Harnessing power smartly: Energy Management Systems in commercial real estate

October 25, 2023

In today's fast-paced commercial real estate environment, energy consumption remains a pivotal concern. As operational costs rise and building efficiency becomes a top priority, the spotlight is on the role of Energy Management Systems (EMS).

Table of contents:

What is an EMS?

Evolution of EMS

Challenges in commercial energy management

The role of building analytics

ROI of an EMS

Government incentives

Future trends in energy management

What is an Energy Management System?

In a world increasingly conscious of environmental impact and resource conservation, the concept of an Energy Management System (EMS) has become central to modern infrastructure and operations. But what exactly is an EMS?

An Energy Management System is a comprehensive framework designed to monitor, control, and optimize the energy consumption and performance of a building or a group of buildings. It combines software, hardware, and a range of processes to provide a detailed understanding of energy usage, facilitating more informed decision-making and promoting efficiency

Key components of an Energy Management System:

  • Sensors and meters: These devices continuously collect data on various parameters like temperature, humidity, lighting levels, and energy consumption across different zones of a facility.
  • Control units: These components execute commands, such as turning off lights in unoccupied areas or adjusting HVAC settings to maintain optimal temperatures.
  • Centralized dashboard: This interface allows facility managers or system operators to monitor real-time data, set energy-saving goals, and manage various building systems from a unified platform.
  • Data analytics engine: Modern EMS often incorporate sophisticated software that can analyze historical and real-time data to identify patterns, inefficiencies, and areas of potential energy savings.

At its essence, an Energy Management System offers myriad benefits, from significant cost savings and reduced energy wastage to a decreased carbon footprint and enhanced building value. Furthermore, in an era where sustainability and green credentials are becoming key decision drivers for tenants and investors, an effective EMS positions a commercial property at the forefront of the market.

Evolution of Energy Management Systems in commercial real estate:

The history of Energy Management Systems in commercial real estate is a testament to technological ingenuity, societal shifts, and a growing understanding of our planet's needs. Over the decades, as commercial buildings grew in size and complexity, so did the demands and capabilities of EMS. Let's trace this evolution:

The early days – manual controls and standalone systems:

In the initial phases, energy management was a manual endeavor. Facility managers relied on standalone systems, often only for heating and cooling, with rudimentary control capabilities. The scope was limited, and so were the benefits.

Integration and centralization:

As the intricacies of commercial buildings expanded, so did the need for more integrated solutions. The 1980s and 1990s saw the rise of Building Management Systems (BMS) that combined various subsystems like lighting, HVAC, and security into a centralized interface.

Digitalization and the dawn of data:

The late 1990s and early 2000s marked the onset of digital transformation. With the proliferation of sensors and the advent of the internet, EMS began harnessing real-time data. This led to more accurate monitoring, improved efficiency, and predictive maintenance capabilities.

Green movement and sustainability:

The global push towards sustainability in the 2000s changed the lens through which EMS was viewed. No longer just about cost savings, EMS started playing a pivotal role in reducing a building's carbon footprint, aligning with LEED and other green building certifications.

IoT and smart buildings:

The integration of the Internet of Things (IoT) in the 2010s elevated EMS to new heights. Buildings became 'smart', with interconnected devices communicating seamlessly. This allowed for more granular control, automation, and the optimization of energy usage based on real-time demands.

Artificial intelligence and predictive analysis:

Today, the most advanced EMS leverage AI and machine learning. These systems don't just respond to immediate demands but can predict future energy needs based on historical data, weather forecasts, and occupancy trends. The result is a proactive approach to energy management, minimizing waste and maximizing efficiency.

Cloud computing and global management:

With the incorporation of cloud technologies, modern EMS can be monitored and controlled remotely. This is particularly beneficial for companies managing multiple properties across different regions, enabling standardized energy management practices and centralized data analytics.

