, and digital readouts of energy performance.
Demand control ventilation (DCV): When a major transportation company underwent an energy audit, it found DCV installation would reduce electricity, gas, and steam consumption significantly while improving occupant comfort. Some intelligent DCV systems can be used with new and legacy HVAC systems, providing significant benefits without HVAC replacement.
Advanced security systems: Intelligent security systems provide sophisticated capabilities, such as visual recognition and data analytics, and centralized control of user authorization and secured areas.
Energy efficiency—and production: Smart buildings make it easier to adopt submetering, giving tenants more control over their energy use. But why stop with simply reducing energy? Operated in conjunction with a municipal smart grid, a smart building can return excess energy to the grid and respond to new services emerging from the growth of smart grids.
The newly retrofitted Electrical Training Institute in Los Angeles, CA is designed to generate more energy than it uses—and to cut what it uses, while they’re at it. Featuring an integrated microgrid system and automated building management systems, the retrofit is expected to reduce heating and cooling by 60%.
Choose Your Own Retrofit Adventure
Know thyself—and thy facility priorities. The key to achieving investment payback quickly is to take a holistic approach.
Evaluate capital projects: Rank capital projects by energy impact potential.
Perform energy study: Work with qualified energy engineers to review all aspects of energy consumption.
Evaluate projects: Create a baseline energy model against which potential projects can be compared. Plot costs, savings, and performance indicators across potential projects to narrow down the most ROI-friendly options.
Take the iconic Empire State Building’s attention grabbing retrofit. Rather than pursuing every possible energy savings opportunity, the project team narrowed down 70 viable concepts to eight must-do projects that would yield the greatest return. The result of the integrated energy retrofit? Energy reductions to the tune of 38%, saving $4.4 million per year within a three year payback.
Modern building science, IT telecommunications, and data storage and analytics are making facilities and, in turn, facility leaders—smarter than ever. Intelligent building technologies and management systems are improving buildings of nearly all ages, bringing older ones into a smart new future.
Probst is Global Chairman of JLL’s Energy and Sustainability team, helping clients reduce their energy costs and environmental footprints through innovative corporate real estate strategies, workplace standards, and operating practices. He also leads JLL’s Technical Services team, improving the energy and operational performance of buildings.
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