Energy usage in the United States and indeed the world poses significant economic and environmental challenges. Commercial and industrial facilities account for nearly 40% of total US energy consumption and GHG emissions presenting major opportunities for improved efficiency and sustainability. Thankfully, new technologies are emerging to provide behind the meter, real-time energy monitoring, optimization, and trading capabilities to help older facilities drastically cut waste and costs.
A System Strained by Inefficiency
The US electrical grid strains under the weight of significant inefficient energy usage. Commercial buildings alone account for 33% of the nation’s total electricity consumption and 30% of greenhouse gas emissions. Unfortunately, 30% of that energy in commercial buildings is wasted through older inefficient lighting, HVAC systems, plug loads, and other uses. Likewise, industrial facilities waste over 20% of energy due to losses in transmission, generation, inefficient equipment and more.
This wasted energy costs American businesses over $60 billion per year in unnecessary electricity costs. It also contributes heavily to the over 4 billion metric tons of CO2 released by the US electrical sector each year. Improving the energy efficiency of commercial and industrial facilities by just 20% could save over $80 billion annually and reduce electricity sector GHG emissions by 20% based on current usage, according to the US Energy Information Administration (EIA).
Barriers to Efficiency
If the solutions are so beneficial, why do inefficiencies remain so high? For most facilities, the challenge comes down to lack of visibility into exactly how much energy different systems use, and often the prohibitively high cost of retrofitting older assets, with new energy and emissions efficient equipment. Building managers simply do not have enough real-time data to know where waste occurs or when to shift usage to off-peak times. Energy bills give basic monthly usage, but lack granular insights needed to target improvements.
Equipment-level energy meters can provide greater visibility but require retrofitting sensors onto every major system – an expensive and time-consuming project. Even with added metering, the sheer volume of data can be overwhelming and difficult to analyze in ways that really improve
operations. Managers need actionable insights into waste and opportunities, not just more data.
This lack of energy visibility leads to reactive management practices, like running HVAC and lighting flat-out all day regardless of occupancy or weather conditions. Or relying on simple timed schedules and thermostat setpoints rather than dynamically optimizing for efficiency. In industrial facilities, lack of energy visibility perpetuates the use of outdated legacy equipment that guzzles far more electricity than modern technologies.
Overall, most facilities treat energy as an unavoidable fixed cost, rather than a variable input that can be actively managed for optimization. But new technologies are emerging to provide the needed visibility, management tools, and financial incentives to finally improve efficiency.
Smart Building Technology for Optimization
Increasingly, facilities are turning to lower cost “smart building” technologies to monitor real-time energy usage, identify waste, and dynamically optimize systems. These leverage internet-connected sensors and cloud analytics platforms to provide granular visibility into how much electricity is used by HVAC, lighting, plug load, and other end uses.
AI algorithms crunch this data to detect anomalies, model energy patterns, and simulate control strategies. The systems provide building managers with dashboards to view energy usage, but also will automatically adjust equipment usage at the plug load without building manager
intervention. This allows for the seamless operation of the building for not only occupant comfort, but significant energy and GHG emissions reductions.
For example, cloud-based energy management systems can model the HVAC energy needed under different temperature setpoints. This allows dynamic adjustment of setpoints to reduce HVAC runtime while keeping within desired comfort bands. Natural temperature fluctuations throughout days and seasons are factored in to optimize efficiency. These systems can also detect faults in equipment such as stuck dampers, allowing for additional savings from maintenance of equipment rather than replacement.
Another major benefit is using energy data to shift flexible electricity usage to times of day when rates are lower, or when on-site solar generation is higher. This demand optimization reduces peak charges and minimizes a facility’s draw from the grid during high-emission periods, with opportunities to fully participate in demand response programs, for additional asset revenue streams as outlined below.
Financial Incentives for Efficiency
Beyond cost savings from avoiding energy waste, new financial incentives are emerging to further motivate efficiency gains. Utility demand response programs provide lucrative payments to industrial and commercial facilities who reduce electricity use during peak grid events. By enrolling in these programs and using their real-time energy insights to shift flexible load, facilities can generate significant added revenue from their unused capacity.
According to the US Department of Energy, demand response programs provide over $2.7 billion in annual revenue to participating commercial and industrial facilities. Enrolling in these programs and optimizing for event-driven efficiency can result in an additional 5-15% in energy cost savings.
More advanced systems are enabling entire groups of commercial facilities to autonomously form virtual power exchanges (VPE). When grid demand is high, these clouds of assets collectively shed non-essential load acting as a single flexible resource. This allows them to benefit from wholesale demand response markets once limited to utilities. VPE participation also qualifies facilities for bonus utility incentives through green energy and grid services programs.
The Road Ahead
Technology now provides the energy visibility, analytics, and controls needed to drive major efficiency gains in commercial and industrial facilities across America. While lack of visibility into energy waste has posed a major barrier, innovations like smart building management solutions
leverage cloud analytics to target savings opportunities. They also enable leveraging financial incentives through utility programs to offset costs and generate revenue.
Combined, these technologies create a powerful business case for investing in efficiency. More widespread adoption could cut commercial and industrial energy usage by over 20%, saving businesses billions in costs while also drastically reducing GHG emissions from this major grid sector.
However, if businesses continue to lack awareness of their energy waste issues and fail to adopt solutions, it will lead to further unnecessary emissions and hinder corporate and regulatory net-zero sustainability requirements. Energy inefficiency is directly tied to the carbon footprint of commercial buildings and industrial facilities. Wasted energy translates to avoidable greenhouse gas emissions that contribute to climate change.
As stakeholders demand greater decarbonization efforts, organizations that ignore efficiency stand to face major reputation damage, loss of investor and customer trust, and in some jurisdictions, significant fines in the coming years. Inefficient energy usage could become a glaring blind spot that overshadows other ESG accomplishments made by a business.
Proactively addressing energy optimization now through smart building technologies can help companies meet energy and emissions reduction goals while boosting the bottom line through cost savings. Businesses that transform their energy management practices also position themselves as sustainability leaders in their sector.
Tackling energy waste further enables long-term resilience planning as regulations and carbon pricing shift market forces. Turning energy efficiency into a competitive advantage will only grow in strategic import as decarbonization efforts accelerate worldwide. The future success and survival of older building assets and businesses will be intertwined with strategically optimizing their energy usage.
Unlocking these savings will be critical for utilities, regulators, and technology firms as America’s energy infrastructure evolves to meet decarbonization and sustainability goals in the years ahead.