As we stand on the brink of a new era marked by sustainable cities and even more advanced technologies, the role of EMS in commercial real estate continues to evolve. What remains constant is the goal: achieving optimal energy efficiency while fostering a sustainable and comfortable environment for occupants.

EMS Challenges Explored: Overcoming Barriers in Commercial Building Energy Management

Energy Management Systems  have been transformative for commercial real estate, offering enhanced control, efficiency, and sustainability. However, the journey to seamless energy management is not without its hurdles. The intricate nature of commercial buildings, combined with technological and operational challenges, presents unique obstacles. Here's an exploration:

Diverse functionalities and energy needs:

Commercial real estate isn't a monolith. From sprawling office complexes to multi-storied malls, campuses, hospitals or airport terminals each type has distinct energy requirements. Tailoring an EMS that caters to diverse needs—like the temperature control for a server room versus a retail store—requires finesse and adaptability.

Legacy systems integration:

Many commercial buildings are saddled with older systems and technologies. Integrating these legacy systems with modern EMS can be both technologically challenging and expensive, potentially leading to inefficiencies or data inaccuracies.

Real-time data synthesis:

For an EMS to be effective, it needs to process vast amounts of data from various sources in real-time. Ensuring this data is accurate, consistent, and actionable is a significant challenge, especially in larger or older buildings.

Security concerns:

As buildings become smarter and more connected, they also become more vulnerable to cyber-attacks. Ensuring the security of an EMS, and by extension the entire building's operations, is paramount yet challenging in today's dynamic cybersecurity landscape.

Operational buy-in and training:

An EMS is only as good as its users. Getting buy-in from stakeholders, training staff, and ensuring consistent and proper usage can be an uphill battle, especially in organizations resistant to change.

Evolving regulatory landscape:

Energy and building codes, as well as environmental regulations, are in flux globally. Keeping up with these changes, and ensuring compliance, adds another layer of complexity to energy management.

Financial constraints:

Advanced EMS solutions come with a price tag. For many property owners, especially of older buildings, the upfront costs of implementation and the potential disruptions during the transition can be daunting deterrents.

Scalability issues:

As commercial entities grow and diversify, the EMS needs to scale with them. However, scaling while maintaining efficiency, accuracy, and user-friendliness is a challenging endeavor.

Interoperability with other systems:

Commercial buildings often deploy various software and hardware systems for different functionalities. Ensuring seamless interoperability between the EMS and these disparate systems can be technically challenging.

Sustainability versus profitability:

While there's a push towards greener operations, there's also a need for profitability. Balancing the short-term costs of sustainable initiatives with long-term benefits can be a strategic challenge for decision-makers.

In conclusion, while the advantages of EMS in commercial real estate are undeniable, navigating these challenges requires strategic planning, technological acumen, and a commitment to continuous improvement.

The role of building analytics software in energy management

Building analytics software, such as PEAK Platform by CIM,  plays a pivotal role in the energy management of commercial buildings by providing data-driven insights and facilitating intelligent decision-making. The confluence of EMS with building analytics software has brought forth an era of unprecedented capabilities:

  • Real-time monitoring: Monitoring energy consumption and operational data across various building systems.
  • Historical data analysis: Utilizing historical data to understand energy usage patterns over time.
  • Optimization: Recommendations for optimizing building systems to achieve energy savings.
  • Benchmarking and performance tracking: Benchmarking energy performance against similar commercial properties or predefined standards.
  • Fault detection and diagnostics (FDD): Identifying and diagnosing issues to maintain energy efficiency.
  • Energy reporting and compliance: Generating energy reports for compliance with local energy codes and certifications.
  • Integration: Integrating data from various building systems for a holistic view of building operations.
  • Cost control: Insights into energy consumption patterns for better budgeting and energy procurement.

In essence, building analytics software is an indispensable tool in the modern commercial real estate landscape.

