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THREE

DIMENSIONS
OF ENERGY OPPORTUNITIES
Boost Profits and Asset Value
Lower Increased
Operating Tenant
Costs Satisfaction/
BY HUGH LINDSAY AND Retention tenant satisfaction. Typically,
TERRENCETOBIN only monthly energy totals are
available, not interval measure-
ments (e.g, readings every 15

P
roperty owners, man- minutes) that are needed to sub-
agement firms, and Increased Enterprise Increased bill for coincident energy
Net Appeal for
brokerages regularly
Operating
Energy demand or other utility charges
face ehallenges in Prospective
Income Management Tenants
applied on top of base load.
maintaining or increas- Higher resolution data are also
ing profits and maximizing valu- not available that could offer
ation. Energy is a significant insight into opportunities to bet-
operating expense that, when ter manage costs.
managed effectively, can help
"Green" EEM systems provide a com-
property firms survive tough Increased
Building plete sub-metering and sub-
times in the short term while Asset
Certifications Value billing solution that supports ail
reducing financial risk and
forms of utilities (e.g. electricity,
strengthening competitive posi-
gas, water) and leverages exist-
tioning into the future.
ing meters while allowing new
Studies by the U.S. Depart- Figure 1. Enterprise energy management offers a broad range of direct economic benefits to property owners ones to be added where required
ment of Energy show utility costs and managers. (figure 2). Meter data are auto-
can be reduced 25% or more if matically uploaded on a frequent
properly managed. With energy
For the maximum Star organization notes that FIXED COST basis to the EEM software over
representing on average as much "[Investment] firms totaling OPPORTUNITIES corporate networks, the Internet,
as 30% of operational expenses,
commercial real estate enterpris-
level of benefits to more than $4 billion in assets
under management are looking at
Fixed energy costs include a or wireless communications,
realizing a low total cost of own-
facility's typical base load of
e.s are in a unique and enviable
position as compared with other
be enjoyed all three companies' EnergyStar perfor-
mance for signs of superior over-
energy consumption as well as ership while enabling reach
across entire property portfolios.
the resources required for admin-
industries In terms of the poten-
tial to lower costs and improve
dimensions of all management quality. istration, operations, and mainte- Equipped with an integrated rate
engine and data quality tools,
For the maximum level of ben- nance; all of which represent sav-
net operating income (NOI). For
example, for a 500,000 square
energy costs should efits to be enjoyed all three dimen- ings potential. tenant bills are calculated based
on simple or complex rates with
sions of energy costs should be Energy costs are often allocat-
foot (ft-) building with average
energy costs of $i.80/ft^, cutting
be considered: considered: fixed, variable, and ed to tenants based on a square assured accuracy. High labor
rates associated with data collec-
exceptional. Specific information footage formula, which can be
costs by 25% will produce
S25O,OOO in enhanced NOI. At a
fixed, variable, and and functionality is required to highly inaccurate. Tenants are tion and processing are avoided
while tenant satisfaction is
turn each into an opportunity. increasingly asking to be more
\0% capitalization rate this could
amount to a $2.5 million increase
exceptional. Enterprise energy management accurately billed; in some areas increased.
(EEM) systems affordably deliver leases now include accurate sub- Buildings include a variety of
in property value. the intelligence and automation
achieving "green building" certi- metering as a standard clause. If high-demand loads, including
Ancillary benefits include fications. Energy performance needed to uncover opportunities, sub-meters exi.st, manual labor is HVAC components like rooftop
increased tenant satisfaction and can also reflect well on the skill make effective decisions and often used to read them, process units, chillers, and fans. Building
retention, decreased environmen- of the management team and. in dynamically respond with appro- the data, and create bills, with automation systems (BAS) are
tal impact, and the potential for turn, on valuation. The Energy- priate measures. human error affecting costs and often tweaked to assure comfort.

