Welcome to The Lens, a monthly-ish recurring series where I unpack the strategy and context behind the news in as few bullet points as possible. For past editions, check out Vol. 1, Vol. 2, Vol. 3, Vol. 4, Vol. 5, and Vol. 6.
For Volume 7, let's build on Volume 5’s Introduction to Energy Program Management.
Last week, I wrote:
Today’s best practices for decarbonizing a building are archaic, typically involving site visits and clipboards and spreadsheet models and simple payback napkin math that doesn’t value carbon. Software technology for decarbonizing buildings has been around forever, but it’s fragmented and often disconnected from the core business.
And you let me get away with it without explaining myself. Thank you, because today is that explanation.
Imagine a prestigious American university with a very ambitious climate action plan to get to zero carbon emissions. They own hundreds of buildings. By 2040, they plan to retrofit each of them to use as little energy as possible, convert each to 100% electric, and procure renewable energy for the remaining electric consumption.
Now imagine a large office REIT. They have an equally ambitious target that’s earned them a top ESG rating. They also own hundreds of buildings. Their retrofit plan is similar.
These two organizations are leaders in their industries. If we’re going to mitigate climate change, we need a lot of building owners to follow them. And that’s exactly what’s happening. All across the economy, large corporates are setting similar targets.
But what else do our University and our REIT have in common? They both told me directly that their current plan and process to get to their target is “suboptimal”, “inefficient”, “not streamlined”, “fragmented”, “disconnected from the rest of the business”, and “lacks transparency”.
To understand today’s “suboptimal” process, picture this... The sustainability committee meets monthly to go over a massive projects spreadsheet. Picture something like this:
But picture it for hundreds of buildings... now you’re starting to grasp the complexity. And the inadequacy.
This committee is made up of representatives from siloed parts of the organization: Engineering, Operations, Capital Planning, Sustainability, and Finance (and probably some external consultants). Before the meeting, an engineer or sustainability manager scrambles to get the unruly spreadsheet under control and up to date. Since the last meeting, projects have been added, approved, funded, updated, removed, and commented on by other committee members.
Updating the spreadsheet requires pulling project information from several different sources, including energy audits, word of mouth, the CMMS, retrocommissioning study reports, M&V reports, FDD software, capital planning software, and more. As we’ll see, the entire decarbonization journey requires navigating disconnected, but slightly overlapping, software tools.
Let’s stick to the meeting though: During each monthly meeting, the team reviews spreadsheet for queued projects, ongoing projects, and completed projects. Everybody (who is able to attend this month) has comments, obstacles, and questions from their own unique lens:
- Controls engineer: That project can’t be done because we’d need a controller upgrade first. Is that upgrade in the budget?
- Local facility manager: How will that project affect our IAQ score?
- Finance manager: What are the non-energy benefits of that project? What value would it have to our core business?
- Sustainability manager: What are the tradeoffs between water and energy?
- Accounting: Is that completed project really saving what we thought it would?
- Procurement: Have we received the three mechanical bids we need for that upcoming project?
The meeting ends without answering many of these questions. Without the answers, the success of the carbon reduction program is left up to human judgement and status quo. There’s maybe a few action items for everyone—and then everybody returns to their primary job.
I see two massive issues here. First, decarbonizing a portfolio of buildings is going to require a more strategic approach that’s more integrated into the core business. Leaving decarbonization relegated to a meeting and a spreadsheet isn’t going to work and it’s missing the point. It’s now a core business issue and needs to be treated as such. But we’re going to set that aside today.
Second massive issue: Once organizations are ready to get serious, there’s a huge hole here that software can and should fill. But it’s not as simple as creating a SaaS product to replace “the spreadsheet”. As Packy McCormick wrote last year, Excel will never die, but it can be replaced for certain use cases if the alternative is better. And better is what we need to make decarbonization realistic.
For the rest of this post, let's unpack the big gap in the market, what better might look like, and what products are on the market today to help.