March 2008

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Control Solutions, Inc. - Minnesota

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The Number One Thing That Will Grow Your Business in 2008
The time for Energy Engineered Systems (EES) is now because the traditional construction process is broken and it is hard to deliver value without EES.

John J. "Jack" Mc Gowan, CEM
Energy Control Inc
Contributing Editor

System Integrators and Building Automation companies are continually faced with dramatic challenge in maintaining and growing their businesses. It is easy for many to forget how hard it was to get direct digital control (DDC) specified for a building project in the late 70’s and early 80’s. The downside of having DDC and integration specified in nearly every large building today however, is that the decision on which system to install is made more often on price not value. Fewer owners will select a system based on a protocol or a technical feature because they believe that all systems are the same. My mantra to customers is that the decision should be made based on the company installing the system. Who will back the technology up and service it over time? That is important, but the customer also wants to see value. That leads me to state that the next frontier for building and automation systems will be driven by energy, and the primary reasons to engineer systems will be energy focused. An even more provocative statement is that the future of your business relies on embracing this simple fact.

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An emphasis on value-based systems the save energy does not apply to manufacturers, engineers and contractors only, because consumers have made it clear that they will buy from companies that embrace the notion of green. CEO’s, Mayors, University Presidents and many other leaders buy this idea, offering an unprecedented opportunity to elevate the importance of systems. For many building owners, systems have been out of sight and out of mind. Leighton Wolffe of Constellation NewEnergy said that the “markets are shifting the premise of building automation systems from temperature control to energy control.” Future buildings will embrace Energy Engineered Systems (EES) where occupants define how much comfort they want based upon cost and other factors. Growing emphasis on LEED (Leadership in Energy and Environmental Design), Energy Star Buildings and other standards that target the entire design process from site selection to systems reflects this too.

So the time for EES is now. Especially as the traditional construction process becomes more broken; it is harder to deliver value with automation and engineered systems. Design specifications are often not enforced and integrators find it difficult to do the right thing while making projects profitable. So what is the next value proposition? Energy, and key to this proposition is that the entry point for automation and technology into buildings is not through design professionals but through electric meters! The emphasis is that higher energy prices, including $100 per barrel oil, are the most significant thing to happen to system design in decades. Combine that with the impact that the 2030 challenge, etc. believe that building energy consumption has on climate change. Also consider that the Energy Independence and Security Act of 2007 signed by the President in December mandates that all U.S. buildings will be high performance / energy efficient by 2050.

AHR presentations in New York developed by Ken Sinclair, the GridWise Architecture Council and for the B2G (Building to Grid) Summit underscored the importance of energy as will Connectivity Week this May. So how do building owners make it happen? The answer is different for retrofits, new construction projects, etc. Either way the owner should seek out teams, not just consultants, because any project can benefit from a blend of design / build solutions that include up-front analysis and involve contractors with pragmatic experience operating buildings and design professionals. The real EES opportunity is to provide building owners with a completely new way to participate in energy markets. Traditionally building energy technology targeted ways to optimize building operation / efficiency such as scheduling, optimization and demand limiting. More recently energy programs are often limited to internally funded measures, typically requiring a return on investment (ROI) of 30% or better. The other popular approach has been used by Energy Service Companies (ESCOs) that use a financial sale to create an operational revenue stream to implement capital energy improvements. Importantly most states capped this funding vehicle at ten years, so the measures were limited. All of this being said, broad based EES projects requiring major investment were rare, unless customers were willing to consider “Life Cycle Costs”.

Control Solutions, Inc Going forward a more common example might include systems like a large scale EES higher education project currently underway that was partially funded by DOE. The campus already has an extensive BACnet™ based automation systems plus smart meters to measure electricity, natural gas, BTU’s of hot/chilled water and steam to clearly quantify energy consumption. The campus also has eight megawatts of combined heat and power distributed generation (DG). This may not be unusual but EES becomes more interesting here with the systems technology that is being developed. Demand Response (DR) is being enabled through a Web Portal so that the utility can drill down through the Web into the energy profile of this 20 megawatt customer to allow changes using DG, DR, etc. For example the first fully EES enabled building on campus has integrated solar thermal with thermal storage and an absorption chiller, and it can be taken off the grid entirely for cooling. The next phase of activity on this project is to develop algorithms that will make it possible to change a building sequence of operation based upon energy needs, economic value and potential reliability issues on the grid. Projects like this glimpse of the full potential for EES and will transcend many of the traditional boundaries in the construction business enabling creative forward looking companies to win.

John J. “Jack” Mc Gowan, CEM is President / CEO of Energy Control Inc., an Energy Service Company and System Integrator. Mc Gowan is Chairman of the U. S. Department of Energy GridWise Architecture Council. He has published 5 books including “Direct Digital Control” on Fairmont Press and is a Contributing Editor with The Association of Energy Engineers accepted him into the International Energy Managers Hall of Fame in 2004 and was named 1997 “International Energy Professional of the Year”.


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