7 min read

Energy efficiency thinking is outdated [Nexus Newsletter #153]

This edition of the Nexus Newsletter is brought to you by BrainBox AI and Clockworks Analytics.


Hey friends,

A few weeks ago, I attended and spoke at my first Greenbuild conference. I learned a ton, but one thing really surprised me:

The word “decarbonization” was everywhere.

The green building community is undergoing two shifts: (1) from valuing energy efficiency to valuing the amount of carbon emitted and (2) from valuing “green” materials to valuing the amount of carbon emitted to get them in the building. The decarbonization push is underway beyond that conference… It's industry wide.

Let’s focus on the first shift today: What does it mean to shift from energy to carbon?

We can begin with the old way of thinking. For the first 10 years of my career, the energy management process hadn’t changed much. Tell me if this energy management formula sounds familiar:

📊 First, we would set a target reduction in energy usage at the portfolio level. We benchmarked buildings based on a year’s worth of utility bills, which gives us an annual energy use intensity (EUI). Then we set EUI targets for each building that will reach our target reduction in aggregate.

🛠️ Then we went on site and did energy audits, created spreadsheets of energy conservation measures (ECMs), and prioritized those ECMs based on ROI. Finally, we executed on all the projects that met the owner’s hurdle rate.

In 2020, if you were following that process, it made sense to suggest an ECM like installing a high efficiency gas-fired boiler. In 2023, depending on the organization you’re working with, that suggestion might get you fired. (footnote:  if you don’t show the option that minimizes carbon (the heat pump).)

Overdramatification? Yes. 

Here’s why: organizations are no longer setting targets based on a % reduction in energy alone—targets are also (or only) based on carbon emitted. If you look at the top 100 REITs in the United States, more are reporting on carbon than energy.

(source: NAREIT

And where would you say that curve is headed? I think it’s headed towards 100% disclosure, and 100% having a carbon emissions target. That’s not all: once that target is set, organizations are tending to ratchet up that target over time, as Sara Neff discussed recently on the Nexus Podcast.

“I think it's really important for leaders to show how (a more aggressive target) is possible. And then a lot of other folks come in.”
—Sara Neff, Lendlease

Suddenly, the whole process needs to shift to accommodate these new carbon targets. So how does the energy management process need to change? Let’s count the ways.

First, energy management was about optimizing a cost center. Decarbonization is integrated into the core business. At Greenbuild, KingSett (Canadian REIT) showed how when they crafted their roadmap towards their carbon target, they realized that one of their assets was obsolete in a zero carbon world. Decarbonizing that asset made no business sense—it needed to be sold off before the value plummeted.

This highlights a shift in how the business case is now being made for retrofit projects. The new business case includes how the project will affect top line revenue, not just the utility budget. The new business case also includes a cost of carbon—whether it’s internally or externally driven—calculated as the price they would pay in penalties or offsets or taxes if that project isn’t done. It's only getting more expensive to do nothing.

Second, creating a realistic roadmap for decarbonization means integrating it with capital planning, tenant fit out, and maintenance processes. The practical reality is every time any of our machines fails or needs to be replaced or gets upgraded for any reason, we need to replace it with a zero carbon option. And the only real zero-carbon option that has emerged is electrification.

#committedemissions

Finally, there needs to be a shift in how energy engineers analyze data and develop “savings” calculations. Decarbonizing means that it’s not just about what happens behind the meter—there is no “behind the meter”. There’s only carbon. So data analysis needs to include data from the grid. And since carbon intensity (not to mention rates) for most grids changes on an hourly basis, the data needs to shift from annual to hourly timescales. And since most grids will trend towards less carbon intensity over time, financial projections need to take that into account.

In summary, let’s shift from energy to carbon management by (1) integrating with the core business, (2) integrating with capital planning, tenant fit outs, and maintenance process, and (2) changing the way we analyze data.

And as Brad White preached in last week’s podcast (see below) we also must remember what hasn’t changed. We still need automation systems to control and optimize ever more complicated systems. We still need commissioning (initial and ongoing) to make sure those controls are working. We will need analytics (FDD) to sustain that performance. We still need to be continually picking the low hanging fruit.

As I’ve talked to energy professionals about this shift in the last few months, some reactions are worrying me.

