I’m watching some big trends that have been building up steam for some time, and they are now poised to become bigger and more obvious in 2021. In a nutshell, we now have the technologies to simultaneously make buildings cleaner and smarter. Three stories from 2020 illustrate what I’m talking about.
First, COVID-19 has dramatically altered the occupancy patterns in commercial buildings of every type. As Bloomberg notes in this video, office work in particular has changed dramatically. The jury is still out about how long-lasting these changes are, but there are lessons to be learned.
The big takeaway here is that buildings need situational awareness. For example:
Tech makes it possible, if not always desirable, to do a much higher proportion of work, learning, and other interactions remotely.
Buildings that used to operate on relatively static schedules can benefit greatly from more dynamic operation decisions.
Every type of nonresidential building (office, retail, church, school, restaurant, grocery, warehouse, municipal, etc.) has different challenges, but all could be managing their energy a lot better. They can do this through more monitoring and situational awareness software that adjusts to the building’s energy needs—as well as to the grid’s needs. There’s good policy to be made here, and we’d suggest starting with schools.
Second, the Federal Energy Regulatory Commission (FERC) recently issued its Order 2222 that has made distributed energy resource (DER) monetization an even bigger deal than ever before. While it will be years before all the slow-moving regional grid operators get their acts together, the message is clear: DERs are first-class citizens on the grid, from behind the meter up to the transmission system, and it’s time to pay ‘em as such. This is a big deal.
The final and third trend is that interactive buildings are valuable. Don’t take my word for it. The big brains at Rocky Mountain Institute (RMI) and the big money from the U.S. General Services Administration (GSA) have declared in a white paper that in the GSA portfolio alone, Grid Interactive Buildings (GIBs) have the potential to unlock $50 million in annual cost savings to the GSA, and $70 million in value to grid users by reducing generation and transmission and distribution costs, benefiting all ratepayers.
Buildings currently use 70% of the electricity in this country, yet they’re still using that electricity as though we were still running a 20th-century central-plant fossil-fueled grid. That grid model is so 1921, and it’s now being disrupted.
Unlike 1921, today’s buildings can now produce, consume, store energy, and participate in energy markets. As a result, RMI and GSA rightly point out that buildings will need to become more grid-aware and grid-interactive. In my opinion, these three trends are pushing the market toward a boom in behind-the-meter DERs in all sectors, but especially in the commercial sector.
Adding brains to commercial buildings gives more bang for the buck than individual homes, and the commercial market is ripe for disruption and innovation. While FERC 2222 applies to all building types, Trends 1 and 3 are most applicable to commercial buildings.
I’ll have more to say about each of these trends as the year continues.
One more thing: Anyone who cares about how FERC 2222 affects behind-the-meter assets should step up and become dues-paying members and sponsors of the Peak Load Management Alliance (PLMA), where actual practitioners in this space gather to make it all real.