Demand for efficiency drives smart building trend

There is no denying buildings are getting smarter. By 2022 the global smart building market is expected to reach US$31.7 billion, at a compound annual growth rate (CAGR) of 33.7 percent from 2017 to 2022, according to a report by MarketsandMarkets. A growing demand for integrated security and safety systems, along with increasing government initiatives for smart building projects are among those driving market growth.

The smart cities market is also growing rapidly, and smart buildings are playing an integral role. In fact, smart buildings will make up 7 percent of the total global smart city market in 2025, according to Frost & Sullivan. Furthermore, with several research firms expecting the global smart cities market to surpass $1 trillion in the next few years, the opportunity for growth is exponential.

Smart City Initiatives Boosting Adoption

As more and more governments around the world strive to make their cities smart, buildings are looking for ways to increase operational and financial efficiency to keep up with the smart trend. According to MarketsandMarkets, increased initiatives to build smart and intelligent structures by European governments is why the region is expected to account for the largest market share during the period 2017 to 2022.

Terrence McManus, VP of Business Development at BuildingIQ argued the adoption of smart building technologies should be supported and driven by infrastructure-based utilities, cities, governments and building owners, in support of climate change initiatives. “This adoption effort should be led by cities (i.e., those closest to the buildings) to provide macro guidance for all buildings within a city, and the governments to provide interstate/territorial collaboration.”

“At the moment, I think we are at the beginning of the journey where smart city initiatives, or laws, drive adoption of smart buildings. Smart cities are just now starting to address macro issues related to smart transportation, infrastructure, logistics (movement of goods) and finally parking and traffic flow — all of which will improve the overall health of the city, allowing smart buildings to thrive,” McManus said.

Building codes and regulations are also driving smart building adoption. In the area of safety, energy management and sustainability, codes and regulations over the last 20 to 30 years have been increasing for the benefit of building occupants, owners and the community at large, according to Luis Suau, Technical Leader for Kinetic Industrial Products at Cisco Systems. “Sustainability is being promoted through building codes and regulations in order to protect and preserve the environment. These codes and regulations also improve the building facility to promote health and wellbeing in the workplace,” he added.

The drivers, however, are a double-edged sword, according to Steve Nguyen, VP of Product and Marketing at BuildingIQ. “On one hand, they drive interest and conversation. On the other, because they are, oftentimes, initiatives with little enforcement or are costly to attain, they can create confusion and uncertainty. It’s our job, as a solution provider, to help clients navigate the impact and opportunities presented by these drivers.”

At the end of the day, however, smart building management will need to relate back to increasing shareholder return, reducing budget constraints, and improving operations to maintain high-quality buildings. “Although initiatives and laws can factor into the equation when enforced, buildings must go through their own unique ‘journey’ to understand and fund technologies, which benefit all stakeholders,” McManus added.

Efficiency Equals Savings

Operational efficiency is one of the major advantages driving smart building adoption. By providing building operators with actionable data that can optimize energy usage and sustainability, enhance tenant comfort, bring greater automation, etc., they can reduce operating costs. Up to 30 percent of building maintenance costs can be reduced with smart building solutions, according to Aseem Joshi, Country GM of India at Honeywell Building Solutions.

“At the highest levels is the building owner. A major benefit is they are starting to see that smart solutions drive a solid and profitable return on investment (ROI). Properly implemented smart building solutions drive lower operating and maintenance costs. Tenants are willing to pay premium lease rates for buildings with these solutions, and the balance sheet can represent increased valuation of the building asset compared to other buildings with similar valuations,” McManus explained. “The building owner drives the facility budget, thus the amount of capital that can be applied to smart initiatives is starting to increase because of positive industry results. Utility incentives continue to have an impact on the funding and ROI justification of emerging technologies.”

Suau noted that capital and operational efficiencies result from converged power and controls (communications) during the design and installation of building infrastructure; this means leveraging the same cable type and architecture for multiple building systems. “As more building devices utilize a converged infrastructure for network power and control, more savings is realized in the form of labor and reduced electrical conduit, circuits and electrical panels needed in buildings. In some cases, cost savings of up to 25 percent have been reported in first-in cost and up to 85-percent savings has been documented in the energy savings from smart digital LED lighting alone,” he said.

Better management of the infrastructure is also an advantage of implementing a smart building. “When digitized, the devices in the building become IP endpoints which can communicate with management applications and digital/IP building devices. This allows the building manager to obtain device status and know when a failure occurs before they become reported user complaints. Dashboards provide device status and generate data that can be used to continuously optimize building usage. Device and building analytics can predict failures or request preventive maintenance of devices and building systems,” Joshi explained.

In regard to sustainability, a smart building solution can support all three dimensions: environmental, economic and social. “Environmentally, this technology reduces the amount of metal conduit required in buildings and many of the products have recyclable properties which can be reused at the end of their lifecycle. Economically, the digital building technology brings granular software controls that save of energy (and costs). And finally, the advanced occupant experiences and sensor capabilities can create a healthier environment within the building,” Suau added.

Reducing Energy Costs

Increasing energy consumption and rising electricity expenses are pushing building owners to adopt smart buildings solutions that can automate control systems and enable them to avoid energy wastage, according to a report by Technavio.

“Energy is a limited resource which must be conserved to avoid the depletion of natural resources required to produce it, thus energy efficiency is mandated through building codes,” Suau said. “To control building systems and devices, the use of semiconductor electronics powered by low voltage DC has been increasing as technology improves. In many cases, these low voltage controllers have been powered with AC high voltage with the use of AC-DC transformers.”

According to Joshi, implementing smart building solutions to make buildings green, safe and productive could potentially save up to 30 percent of water usage and 50 percent of energy usage. “Green buildings provide many economic advantages such as generating higher value for building owners and lower building lifecycle cost.”

Additionally, smart city initiatives related to the power grid have already been implemented. According to Nguyen, such initiatives are helping to create a market/operating environment that favors cloud-based services, artificial intelligence (AI) and smarter buildings. “Let’s assume there is a city with a solar-powered microgrid that supplies X% of power to local companies. Forecasting cloud coverage becomes critically important given the all or nothing power delivery. Smart systems that can take the forecast information and proactively heat or cool a building in advance of cloud coverage is a logical and necessary function of a smart city/smart building scenario. In the case of BuildingIQ, one could imagine that we’d be able to use our IoT-enabled intelligent energy management platform to forecast cloud coverage and set up control sequences in a building to ensure uninterrupted comfort through the day based on the power source for the building,” he explained.