The New Business Case for Energy Efficiency

The traditional business case for energy efficiency has relied on the premise that it creates long term value in terms of energy savings. In essence, value is derived through the existing operating cost minus the new operating cost. In other words, value is generated when the new operating cost is less than the previous operating cost.

Breaking this down, this means that the total value derived from such a project tends to have limited potential because it can never exceed the current operating cost by design. Energy efficiency projects therefore are often seen as ‘bottom line-centric’ by companies. As a result, such projects are often not perceived as ‘path breaking’ strategic investments.

However, building automation and management is now being reshaped by the belated introduction of information technology and the power of data analytics. This, combined with a rich and diverse set of intelligent equipment, is allowing rapid strides in standard communication protocols and demand for future proof infrastructure. This has led to a change in the way buildings operate. The emergence of such data-driven analytics alters the value equation slightly with potentially ‘game changing’ implications.

Under the new scenario: Total Value = Existing operating cost – New operating cost + New opportunity value

For the built environment, this is enabling technology to analyse building energy usage patterns via smart grid systems to provide the most efficient fuel mix and time of day energy production. In addition, it can regulate consumer energy usage behaviours through real-time pricing. These factors alone, could radically change the energy availability through shifting of peak demands and utilisation of the most efficient use of available resources.

Furthermore, the 'Internet of Things' is going to fundamentally change the way building management is carried out which will impact sustainability. This means sustainability has an emerging opportunity to ‘flex its muscles’ and become a long term strategic investment that creates real value.