spark15: software can transform energy strategies...but will it?

Software Can Transform Energy Strategies

...But Will It Happen?

David MetcalfeCEO

Verdantix

Software Can Transform Energy Strategies – But Will It Happen?

David Metcalfe, CEONovember 10, 2015

About Verdantix

• Independent research and consulting firm• Expertise in EH&S, sustainability and energy• Founded in 2008 and 100% employee owned• More than 250 research clients worldwide• Delivered research and consulting for 17% of the Fortune 500

75 Farringdon RoadLondonUK

175 Varick StreetNew York CityUSA

• Benchmarking• Best Practices• Market Size & Forecast• Scenario Analysis• Product & Service Assessments• Thought Leadership

Theme

Our ecosystem still needs to overcome blockers to investment in

data-driven energy management strategies – let’s make it happen

Agenda

• Which market drivers have the biggest impact on investments in data-driven energy management strategies?

• Are the technology enablers and services capabilities in place to make data-driven energy strategies work?

• How can we collectively overcome the remaining blockers to implementing strategies that combine energy data, software and analytics?

Three Macro Trends Make Data, Software and Analytics More Critical for Energy Strategies

Higher electricity prices

More complex energy systems

Bigger risks to power supply

Three Macro Trends Make Data, Software And Analytics More Critical For Energy Strategies

8


Increasing Energy Costs Will Always Be The Primary Driver of Invest in Energy Management

N =131

Source: Verdantix “10 Steps To Help Industrial Firms Realize Energy Saving Opportunities”, November 2015

And That Translates into Investments in Energy Data and Energy Software

Source: Verdantix Green Quadrant Building Energy Management Software 2015, October 2015

N = 17

52% of Firms Expect They Will Spend More on Electricity and Natural Gas Next Year

N = 285

Source: Verdantix Global Energy Leaders Survey: Budgets & Priorities, June 2015

What are Price Elasticities for Energy Use in Buildings in the US?

Source: US EIA “Price Elasticities For Energy Use in Buildings In the US”, October 2014

If a fuel input cost was increased each year by 1%, by how much would a building owner reduce consumption

of that fuel the next year and the year after?

The Answer Is?

We Need to Acknowledge a Big Challenge in This Market – US Electricity Prices Have Not Increased Rapidly

Source: Verdantix, EIA Jan 2015

Electricity Prices Will Drive Faster Adoption of Energy Data Management in Other Markets

Source: Verdantix Where Next For UK Energy Services, January 2015

Energy Systems Are Becoming More Complex and Interdependent as the Cheap, Centralized Power Gen Model Slowly Gives Way to Alternative Models

Single-Site Real Estate

Single-Site Decentralized

Generation

Multi-Site Real Estate

Data Centers & Telecom

TowersLarge Scale Residential

Urban Zone

Industrial Zone Municipality Smart Grid

For Utility Bill Management, Small Firms Lack Resources, Large Firms Face Increased Complexity

Source: Verdantix Urjanet Supports Growth of Energy Management Ecosystem, April 2015

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That’s Why 57% of Energy Managers Currently Outsource or Plan to Outsource Energy Data Management (n=285)

Source: Verdantix Global Energy Leaders Survey: Budgets & Priorities, June 2015

N = 285

Empire State Building $20M Retrofit – Business Case Predicated on Tenant-Level Billing Data

You Need Billing, Usage & Generation Data to Sell Power Back to The Grid

Participants in Demand Response Programs Need Rock Solid Utility Bill And Energy Consumption Data to Participate

Source: Suffolk University

Power Utilities Are Drowning in Data – For 64% Smart Meter Data is a Very Significant Driver of IT Spending, 50% Grid Data Say The Same for Grid Data

Source: Verdantix Green Quadrant Power Utility IT Services (North America), February 2015

Power Utilities Are Seeking to Convert Their Investments in Data Systems Into Cash and Cost Savings

“The focus of any IT project is about how to take cost out of the business

by automating processes and creating efficiencies. We are looking to use a

digital platform to automate the dispatch of our mobile workforce.” -

Canadian Utility

“Having invested in smart meters, we are looking to drive ‘meter-to-cash’. We are looking at using smart meter data to benefit the grid. In particular

we are looking at improving our monitoring and forecasting of energy

consumption.” - US Utility

Source: Verdantix Green Quadrant Power Utility IT Services (North America), February 2015




Bigger risks to power supply

Lambeau Field – Where The Best NFL Team Plays – Couldn’t Function Without a Reliable Energy Management System

What’s Wrong with This Picture?

Bad dataGood data

The Mets’ Daniel Murphy Didn’t Bat As Well As Expected in The World Series

27

The Mets’ Daniel Murphy Didn’t Bat As Well As Expected in The World Series

28

High Quality Energy Data is Critical to Inform Customers About Power Outages & Availability

Agenda




Energy Systems Are Becoming More Complex

Multiple energy domains linked together with information technologies, electrical and mechanical systems and system-wide

governance to improve operational management and financial performance.

Software Applications That Can Leverage High Quality Energy Data Are Available in Abundance

Some Building Energy Apps Have Rock Solid Data Acquisition & Data Management Functionality

Building Energy Apps Offer Functionality That Responds To Priority Customer Requirements

Energy Systems Are Built on a Foundation of High Quality Data

Strategy & Financing

Process & Equipment Integration

Data Management, Analytics & Field Services

Data Collection & Translation

Software Workflow & Analytics

Network Monitoring

StrategyDeveloper

MasterPlanner

ProgramManager

IT Integrator Engineering Integrator

Technical Plans & Project Coordination

Who Does What to Optimize an Energy System?

Energy Services Firms Are Building Out the Capabilities, Acquiring and Partnering To Better Manage Entire Energy Systems

Benchmarking Energy Services Capabilities Identifies Strengths and Weaknesses

Data Collection Through Network Monitoring and Software Platforms Are a Constant in the Energy Services Delivery Capability

We Are Heading Towards a Phase in Market Evolution Where Data and Software Tools Are Designed for Energy and Facilities Providers

Agenda




Hypothetical Model: Business Case for Implementing Energy Software

Source: Verdantix Business Case For Building Energy Management Software, March 2014

Our Analysis Indicates a Positive ROI and Payback Period of Just Over 2 Years

Source: Verdantix Business Case For Building Energy Management Software, March 2014

Hot Off the Press – No. 1 Challenge to Get Funding for Energy Projects is the Need to Compete for Cash Within the Organization

Source: Verdantix “10 Steps To Help Industrial Firms Realize Energy Saving Opportunities”, November 2015

N =131

The Flux Capacitor Enables Us to Go Back in Time to….

A 2012 Survey We Conducted Which Had Exactly the Same Insight!

n = 210

If We Push a Bigger Value Proposition We Can Overcome the Barriers to Adoption

• Small scale business cases• Payback hurdles limit project ambition• Fragmented spending• Siloed energy spend data• Minimal understanding of creative

financing• Weak governance structures• Insufficient engineering talent to effect

change• Lack of engagement from the CFO• Energy costs squeezing out energy

management budgets