— By Melissa Blanken —
3 ways energy costs are driving sustainability practices for smaller buildings.
Utilities, grid operators, energy consumers and technology innovators all have roles to play in stabilizing the power grid and keeping the lights on for everyone, and a key part of the solution includes commercial buildings. Historically, energy efficiency programs have either focused on the residential sector or on larger buildings, creating a major gap in programs for small- to medium-sized commercial buildings.
Existing buildings are responsible for almost 30% of global energy use and nearly 40% of global CO2 emissions. Plus, over 90% of buildings in the U.S. are under 50,000 square feet, covering retailers, restaurants, convenience stores, boutiques, community shops and more. All in all, smaller buildings are in an incredible position to drive sustainability efforts.
Our recent survey on energy efficiency in commercial building queried more than 800 professionals in the U.S. and Canada who serve as decision-makers for their organizations’ energy efficiency, facility management or sustainability efforts. The results shine light on three ways rising energy costs are a growing priority for sustainability practices among facility managers of smaller buildings.
1. Energy efficiency and grid reliability have moved up the priority list
Energy use in commercial buildings is a global problem. Improving efficiency efforts can greatly impact sustainability goals and energy security, while also saving money on energy costs that can be applied to other business needs. The combined risks of rising energy costs, extreme weather and grid blackouts make it even more imperative that commercial buildings can withstand energy disruptions. Unexpected power outages can lead to reduced business hours, lost perishables or uncomfortably hot (or cold) guests, and if there’s a way to sidestep these risks, retail and restaurant facility managers are interested.
Smart building technology can help improve energy efficiency quickly and easily. Building operations must adjust to pricing, extreme weather, peak demand, maintenance requirements and other needs to ensure a suitable environment for those within. Incorporating an energy management system (EMS) enables facility managers to make informed decisions about comfort, quality, energy efficiency and sustainability — all in real time.
Additionally, there is a massive opportunity to enroll retail and restaurant facilities in utility energy efficiency programs, like demand response (DR), where the relationship is mutually beneficial. Designed to reduce energy consumption during periods of high demand, utilities offer incentives to building managers to support the grid during extreme weather events and other peak periods. Small, collaborative decreases in energy load across many participating buildings provide a large, reliable reduction impact — reducing stress on the grid for higher reliability and stabilizing costs for facility managers.
Survey proof points:
• 98% of respondents working in facilities/building management rated energy efficiency efforts as extremely or very important to their role
• 94% of respondents have concerns about grid reliability, as a steady power source is critical for keeping businesses open, restaurants running and customers happy
• 90% of participants said they planned to increase energy efficiency improvements
• 39% plan to implement DR and other demand management efforts
• 36% have included an EMS or building management system in their plans
2. Bigger energy bills are worrisome
Commercial electricity costs have been steadily increasing and recently saw a drastic 18% increase from 10.6 cents per kWh in 2020 to 12.55 cents per kWh in 2022. With aggressive mass electrification efforts gaining momentum, this trend is likely to continue. While HVAC, lighting and refrigeration systems are some of the costliest line items in a commercial building’s budget, they’re also critical for retailers and restaurants to keep the doors open.
Survey proof points:
• 99% of respondents expressed at least some level of concern over rising costs, as the electric bill, generally a top line item for commercial buildings, continues to climb
• 79% experienced energy cost increases in the last 12 to 24 months
3. Sustainability strategies are getting smarter
The lower-cost and easier-to-implement efforts, including efficient lighting and smart thermostats, are likely already part of the plan, but why stop there? Rising energy costs are inspiring facility managers to expand sustainability efforts with more advanced strategies, putting them in a better position to reach energy efficiency goals.
In fact, some are considering distributed energy resources (DERs), including renewables, battery storage and electric vehicle (EV) charging to meet their sustainability goals. As more DERs become commercially practical, they help unlock additional capacity within the building, creating more revenue streams for businesses, strengthening the business/utility relationship and benefiting both business and the grid in the long term.
Survey proof points:
• 39% of respondents plan to add EV charging
• 39% indicate they’ll enroll in utility energy efficiency programs
• 38% have included renewable energy sources in their plans
• 37% plan to include onsite battery storage
Smaller Buildings Have the Most to Gain
Traditionally, energy has been a linear purchase from the grid to the building based on certain power requirements, which are influenced by the energy-consuming assets within the building, weather trends and building occupancy. When smart controls, building assets and the grid are connected via smart devices to make the building grid-interactive, operators can control energy demand to improve efficiency, lower costs, unlock new revenue streams through grid services, and operate more sustainably.
The future of energy efficiency for commercial buildings includes smart devices that optimize retail spaces and restaurants individually, network them together and connect them to the power grid, creating a give-and-take relationship with utilities. This two-way communication allows both sides to work together to balance supply and demand without any of the normal downfalls. For businesses it means lower energy costs, lower operational costs and buildings that are ready to withstand long term energy infrastructure changes. For utilities, it means ample on-demand power capacity that can be called on within minutes to stabilize the grid during times of peak demand. For communities, it means reliable power. It’s a win-win-win situation.
— Melissa Blanken is the chief marketing officer at GridPoint, a leader in building energy management and optimization technology that decarbonizes commercial buildings and accelerates a more sustainable energy future. Blanken is responsible for leading GridPoint’s marketing efforts and strengthening relationships with customers, utilities, strategic partners and investors. She also leads the go-to-market strategy for new product launches and features.