14 Energy S Povuer Management July 2005


DIMENSIONS
OF ENERGY OPPORTUNITIES

New or Existing Enterprise Access to


Sub meters

H
Anaiysis & Reports

with maititenance typically based of information available. EEM


on estimates of equipment opera- systems will aggregate energy
tion and on predefined service consumption information from
schedules. Though often consid- across all properties, across wide
ered a building's energy manage- geographies, to help negotiate
tnent system, energy-related bulk energy pricing with a single
information from BAS is typical- supplier. Using accurate fore-
ly limited in both amount and casting and "what i f scenarios,
accuracy. This can mean oppor- energy managers can compare
tunities are missed to improve different rates, tariffs, suppliers,
energy efficiency or reduce risk or whether it is more profitable
associated with potential equip- Wireless
to shift loads or pay more when
Submetering
ment misoperation or failure. prices are high (figure 4).
In contrast. EEM systems Figure 2. Automated sub-metering and sub-billing improves billing accuracy while reducing or eliminating the labor Weather, occupancy, retrofit
iiutomatically collect and report involved in reading meters and generating bills. opportunities, and other vari-
detailed power and energy infor- ables can be incorporated into
mation from all energy a.ssets, meter malfunctions, meter reader Property firms can procure future models. For example, pre-
including HVAC. BAS,electrical Start-up procedures errors, wrong tariffs, or incorrect energy more efficiently and for dictions can be made regarding
distribution systems, and onsite billing intervals can also offer an better rates if they are in a strong how an energy bill might
generators. An EEM system con-
tinuously tracks conditions and
can be optimized to opportunity to recoup costs. negotiating position, which often increase if the average summer
ErTors tbat seem in the building's depends on the depth and quality temperature increased by a
alerts operations staff to any
potential problems before they
avoid demand favor can still be a problem.
Many contracts allow tbe utility
occur. The source can then be
quickly isolated using graphical
peaks and HVAC to recover missing charges lone
after the fact, making it impossi-
facility overviews of real-time
electrical and equipment status,
settings can be ble to pass them on to a tenant
that may have moved on.
historical information, and "drill-
down" analysis. These tools help
adjusted to reflect To help avoid these situations,
EEM software can be used to
drive proactive maintenance,
extend equipment life, avoid cap-
occupancy and internally calculate accurate
monthly "shadow" bills, match-
ital costs, and reduce labor.
weather patterns. ing the utility's rate structures,
EEM systems also deliver the and compares each billing period
information corporate and facility report on the complex relation- to tbe utility's bill to identify any
managers need to deal with ener- ships between energy drivers inconsistencies. Tbe EEM sys-
gy in financial terms. Browser- over a week, month, sea.son, year, tem draws its data either from
based "dashboards" listing key or any otber range. Energy con- revenue-class meters installed in
performance indicators (KPIs) sumption for buildings and other parallel with the utility's billing
help track and verify enterprise- cost centers can be aggregated meters or, where allowed, by
wide conditions and costs on a and normalized to remove inde- importing energy pulses from the
dynamic basis. Trending tools pendent variables such as temper- existing billing meter.
ature or square footage from the Tbe electrical systems and Figure 3. EEM key performance indicators, benchmarking and normaliza-
profile. This allows for accurate other energy distribution systems tion tools help analyze and compare building performance and reveal
LOWER FIXED COSTS direct comparison, helping iden- for new facilities are often over- opportunities to reduce costs.
• Cost recoverv through
tify inefficiencies and opportuni- designed, and additional capacity
tenant sub-billing ties to reduce usage. For exam- in existing buildings goes undis-
ple, start-up procedures can be covered. An EEM sy.stem deliv-
• Reducing the cost of
optimized to avoid demand peaks ers detailed load profiles for eacb
operations
and HVAC settings can be building and major circuit. This
• Shadow metering to catch adjusted to reflect occupancy and
billing errors
can help safely maximize the use
weather patterns. of existing capacity, avoid
• Expansion planning unnecessary upgrades, and help
The EEM system will also uv.twii <• -•

CoNTROi VARIABLE provide an accurate energy base- planners right-size the infrastruc-
line prior to any retrofit or initia- ture for new buildings to mini-
COSTS mize costs.
tive, helping verify effectiveness
• Better energy procurement afterward. Ultimately, building
• Dynamic control of loads performance can be bench- VARIABLE COST
and generation marked {figure 3) and the infor- OPPORTUNITIES
• Tenant energy management mation used to support certifica- How energy is purchased,
","T.
• 0.00 0.00 i . M . t i m> •.Hiuki. a mil.
tion with nationally recognized bow it is used by the building,
AVOID EXCEPTIONAL rating systems such as those and how it used by tenants are all 10. a>

COSTS developed by the EnergyStar or dynamic processes that offer


• Protection from outside ASHRAE organizations, or the opportunities to reduce cost.
disturbances U.S. Green Building Council's Each depends on having the right
• Power quality improvement
LEED program. information to support timely Figure 4, EEM softvuare helps model energy requirements and perform
Utility billing errors due to strategic and tactical decisions. rate comparisons based on actual usage data and utility tariffs.

