Energy Efficiency Strategies to Transform the Smart Building Market

To tackle escalating electricity costs, building owners are adopting building automation systems.
Published: Wed 03 Sep 2014

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As buildings account for nearly 33% of the world’s energy consumption, and contribute to large-scale greenhouse gas emissions, the need for smart building systems is set to grow significantly.

Smart building systems market set to grow

Opportunities for manufacturers will be particularly promising in the stabilizing economies of Brazil, Russia, India, China, Germany and the United States due to high infrastructure spending.

A new analysis from Frost & Sullivan, Global Building Automation Market, finds that the market earned revenues of US$5.78 billion in 2013. This is estimated to reach US$7.28 billion in 2018. The data centre and hospitality application segments will experience rapid growth owing to growing Internet penetration in emerging nations and the expansion of the tourism market.

"Government regulations and policies designed to improve energy efficiency in buildings are driving the market for building automation systems especially in North America, Europe and parts of Asia-Pacific," said Frost & Sullivan Energy & Environmental Research Analyst Balaji Anand Sagar. "Market participants realise that building automation systems (BA) are essential to achieve energy efficiency targets dictated by government regulations and are offering reliable solutions at competitive prices."

Taking the building automation market to new heights

However, insufficient clarity on the benefits of building automation systems is discouraging building owners from considering these solutions during the budgeting and bidding stages. In addition to this, the lack of standardization of building automation products across regions is lowering customers' confidence.

Providing turnkey solutions with robust ICT and engineering capabilities will help building automation companies boost their visibility in specific application markets. Rolling out open building automation systems that use standard protocols must also be a go-to-market strategy.

"Intelligent building control systems, fault detection, predictive diagnostics, big data analytics, and remote correction on the cloud will shape the market over the next few years," noted Sagar. "Further, open connectivity and interoperability of building automation systems will enable the automation of a much broader 'Internet' of devices and take the global building automation systems market to greater heights.

Utilities should be prepared

The utility will need to prepare its business for the development of this sector so that opportunities are not lost. [Engerati-Utilities Could Miss The Growth in the Smart Building Sector.]

Buildings typically drop their energy consumption by 20% or more after smart technology has been installed. Smart buildings are ideal candidates for automated demand response, load control and similar programs.

Furthermore, “smart buildings will play a central role in stabilizing the future grids thanks to the buildings’ flexibility regarding energy consumption and energy storage”, says Andreas Gmuer, Marketing Manager, Siemens Building Technologies Division. This flexibility of buildings could help balancing power generation and consumption, an increasing challenge for grid operators, especially considering the unpredictable nature of renewable energy sources.

This is a good time for utilities to rethink their load growth projections as penetration ratchets up.

An increasing number of building owners are proactively seeking to tap into new revenue streams by connecting to the smart grid. Demand response is one such revenue stream, as well as the idea of generating power onsite to sell to utilities. To take advantage of this, commercial customers will want to partner with their utilities. It is therefore only a matter of time before commercial customers will expect their local utility to have a program ready for them.