Lower density building occupation in post-pandemic climate calls for better energy efficiency

Mark McLoughlin
Mark McLoughlin

Building controls have the potential to reduce energy use, support carbon reductions and reduce running costs, says Mark McLoughlin

This year has seen a significant drop in electricity demand within big commercial centres across the world, as the coronavirus pandemic has forced people to stay at home. Today, as parts of the UK population begin to slowly trickle back into office spaces and other commercial buildings, key building systems like heating, ventilation and air conditioning (HVAC) and lighting will soon be returning to their previous patterns of consumption. However, at a time where a third of workers are still working from home[1] and many more are exploring new ways of working by splitting their time between the office and home, the need to optimise the energy efficiency of only semi-occupied buildings is coming under the spotlight.

Meeting climate goals and the rising cost of energy

The operational emissions associated with heating, cooling, and lighting buildings are responsible for a staggering 28% of all carbon emissions in the world.[2] Reducing energy consumption through improving energy efficiency could therefore be a significant aid in helping the UK meet its legally binding climate targets. The dip in carbon emissions over the past 6 months is testament to the fact that rapid improvement in climate change objectives is possible and an indication that the ‘new normal’ should be re-built with sustainability objectives in mind.

Likewise, a recent study finds that building managers can save between 24-32% on their energy costs when combining smart HVAC and smart lighting.[3] Return on investment (ROI) from smart building controls will vary, depending on external climate, cost of power, and other factors. However, as energy costs continue to rise, businesses may find that these energy savings free up a significant amount of working capital that can be re-invested. With sustainability goals high on the world agenda and as building managers look towards energy saving solutions, the installation of smart building devices is expected to grow to over 980 million units worldwide by 2025.[4]

 

Smart buildings: HVAC and Lighting

Smart controls give buildings a "central nervous system” that balance and reconcile competing interests such as energy minimisation, occupant comfort and grid stability. Fire protection, climate control, ventilation, lighting and video surveillance are all integrated into a single platform which allows them to communicate and interact with each other – as well as offering the option to be controlled remotely and automatically.

Smart building management systems can help reduce energy consumption and get closer to climate targets, for example, by controlling a building’s temperature and varying it across different rooms or areas, depending on its use and the desire of its occupants. With only 34% of UK office workers having returned to the office since lockdown,[5] many non-residential buildings are still far from full capacity. Heating or cooling the entire building homogenously is therefore particularly wasteful if the building is only partially occupied. With smart buildings controls individual rooms can instead be controlled and monitored independently – an ideal capability during this period of lower density of building occupancy.

While the pandemic may not have spelt the end of the office, many workers may wish to continue splitting their time between the office and home.[6] The ‘new normal’ may therefore entail partially filled buildings with workers scattered across different floors and sections. This is where smart building controls on lighting levels step in as a way of cutting down on unnecessary energy use. Similarly, as companies seek to de-densify their workplaces to adhere to social distancing requirements, localised lighting will become of even greater value – allowing for lighting to be automatically adjusted to the occupancy level of a particular space as well as to the natural light it receives.

Financing smart building conversion

The benefits of smart building technology are evident, but finding practical, affordable and sustainable ways of achieving smart building conversion is usually the challenge. For office energy efficiency conversion alone, Siemens Financial Services (SFS) conservatively estimates the investment challenge to be £1.2 million in the UK over the next 20 years.[7] Many organisations are looking to optimise their capital deployment by moving tangible investments – such as smart-building conversion and technology investment – away from capital expenditure (CAPEX) and into operating expenditure (OPEX). Effectively, the supplier of a “service” such as smart-building conversion deploys financial techniques and solutions that remove the need to devote own capital, bundling the cost of technology upgrades into a monthly fee across an agreed-upon contractual period. The customer still receives all of the benefits of the new technology but has not had to devote a large amount of capital in one go.

Experienced financiers can tailor the terms of the agreement specifically to the organisation in question, for example by adjusting the contract length to make payments more manageable, and building in the opportunity to upgrade further in the future as technology continues to develop.

Such customised financing solutions can also harness the savings derived from reduced energy consumption and use those savings to fund the upgrades – ultimately making the investment cost-neutral.

Lower Occupancy

Smart-building technology still delivers attractive cost and capabilities benefits that organisations wish to gain from, even if they are reluctant to invest their capital to this end. This is leading to the rise of a concept called “Smart Buildings as a Service”[8]– sometimes called “servitisation.” Landlords and owner-occupiers are conserving their capital for growth and improvement initiatives and are choosing to let integrated technology-service-finance companies fund the digital transformation of their buildings. There are a variety of modern financing models that allow this to happen, but the most attractive of these involves smart solutions partners that are able to do this at low or zero net cost for the building’s owner.

Smart building technology brings a number of benefits however, making the initial investment in smart building systems is a challenge. Luckily, smart finance solutions exist that make the investment sustainable and harness the savings made to make smart building technologies accessible. By partnering with an organisation that can deliver both the technology and the associated finance, customers can benefit from a seamless end-to-end solution

 

Mark McLoughlin is Strategic Account Manager at Siemens Financial Services

[1] The Guardian, UK office workers slower to return to their desk after Covid, 2nd August 2020: https://www.theguardian.com/business/2020/aug/05/uk-office-workers-slower-to-return-to-their-desk-after-covid

[2] World Green Building Council, New report: the building and construction sector can reach net zero carbon emissions by 2050, 23rd September 2019: https://www.worldgbc.org/news-media/WorldGBC-embodied-carbon-report-published

[3] Cited in European Commission, Smart Building: Energy efficiency application, October 2017: https://ec.europa.eu/growth/tools-databases/dem/monitor/sites/default/files/DTM_Smart%20building%20-%20energy%20efficiency%20v1.pdf

[4] IDATE DigiWorld, Smart home and smart building market, April 2017

[5] The Guardian, UK office workers slower to return to their desk after Covid, 2nd August 2020: https://www.theguardian.com/business/2020/aug/05/uk-office-workers-slower-to-return-to-their-desk-after-covid

[6] The Guardian, UK office workers slower to return to their desk after Covid, 2nd August 2020: https://www.theguardian.com/business/2020/aug/05/uk-office-workers-slower-to-return-to-their-desk-after-covid

[7] Siemens Financial Services, Smart buildings: driving value in the new normal, October 2020

8 See, for instance: ITEA, BaaS “Building as a Service” as technical enabler for future building automation ecosystems, 2016

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