16 Energy & Power Management July 2005


REE DIMENSIONS
OF ENERGY OPPORTUNITIES

costs and, in tum, driving behav- and even equipment designed to


Competitive
Threshold ior. Helping tenants reduce ener- EEM systems mitigate some power problems
100%
gy use in this way helps increase can all add unwanted harmonic
profits as well as competitive convert raw energy frequencies and high-voltage
80% advantage. As an additional ben- transients onto a facility's electri-
nEnergy Cost efit, as efficiency increases so too data and complex cal distribution network. These, in
60% does a building's asset value. tum, can cause data loss and mal-
• Rent utility tariffs into functions in computers, building
EXCEPTIONAL COST automation systems, or process
40%
This example OPPORTUNITIES dollar values that equipment. Worse, transformers
The cost of poor power relia- and conductors can overheat and
20% assumes a
25% energy bility has been well documented the landlord and fail or power breakers can trip
in recent years. One study needlessly, any of which can
cost reduction
showed that power outages inter- tenants can cause a complete facility outage.
Pre-Energy Post-Energy rupted operation.s at 72% of U.S. Using pager, phone, or work-
Savings Savings businesses in a recent year, while understand and station, an EEM system will alert
another study revealed 46% of personnel to imminent problems,
Figure 5. Lowering energy costs provides an opportunity to rebalance the
components of a tenant lease, benefiting the property firm, tenant or both. companies surveyed said each act upon. help them isolate and analyze
hour of downtime costs them up high-risk conditions, and perform
degree, helping fitiancial man- appear as if any energy reduc- to $50,000, while 8% said it co.sts helps personnel analyze condi- the necessary control functions to
agers set an appropriate risk level tions will benefit only the tenant; more than $ 1 million per hour. tions, isolate the source of distur- avoid downtime and the associat-
and bounds. however, the property firm can The source of reliability prob- bances or failures, predict future ed lost revenues. Capital replace-
Buying off real-time spot potentially achieve full benefits lems can sometimes be on the occurrences, and validate the ment costs can be avoided or
markets or taking advantage of by "rebalancing the pie". Lower utility side of a facility's service operation of mitigation equip- deferred and workload for main-
utility rebates associated with operating costs can be leveraged entrance, for example power dis- tnent {figure 6). tenance staff reduced. Being able
load curtailment or demand by increasing rental rates while turbances caused by lightning The system can help baseline a to guarantee higher reliability
response programs can some- keeping the effective cost to the strikes or downed power lines. facility's minimum power quality can aiso help keep existing ten-
limes reduce energy costs. Some tenant the same (figure 5). Alter- To guard against these, compa- requirements. It can also compare ants satisfied and attract busi-
suppliers offer discounts if the natively, energy cost saving.s can nies will often install filtering conditions to international stan- nesses that are especially sensi-
customer can simply demonstrate be used to lower the lease to devices and UPS or generator dards and determine if the energy tive to power quality glitches.
an energy management system is improve a building's price com- backup systems. These are effec- received from the utility meets As with any sound business
in place that can support such petitiveness. tive only if equipment is continu- contractual requirements. Like a strategy, achieving real and sus-
programs, EEM systems provide EEM systems convert raw ously tested and optimized, "black box" tiight recorder, an tainable results depends on hav-
the communications capability to energy data and complex utility EEM system.s help facility EEM system will capture evi- ing accurate and actionable
receive real-time pricing or cur- tariffs into dollar values that the engineers evaluate how the over- dence that is often the key to information. Enterprise energy
tailment signals and provide the landlord and tenants can under- all quality of power affects receiving thousands or even mil- management technology exposes
analytic capability to help man- stand and act upon. Automatical- equipment and uptime. Perma- lions of dollars of compensation fixed, variable and exceptional
agers evaluate the opportunities ly generated reports can be dis- nently installed intelligent meters from an energy provider. costs in financial terms and pro-
against current or projected tributed in paper, email, or monitor key distribution points vides the tools property firms
Computers and data process-
building usage and needs. HTML format, providing tenants and upload real-time data and need to respond to opportunities,
ing equipment, motors, power
Alarms can be used to give a view of their consumption and historical logs to software that switching or protection devices. verify savings, drive best prac-
advance notification before costs tices, and extract the maximum
or consumption levels peak, giv- financial and competitive advan-
utility Transfer Uninterruptible Distribution Building Loads
ing the time needed to decide Service, Switch Power Supply Equipment (Tenant Space, tages from energy, e&pm
Common Areas,
v^'hether to temporarily reduce HVAC, el:c.)
consumption. Selected non-criti- About the Authors: Hugh Lind-
cal equipment can then be manu- say is a marketing manager
Backup
ally or automatically switched off; Generation with Power Measurement, and
on-site generators can be started
up in a coordinated fashion. Ideal-
ly, such programs will include the
participation of tenants to maxi-
a a has w o r k e d w i t h clients
throughout world to help them
understand and leverage the
benefits of energy information
mize load shedding potential. Corporate LAN/WAN for modifying behaviors and dri-
Tenants can represent one of ving change Terrence Tobin is
the largest opportunities to the corporate communications
reduce costs. With gross leases, manager for Power Measure-
energy conserved directly bene- ment and has worked exten-
fits the property firm, and fixed- sively in the high technology
base leases, tenants benefit by sector In the fields of research,
cutting energy costs above those development and communica-
covered by the lease while fur- tions.
ther reductions pass savings to
the property firm. Each situation Alarm Condition Alerts Historical Database of Real-Time Monitoring,
& Remote Browser Access Power Quality Events Reliability Analysis & Reports REPRINTS OF mis ARTICLE are avail-
may be incentive for the landlord able by contacting Jill DeVries at
to invest in efficiency measures. Figure 6. EEM systems help keep the power on by alerting operations staff to critical conditions, helping isolate devrJesj@bnpmedia.com or at 248-
For a triple net lease, it may sources, verifying backup system performance, and documenting importance evidence if an outage occurs. 244-1726.

18 Energy & Power Management July 2005