“But electric heat has much higher lifecycle costs” (But we're not just optimizing a cost center)

“I’ve been doing energy efficiency for 40 years and it’s far from dead and shouldn’t be forgotten” (No one is moving your cheese... things change)

If I could summarize, it seems like they’re dragging their feet and holding onto the past. Maybe they feel threatened and don’t want to get left behind.

If that’s you, I have a question: Why are you not viewing this as the opportunity of a lifetime?

—James Dice, Founder of Nexus Labs

P.S. If you like this topic, this month’s Nexus Pro Member gathering will feature BXP’s Ben Myers and will highlight their journey and give everyone a chance to fire questions at a man responsible for decarbonizing 50 million square feet. Join Nexus Pro now to get the invite.


🧠 A message from our sponsor, BrainBox AI 🧠

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✖ At the Nexus

Here’s everything worth sharing from Nexus HQ this week:

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★ PODCAST: 🎧 #126: Decarbonization from the trenchesEpisode 126 is a conversation with Brad White, President of SES Consulting, and Leo Glaser, Manager of Environmental Sustainability at Concert Properties in Canada.

The theme here is decarbonization from the trenches. Most property owners don’t have a real, detailed plan for decarbonizing their portfolios, despite widespread corporate commitments to do so.

So we talk about the steps in building a roadmap, how Concert Properties built theirs, how they make the business case, the role of smart building technology, and Brad even gets on his soapbox to send two messages out that I think a lot of us need to hear right now.

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★ MEMBERS-ONLY EVENTS THIS MONTH:

  • New Member Orientation: Nexus Founder, James Dice, hosts an introduction to the Nexus Labs Community and how you access and take advantage of all the resources that come with your Pro Membership. This is for new members or those who've not taken advantage of all the resources at the Nexus Community. November 16th @ 9 am MT.
  • Subject Matter Expert Workshop: Pro member and Smart Buildings Programs Director at TIA, Marta Soncodi, will dive deep into the UL/TIA SPIRE Smart Building Assessment program with what it is, how it works, why it's valuable, and how people can get involved. November 21 at 2 pm MT
  • Member Gathering: Global Leader in Real Estate Sustainability and ESG and Vice President of Sustainability at BXP, Ben Myers, will unpack BXP's smart buildings program. November 30th at 9 am MT

Join Nexus Pro now to get the invites and access to the recordings.

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★ ON LINKEDIN: As the R-word is used and more layoffs are announced each day, one thing is clear: Making the business case for smart building technology is rapidly evolving. How are you adjusting your approach?

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★ JOBS: Are you hiring? Searching for a job in smart buildings?—We've relaunched the Nexus Labs Jobs Board.

It's got great jobs from Belimo, Lockheed Martin, PassiveLogic, Bernhard, Vigilent Corporation, Gridium, Slipstream, The Clarient Group.

🔥🔥🔥 Hot Jobs in Smart Buildings

👉 Belimo is looking for a Smart Building Specialist in Hinwil, Switzerland.

Belimo produces millions of sensors and actuators for the HVAC industry. All their devices have a digital identity and participate in the Belimo Digital Ecosystem. This job will enable you to develop your skills further and make a difference in an ecosystem of small devices with a big impact.

👉 Lockheed Martin has two open positions:

  1. Building Management Systems Controls Engineer in Startford, CT.
  2. Fault Detection & Diagnostics Lead in Moorestown-Lenola, NJ.

These positions support the Smart Buildings Team within the Lockheed Martin Rotary & Mission Systems (RMS) Facilities organization. The selected candidate will initially work under the guidance of the team with the goal of quickly becoming an independent subject matter expert.

As a leading technology innovation company, Lockheed Martin’s vast team works with partners around the world to bring proven performance to our customers’ toughest challenges.


🔍 A message from our sponsor, Clockworks Analytics 🔎

The Building Analytics Comparison Guide is used by industry-leading facility teams and service provider organizations to make the jump from building automation system (BAS) alarms to prioritized and proactive maintenance using Fault Detection and Diagnostics (FDD) software. There are actually two kinds of fault detection and diagnostics (FDD) software: those that stop at the first “D” (Detection) and those that go all the way to Diagnostics.

This guide tells the story of the second "D" and why it's so important. Get the guide here.


👋 That's all for this week. See you next Tuesday!

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