September 2010

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A Rose
"What's in a name? That which we call a rose by any other name would smell as sweet".
William Shakespeare’s “Romeo and Juliet”


Anto Budiardjo
President & CEO,
Clasma Events Inc.

Contributing Editor

 I’m talking about the endless list of buzzwords that have occupied these pages over the past years and represent technologies and initiatives that have—and have not—transformed our industry and environments.

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Decades of Buzzwords

We’ve lived through them, we’ve wondered if they were real, and we’ve questioned whether or not they would have an impact on our businesses and the industry. I’m talking about the endless list of buzzwords that have occupied these pages over the past years and represent technologies and initiatives that have—and have not—transformed our industry and environments. From Open Systems, IT Convergence, IP Networks, XML and many others, industry visionaries and technology leaders have deliberated on how and why these buzzwords would make a difference.

That is not to say that these buzzwords have come and gone in vain. Many of them are standard practice now, implemented by most BAS manufacturers, and installed in many buildings today. In some cases these initiatives and technologies have dramatically changed how systems are specified, procured, installed and maintained, and they have provided significant opportunities to system vendors and integrators who have adopted them fully.

I myself have been guilty of talking about these, and I don’t regret it in any way. These have all been great initiatives to move the industry forward, but they have something in common that’s not so good: not one of them has provided that significant value proposition for building owners to rush out and demand them.

I have often stated that the future of building automation lies in the hands of outside players, outside of the traditional BAS industry. Because I came from an IT background, and because many of the changes in BAS have been IT-centric, I naturally thought that IT would be the single most significant driver of change. I’ll admit that I’m partly wrong on this front. IT is only an enabler for change.

The truth is that IT is changing many other things, and it’s this combination of changes that will dramatically change the BAS industry. The driver is not IT, the driver is energy, and the way forward is enabled by IT. The term that best describes this major shift is Smart Grid.

What is Smart Grid exactly?

Many people have different answers; mine is simply that Smart Grid is an overlay of information technology infrastructure on top of the electricity energy system. The purpose of the IT infrastructure is to facilitate a more efficient energy system using electricity by balancing electricity generation and usage.

I use the term “energy system” as Smart Grid is not only about the electric grid, or at least it’s not just about the grid that we think of. The true Smart Grid is everything from generation (wherever it may be) to consuming DEVICE (wherever it may be). So this definition includes the energy system in buildings, in other words, building automation systems.

The size of Smart Grid is actually quite frightening. It is nothing short of a system that covers all (I mean all) energy generating, management and consuming devices in the world. This is a large definition that includes not only utility assets and systems, but building automation systems and all of its components, home automation systems, appliances, consumer electronics, all personal devices from iPods, toys, and shavers as well as all manufacturing and transportation systems (this one is a real biggie).

In a recent estimate of the size of the Smart Grid market, a prominent VC company came up with 45% of GDP as the potential size of impact of Smart Grid.

What is different now?

The difference now is people understand about Smart Grid, it is becoming a term that the general business media talks about, the U.S. president talks about it regularly, and almost everyone is trying to get into the Smart Grid space. But most important to the BAS industry is that the relevance Smart Grid has to smart buildings is starting to be understood, and this has the potential of addressing the missing component of BAS innovation as mentioned above.

Large buildings represent around 70% of the use of electricity generation in the U.S. In the future where controlling load is the name of the game for Smart Grid, the ability to control large loads that large buildings represent will become more and more valuable. Remember that a megawatt of power avoided is worth more than the cost of generating that same megawatt, so Demand Response (DR) and new techniques such as dynamic pricing will become a key tool for managing the energy supply of tomorrow’s grid.

Control Solutions, Inc Large building control companies are starting to realize their potential role in the Smart Grid; the business opportunity is truly significant and the ways that the BAS industry will find valuable roles is still being discovered.

Is it too late?

In a word, no! Smart Grid is a long play; it will take the U.S. and the world’s energy systems decades to implement this radical and deep-rooted change. But the land grab is and will be going on in the next couple of years, with new and incumbent players working out just how to help shape this business opportunity.

There are huge education and learning tasks ahead of us. The complexities of building automation will be simplified through much of the innovation that we’ve seen unfold. New areas need defining, such as continuous commissioning, measurement and verification, and just exactly what business models will BAS players be able to carve in a world where buildings become a very integrated part of a complex renewable energy system.

I have been writing on this site for almost a decade now, and the events produced by Clasma Events have always been focused on moving the BAS forward in technology and practice. It’s truly rewarding for me now to see that strong value proposition seem to be unfolding for much of the work that I and dozens of others have passionately talked about on these pages.

How do you participate?

So the question is how do you, as BA players, participate in the Smart Grid?

To see the true strategic direction of BAS and Smart Grid, I urge you to attend www.GridWeek.com in October; the event has an incredible lineup of speakers from Smart Grid and the building industry too. For a more geeky perspective of standards and system architectures, I suggest you attend www.Grid-Interop.com this December in Chicago; this is the event where the future direction of network and information standards will be defined.

The big event that BAS players should not miss is BuilConn held as part of www.ConnectivityWeek.com in Santa Clara next May. Next year the focus will be on financing the revolution. From new business models of implementation to discussing capital for new entrepreneurial players in the space, it’s time to roll up our sleeves and make of all this work.

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