The benefits of smart buildings are well recognised, but organisations are under pressure to focus on other investments. Gary Thompson explores ‘smart buildings as a service’ – solutions that harness savings from reduced energy use and utilise them to fund upgrades that make buildings smart.
The digital transformation of buildings is experiencing strong growth, with sales of smartbuilding technology predicted to grow in the region of 30% per annum.
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Non-domestic buildings are responsible for between 10% and 15% of carbon emissions, so reducing their consumption makes a considerable contribution to the healthiness and attractiveness of urban environments.
Smart buildings have the potential to save approximately 15-25% on energy costs; this should be a goal for both private and public sector building owners as they seek to generate savings on behalf of shareholders and taxpayers.
Otherwise, every day that goes by represents lost savings and lost benefits. Smart buildings are defined as those that use advanced technology to achieve a series of benefits.
These include improving building performance in such areas as energy, operations, security, and comfort; lowering the costs of equipment installation, operations, and service; and generating significantly higher user-satisfaction rates.
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By GlobalDataTo meet these goals, all smart buildings need the intelligent infrastructure that digitisation enables.
Data from smart-building systems gives a facility’s infrastructure a brain and a voice. This data is put to work through smart controls for buildings – whether in the public sector or commercial – which give buildings a ‘central nervous system’ that balances and reconciles competing interests such as energy minimisation, occupant comfort and grid stability.
This allows building infrastructure to play a major role in supporting the mission of the organisation – and sometimes the whole community – when air-quality monitors,
traffic tracking and other smart community technologies are mounted on the building.
It helps drive top-line results by providing optimal environments, increasing equipment uptime and reliability, and lowering operating costs.
All of this is achieved while utilising advanced analytics to measure, record and report building-system efficiency.
Understanding the benefits of smart buildings is one thing; finding practical, affordable and sustainable ways of achieving smart-building conversion is another.
Where it is difficult for an organisation to justify prioritising capital investment, there is a temptation to do nothing.
But every day that a building has not been converted to smart is a day in which money savings have been foregone, unnecessary natural resources have been consumed, and social benefits have not been delivered to citizens and employees.
Pioneering landlords and owner-occupiers are therefore increasingly looking to solutions whereby the supplier of a service, such as smart-building conversion, deploys financial techniques that remove the need to devote own capital, bundling the smart-building conversion into a monthly fee across an agreed-upon contractual period.
Smart-building conversion still delivers attractive cost and capabilities benefits that organisations wish to benefit from, even if they are reluctant to invest their capital to this end.
In other words, businesses are increasingly looking for ways to pay for outcomes – in this case energy savings and other smart-building advantages.
In the case of smart buildings, this is leading to the rise of a concept called ‘smart buildings as a service’ – sometimes called ‘servitization’.
Landlords and owner-occupiers are conserving capital for growth and improvement initiatives, and are choosing to let integrated technology-service-finance companies fund the digital transformation of their buildings.
There are a variety of modern financing models that allow this to happen, but the most attractive involves smart solutions partners that are able to do this at low or zero net cost for the building’s owner – public or private.
SFS’s research has estimated the value of smart-building conversion that could conservatively be enabled through selffinancing in the UK (see chart).
Using smart financing techniques, the integrated solutions provider introduces technology and systems to create intelligent buildings that deliver a clearly predictable level of energy savings.
The reduction in energy costs is then harnessed to effectively fund the cost of conversion.
While levels of energy reduction will vary depending on climate, cost of power and other factors, in most cases the savings can be reliably reflected in a financing structure to deliver self-financing smart-building upgrades anywhere in the world.
The solutions provider agrees a building-conversion contract with the owner over a set period, after which the owner benefits from ongoing reduced energy consumption, and all the other added benefits of smart buildings.
The building owner puts no capital at risk, and conserves their own funds for strategically important development activities – whether in commercial growth or improved public services.
With budgets under pressure, some CFOs may assume that investment in smart-building conversion is unachievable.
The reality, however, is that financing techniques now exist that allow organisations to capitalise on the many benefits of smart buildings with low or zero net cost.
