Greentech Media is pleased to present a special report on “intelligent efficiency,” a new paradigm emerging in the market based on information awareness and data analytics. We present the first chapter of our report below. For more, you can download the full paper at the bottom of the page.
Chapter 1: How energy efficiency is evolving into "intelligent efficiency"
The last two major economic revolutions were caused by the convergence of two factors: communications and energy.
In the 1800s, the convergence of printing technology and steam power created the first form of mass communications -- bringing with it sweeping changes in literacy and education. In the 1900s, the convergence of radio and television with electricity and the oil-powered combustion engine created the modern consumer-based society we know today.
We are now on the verge of a third revolution, argues economist Jeremy Rifkin. This one will be abetted by the convergence of the internet and distributed energy, creating new ways to do business, communicate, and build wealth. Rifkin calls this a "new economic paradigm for the 21st century."
This new paradigm is already reshaping the way we think about energy efficiency.
All around us, embedded in every commercial building, manufacturing facility and corporate campus, is a vast, untapped energy resource: efficiency. In the past, that resource was hidden, ignored or misunderstood by the companies sitting on the potential, and recognized only by a small group of energy professionals.
But with dramatic advances in web-based monitoring, real-time data analytics and utilities using peak pricing, that hidden resource is now becoming something tangible -- an asset that companies can measure, manage, procure and sell.
This isn’t the stale, conservation-based energy efficiency Americans often think about.
"In the past, energy efficiency was seen as a discrete improvement in devices," says Skip Laitner, an economist who specializes in energy efficiency. "But information technology is taking it to the next level, where we are thinking dynamically, holistically, and system-wide."
This emerging approach to energy efficiency is information-driven. It is granular. And it is empowering consumers and businesses to turn energy from a cost into an asset. We call this new paradigm "intelligent efficiency."
That term, which was originally used by the American Council for an Energy-Efficient Economy in a 2012 report, accurately conveys the information technology shift underway in the efficiency sector.
The IT revolution has already dramatically improved the quality of information that is available about how products are delivered and consumed. Companies can granularly track their shipping fleets as they move across the country; runners can use sensors and web-based programs to monitor every step and heartbeat throughout their training; and online services allow travelers to track the price of airfare in real time.
Remarkably, these web-based information management tools are only now coming to the built environment in a big way. But with integration increasing and new tools evolving, they are starting to change the game for energy efficiency.
Although adoption has been slow compared to other sectors, many of these same technologies and applications are driving informational awareness about energy in the built environment. Cheaper sensors are enabling granular monitoring of every piece of equipment in a facility; web-based monitoring platforms are making energy consumption engaging and actionable; and analytic capabilities are allowing companies to find and predict hidden trends amidst the reams of data in their facilities and in the energy markets.
This intelligence is turning energy efficiency from a static, reactive process into a dynamic, proactive strategy.
We interviewed more than 30 analysts and companies in the building controls, equipment, energy management, software and utility sectors about the state of the efficiency market. Every person we spoke to pointed to this emerging intelligence as one of the most important drivers of energy efficiency.
"We are hitting an inflection point," says Greg Turner, vice president of global offerings at Honeywell Building Solutions. "The interchange of information is creating a new paradigm for the energy efficiency market."
Based on our conversations with a wide range of energy efficiency professionals, we have identified the five key ways intelligent efficiency is shaping the market in the commercial and industrial (C&I) sector:
- The decreased cost of real-time monitoring and verification is improving project performance, helping build trust among customers and creating new opportunities for projects;
- Virtual energy assessments are bringing more building data to the market, leveraging new lead opportunities for energy service professionals;
- Web-based energy monitoring tools are linking the energy efficiency and energy management markets, making efficiency a far more dynamic offering;
- Big data analytics are creating new ways to find trends amidst the "noise" of information, allowing companies to be predictive and proactive in efficiency;
- Open access to information is strengthening the relationship between utilities and their customers, helping improve choices about efficiency and setting the foundation for the smart grid.
Figure 1-1: How Intelligent Efficiency Creates Value for Customers
At its core, energy efficiency is still about the nuts and bolts of changing equipment and improving the physical components of a facility. Information is not a panacea and is not a substitute for the physical integration of new systems. But it is becoming the glue binding the holistic, system-wide approach that is starting to define the intelligent efficiency business.
"It is rapidly becoming much cheaper to measure efficiency and analyze that data alongside lots of other information so companies can actually take action," says Robert Hutchinson, managing director of the Rocky Mountain Institute. "These information technologies are transforming the efficiency business. They are incredibly powerful."
Driven by the convergence of instantaneous communication and distributed energy resources, the world is entering a new phase of economic growth. The evolution of intelligent efficiency parallels that larger shift that is now underway. In this report, we detail crucial pieces of that shift.
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