Energy-Smart Buildings: How IT Can Cut Energy Use and Costs

Innovative use of IT analytics can help companies reduce their carbon emissions and save costs without major disruption.

This approach represents a major opportunity to save up to 25 percent of the $100 billion that US companies alone spend on energy for their offices each year.

This report, authored in collaboration between Microsoft, Accenture and the Lawrence Berkeley National Laboratory, examines how building owners, operators and occupants can achieve significant energy and cost savings through the use of smart building solutions. It is based on insights from a detailed case study of a smart building pilot program being conducted by Microsoft at its corporate headquarters’ campus.

IT enables unprecedented efficiencies for businesses. Powerful analytics are helping firms better manage supply chains, improve resource allocation, detect fraud and optimize many core business functions. The real estate portfolio is no exception.

Worldwide, buildings account for about 40 percent of total energy consumption and contribute a corresponding percentage to overall carbon emissions. Buildings used by businesses and public service organizations make up a large part of this footprint, whether they are office buildings, retail stores, hotels, schools or hospitals.

In the United States alone, businesses spend about $100 billion on energy for their offices every year. In Asia, economic growth and a gradual shift toward service-based economies will expand the need for commercial buildings significantly over the coming years. This provides scope for substantial cost savings. For the United States, estimates predict that smarter buildings could save $20 billion to $25 billion in annual energy costs.

This opportunity is largely untapped today, as many building owners and operators are not yet aware of how data-driven optimizations can reduce energy consumption. Buildings may be equipped with hundreds of sensors and controls, but companies are leaving money on the table if they do not use this data more holistically to optimize their infrastructure. By applying analytics to make buildings smart (or energy-smart, to be more specific), companies can save billions and significantly reduce environmental impact.

The pilot program by Microsoft’s Real Estate & Facilities organization evaluated smart building applications from three vendors across 13 buildings within the company’s main 118-building campus. In essence, these applications added an analytical layer on top of existing building management systems, without the need to replace existing infrastructure. This new layer lets Microsoft aggregate and analyze its building data to generate actionable insights that save energy and cut costs.

In its initial stage, the program addresses energy consumption and cost in three specific ways:

• Fault detection and diagnosis.
• Alarm management to point engineers to the most impactful issues.
• Energy management through systematic tracking and optimization of building energy consumption and performance over time.

Microsoft’s experience thus far demonstrates that a smart building solution can be established with an upfront investment of less than 10 percent of annual energy expenditure, with an expected payback period of less than two years.

Microsoft’s building engineers have become far more productive: they’re now “walking to” the problems that have the greatest impact on cost or comfort. By itself, the ability to continuously identify problems and optimize the performance of building equipment is expected to deliver annual savings of more than $1 million. Furthermore, as building engineers can analyze data collected over time and occupants become more aware of individual energy use, Microsoft hopes to save several million dollars by optimizing base load and by reducing plug load.

Microsoft’s pilot program has helped define a set of key design principles that can be used in any such rollout. These are outlined in more detail in this report, but in summary they include:

• Identify, collect and aggregate relevant data. This involves setting up automated aggregation of building, weather, utility and organizational data from building systems and other sources to feed into the smart building solution.

• Employ industry-leading analytics to identify savings. The core of the smart building solution is the analytics engine consisting of rules and algorithms that identify and prioritize interventions to maximize savings.

• Present results in a consumable and actionable form. Solutions need to improve an engineer’s day-to-day productivity with better real-time information and access to data, while also providing a strong toolset for deeper analysis.

• Centralize monitoring operations. A centralized operations center can effectively monitor building conditions across a campus or multi-site portfolio and communicate directly with building engineers.

• Engage the organization. Greater awareness of energy use and benchmarks can encourage employees and business leaders to save energy, reducing overall demand.

• Avoid disruptive change. Existing building management systems do not need to be replaced. By deploying an analytics layer on top of these systems, prior investments can be significantly enhanced with minimal capital expenditure. Strong cross-organizational project management and a tailored change management approach are key to success.