ROI on  Energy Management System Investments

The return on investment (ROI) in Energy Management Systems goes beyond energy bills. While the immediate financial savings from energy efficiency are palpable, the long-term gains encompass various other spheres, from enhanced property valuation to a boost in tenant satisfaction and demand. Let's break it down:

Energy savings:

The most immediate and quantifiable return comes from reduced energy consumption. For instance, lighting optimized through EMS can see up to 20% energy reduction. When it comes to HVAC systems, with efficient monitoring and management, buildings can achieve significant reductions in energy wastage, translating to notable cost savings. Over time, these savings can offset the initial investment made in the EMS and contribute to ongoing operational cost reductions.

Increased property value:

An energy-efficient building, equipped with state-of-the-art EMS, invariably stands out in the real estate market. Such properties can command higher lease rates or sales prices, thanks to their advanced infrastructure and reduced operational costs. Moreover, as energy prices continue to escalate, future-proofing properties with EMS becomes an attractive selling point for potential investors.

Attracting environmentally conscious tenants:

The modern tenant is discerning and often prioritizes sustainability. Commercial spaces that can substantiate their green credentials, thanks to an integrated EMS, are likely to attract and retain tenants who value environmental responsibility. This not only enhances occupancy rates but can also foster long-term, loyal tenant relationships.

Maintenance and lifecycle savings:

By proactively monitoring equipment and systems, EMS can help in identifying potential issues before they escalate, thus reducing maintenance costs. Over the long run, this proactive approach can extend the lifespan of critical equipment, delaying the need for replacements and capital expenses.

In summary, while the upfront costs of EMS may seem significant, the compounded returns, both direct and indirect, make it a prudent investment for any commercial real estate company.

Government incentives for EMS: Tax breaks, rebates, and grants to boost energy efficiency

Government and local authorities recognize the potential of Energy Management Systems in reducing energy consumption and mitigating environmental impacts. As a result, they often provide a range of financial incentives and rebates to promote their adoption. Here are some specific examples from various regions:

Tax incentives:

  • U.S.: The Federal Energy Policy Act provides tax deductions for commercial buildings that achieve a 50% reduction in energy and power costs. Depending on the type of upgrade, deductions may range from $0.60 to $1.80 per square foot.
  • Canada: The Canadian government offers the Accelerated Capital Cost Allowance (ACCA) for businesses that invest in energy-efficient equipment, allowing them to claim a higher percentage of the equipment's cost in the year of purchase.

Utility rebates:

  • California: Pacific Gas & Electric (PG&E) provides rebates for businesses implementing EMS and making energy-efficient upgrades to HVAC, lighting, and other systems.
  • UK: The Carbon Trust provides interest-free loans and rebates to businesses in the UK that invest in energy-saving technologies.

Grant programs:

Low-interest financing:

  • Germany: The KfW Development Bank provides low-interest loans for energy-efficient construction and retrofitting, making it more feasible for businesses to invest in EMS.

Certification and recognition:

  • Singapore: The Building and Construction Authority's Green Mark Scheme recognizes and certifies buildings based on their environmental impact and performance. While not a direct financial incentive, buildings with higher Green Mark ratings can command higher rental rates and enjoy increased occupancy.

Pilot programs and partnerships:

Property owners and managers should remain proactive in seeking out regional and national programs tailored to their specific location. Taking advantage of these incentives can significantly reduce the cost of EMS implementation, thus providing a quicker return on investment.

Future trends in EMS: Predicting the role in next-gen smart commercial buildings

As we steer into the era of smart buildings and cities, Energy Management Systems will play a foundational role. They will be the backbone, ensuring these smart entities are also energy efficient. The intertwining of IoT, AI, and EMS heralds an era where buildings will think, act, and conserve energy on their own.
While today's EMS technology, characterized by integration and real-time analytics, seems state-of-the-art, the future is even more promising. Trends suggest deeper integrations with building automation systems, smart grid technologies, and even city-wide energy management solutions.

Ready to transform your commercial property's energy management? 

Get started with CIM's PEAK Platform and unlock significant energy savings!

Kateryna Dmytriyeva
October 25, 2023