6 min read

#34: the antifragility of the smart building

VC fundraising during a pandemic, the BAS is broken, obstacles to small building BAS, and more
"Ideally, these teams could spend that time innovating, improving, re-tuning, adapting, enhancing, and getting more out of their existing systems."

—Matt Schwartz, The BAS industry is broken… here’s why

Good morning!

Welcome to Nexus, a newsletter, podcast, and membership community for smart people applying smart building technology—written by James Dice. If you’re new to Nexus, you might want to start here.

Here’s an outline of this week’s newsletter:

  1. 🤔 On my mind this week

  2. 📚 What I’m reading

  3. 💡 New from Nexus

  4. 🧐 New to me

  5. 🧱 Foundations—announcing cohort 1!

If you missed last week’s edition, you can find it here.


☝️ Disclaimer: James is a researcher at the National Renewable Energy Laboratory (NREL). All opinions expressed via Nexus emails, podcasts, or on the website belong solely to James. No resources from NREL are used to support Nexus. NREL does not endorse or support any aspect of Nexus.

1. 🤔 On my mind this week

Last week, I had so much fun hosting our third Nexus Pro member gathering. In a time full of too many Zoom and Teams meetings, this has become an event I look forward to all month.

I want to send a big thank you and shout out to Graham, Alicia, Will, and Matt for sharing your knowledge with us and knocking your Pecha Kuchas outta the park. To watch the recording and get an invite to August’s gathering, click here to sign up for a Pro membership.

By the way, Nexus Pro prices will be rising on Friday (for new members only). If you’ve been on the fence, now is the time to lock in the current rates ($19/mo or $199/year). 

👉 If you enjoy reading NEXUS, feel free to share it with colleagues!

2. 📚 What I’m reading


Density, Platform For Counting People Inside Buildings, Raises $51 Million In Series C—$51M. That’s a really big number for a people-counting sensor! This news, along with recent news of Aquicore’s and Switch Automation’s fundraising during the pandemic, highlights the power of smart building technology to help building owners build antifragility. I wrote about this power back in March—it seems like investors recognize that too. (Forbes)

Ilya Fushman, partner at Kleiner Perkins, says that one of the biggest effects the coronavirus has had on the world of business is that it has accelerated the adoption of technologies that were going to become the norm anyway.


Setting free the dancing bear: A practitioner's view of how to break open energy efficiency—This thought-provoking article from Gridium walks through the four causes of the frustratingly slow growth of energy efficiency—split incentives, frequent building sales, counterparty risk and savings quantification (M&V)—and how subsidies/incentives don’t necessarily help. I love how this opening sentence pulls you in…

Energy efficiency is the dancing bear of the electricity world — a sector that we've trained to react to subsidies and incentives in a way that amuses the circus-going public, but that acts out a poor simulacrum of its true potential.

Couldn’t agree more. The article also walks through how on-bill financing policies for long-payback energy efficiency measures can help solve these issues. (Utility Dive)


Smart appliances – why they matter for delivering smart buildings—Building on Gridium’s list, Chris Irwin from J2 Innovations lays out the reasons why small buildings are typically not automated and therefore waste energy (CABA Journal):

  1. Short term leases lead to short term thinking
  2. Fast payback requirements (typically better than 2 years) limit investments
  3. Small building owners cannot justify the cost of an on-site maintenance team or dedicated technical expertise. Non-dedicated staff don’t receive training and have high turnover.
  4. While the cost of the energy across a portfolio may be large, the per-site cost is relatively small and is frequently regarded as a fixed cost of operation, instead of a reducible cost.
  5. BAS options have historically been poor. He mentions how heating or cooling equipment manufacturers include controls as a bundle with their products, or contractors tend to select the cheapest solutions with little regard to a portfolio-level strategy.
  6. The cost of connecting to smaller sites is disproportionately expensive. As a result, large retail chains focus on their larger sites only.

He also lays out the attributes of the ideal controls solution for those buildings.

“The sad reality is this: it is easy to make solutions that are complex, and much harder to make solutions that are simple.”

Agreed. By the way, NREL did research on this a few years back. The small building problem is a BIG problem:

The 4.6 million small buildings across the (USA) consume 44% of the overall energy use in buildings.


Other pertinent reads from just (a bit) outside the smart buildings industry:

This installment of NEXUS is free for everyone. If you would like to get full access to all content, join the NEXUS Pro community. Members get exclusive access to the Nexus Vendor Landscape, monthly events, weekly deep dives, and all past deep dives.

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3. 💡 New from NEXUS

DEEP DIVE—The BAS industry is broken… here’s why

The BAS is the linchpin of the smart building. Given its importance, I believe our expectations of the BAS industry are far too low. To get some outside perspective and expertise on this gap, I brought an expert (Matt Schwartz of Altura Associates) in from the trenches to explain this mess and how to get out of it.

If you liked that interview, you’ll also enjoy this clip from the Nexus podcast, episode 5, with Troy Harvey:

4. 🧐  New to me

Even though the Nexus Vendor Landscape has over 100 vendors on it, I still learn about new companies to track every week.

Here are this week’s discoveries:

Vata Verks—Startup with non-invasive metering technology that provides interval data for legacy natural gas and water meters.

Just straps on. No plumbers, no cut pipes, and no tools.

The Smart Building Data Clearinghouse initiative—Australian open data layer project sponsored by AIRAH, CSIRO, CSIRO's Data61, and the Australian government. As Deb Noller said on LinkedIn:

The concept is pretty simple, access to Open Data for the built environment will accelerate innovation, in the same way that Google Maps, stock market data, public transportation data and others accelerated innovation by encouraging the software community in.

5. 🧱 Foundations

The dates are set for cohort 1 of Nexus Foundations, an introductory course on the smart buildings industry. From 10/1 to 11/19, we'll publish weekly content, host weekly live workshops on Zoom, and hold weekly office hours. We're capping this (deeply discounted) first cohort at 25 students to maximize the time we can spend with each student.

Sign up for Nexus Foundations

As we inch closer to 10/1, this section of the newsletter will provide links to introductory-ish content that might help someone new to the industry understand this week’s newsletter, podcast, or deep dive. As you can see, the water we swim in is quite deep.

Split incentives
In most privately-owned buildings, landlords own the building but tenants pay the greatest part of energy-related charges — typically in a pass-through arrangement managed by the building owner. Neither owners nor tenants have the proper incentives to lower the energy use of the building. (Utility Dive)
Counterparty risk 
Commercial buildings are rarely credit-worthy entities in and of themselves. They do not issue rated debt, for example. They are often limited liability corporations designed to shield their owners in the case of a bankruptcy. That shield means that would-be project funders — banks and investment funds — are loathe to fund projects for which there is diminished protection for financiers in the event of a building bankruptcy. The transaction cost arising from counterparty risk takes the form of high borrowing costs. (Utility Dive)
Interval Data
Interval data is simply meter data collected at defined intervals, typically every 15 minutes or hourly. It used to be that you had to install submeters and manage an on-site database to capture interval data. Today, the advent time-of-use rates, smart meters, and real-time communication networks means that a large and growing number of buildings have access to interval data hosted on their utility web sites. (Gridium)

OK, that’s all for this week—thanks for reading Nexus!