spark16 presentation: iot, data, and new business models are disrupting building energy efficiency...

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED1

IoT, Data, and New Business Models Are Disrupting Building

Energy Efficiency EconomicsBenjamin Freas

Principal Research Analyst Navigant Research


DISRUPTING BUILDING ENERGY EFFICIENCY ECONOMICS

IOT, DATA, AND NEW BUSINESS MODELS

SEPTEMBER 15, 2016

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED3 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED3

NAVIGANT RESEARCH INTRODUCTION

RESEARCH PROGRAMS:Energy TechnologiesUtility TransformationsTransportation EfficienciesBuilding Innovations

RESEARCH OFFERINGS:Research ReportsSubscription Research ServicesCustom Market Research

• Custom Market Analysis• Market Sizing and

Forecasting• Primary Research• Go-to-Market Services

• Strategic Advisory Sessions

• Commercial Due Diligence• Technology Evaluation

NAVIGANT RESEARCH PROVIDES IN-DEPTH ANALYSIS OF GLOBAL CLEAN TECHNOLOGY MARKETS.The team’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Energy Ecosystem.


BUILDINGINNOVATIONS

Intelligent Building Management SystemsEnergy Efficient BuildingsLighting InnovationsSmart Cities

RESEARCH SERVICES

TRANSPORTATIONEFFICIENCIES

UTILITYTRANSFORMATIONS

ENERGYTECHNOLOGIES

Wind EnergyGrid-Tied Energy StorageMicrogridsDistributed Generation

Electric VehiclesAdvanced Transportation TechnologiesTransportation ForecastNatural Gas Vehicles and InfrastructureAdvanced Batteries

Grid IT and CommunicationsGrid T&DResidential Energy InnovationsDemand ResponseUtility Innovations


TECHNOLOGY EVOLUTION IN SMART BUILDINGSSO

LUTI

ON

S

LOCALIZEDEFFICIENCY

NETWORKEDINTELLIGENC

E

LOCALIZEDINTELLIGENCE

SERVICESEnergy efficiency financing

Smart building managed services

Demand response

Energy procurement

Energy service companies (ESCOs)

HARDWARE/ MECHANICALS

Energy efficient HVAC

Fluorescent lighting

Building materials

Building automation systems (BAS)

Submeters

LEDs

Smart meters

Distributed renewable energy systems

Energy storage

SOFTWARE

Building energy management systems

(BEMS)

Building management systems (BMS)

Energy dashboards Auto demand response

Software-as-a-service (SaaS) applications


IOT ENABLED BUILDING INTELLIGENCE

IoT

• Infrastructure for connectivity and data acquisition for actionable insights and system improvement

BEMS

• Analytics that utilize data from BMS and BAS, plus external data such as utility billing, grid signals, or weather

BMS

• Software plus networking/protocol translation hardware that coordinate the operation of multiple BASs

BAS

• System of individual components to automate the control in a single building function

Decision support for the

C-suite, enterprise, and

operations

Frontend decision

support for operations

HVAC, lighting, fire & safety

controls

Enabling hardware and

communicationsInternet of Things

Building Energy

Management Systems

Building Management

Systems

Building Automation

Systems


THE ENERGY CLOUD

EMERGINGThe Energy Cloud

TODAYOne-Way Power System

TRANSMISSION &DISTRIBUTION

INDUSTRIAL

RESIDENTIAL COMMERCIAL

POWER PLANT

• Large, centrally located generation facilities

• Designed for one-way energy flow• Utility controlled• Technologically inflexible• Simple market structures and transactions • Highly regulated (rate base) and pass

through

• Distributed energy resources• Multiple inputs and users, supporting two-way energy flows• Digitalization of the electric-mechanical infrastructure: smart grid and

behind the meter energy management systems • Flexible, dynamic, and resilient• Complex market structures and transactions• Regulation changing rapidly around renewables, distributed generation

(solar, microgrid, storage), net metering etc.

(Source: Navigant Consulting)©2014 Navigant Consulting, Inc. All rights reserved.


HOW BUILDINGS FIT INTO THE ENERGY CLOUD

Industry transformation and new opportunities for interoperable buildings IoT ENABLED BUILDINGS

(Source: Navigant Consulting)

Real-time information & automation

Grid response: utility programs or customer-directed load management

Integration of traditional building systems, enterprise software, new energy assets

Improved bottom line, sustainability, shareholder & stakeholder satisfaction

IoT = Platform for Data BEMS = Information for ActionManaged Services

Connected Occupants

Business Intelligence

Full Resource Optimization

Enterprise Awareness


WHAT BARRIERS STILL EXIST?

OPEN

SECURE

SaaS

SCALABLE

EXISTING SYSTEMS

GATEKEEPERS

COST

DIVERSE GOALS

TECHNOLOGY HURDLES

PEOPLE HURDLES

(Source: Navigant Research)

Customer Obstacles: Vendor Solutions:


IOT BUSINESS MODEL FRAMEWORK

Devices

Apps

Services

Product

Platform

Ecosystem

Transactional

Transactional or Recurring

Recurring

Offering Revenue Value Capture

Set the right price

Provide personalization and network effects

Create a solution

IoT Stack


CLOUD COMPUTING SERVICES

• Cloud-computing generally operate under three standard models: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS)

• Success of these models is driving a shift towards “Everything as a Service”

Cloud Computing as a Service models


Server Storage Operating System Software

Infrastructure as a Service (IaaS)


Platform as a Service (PaaS)


Software as a Service (SaaS)

= Provided by vendor

= Provided by customer

Niche Focus

Breadth Focus


TECHNOLOGY ENABLING VALUE-ADDED LIGHTING

• LED system upgrades open the door for a wide range of service relationships, from those that simply optimize lighting to serve the needs of a space, to those that use lighting as a platform for providing targeted, location-specific information to retail shoppers

LaaS Technology Spectrum


Increasing Complexity

Sensors and ControlsLED Lighting

Networked Lighting Systems

Cloud Services

Visual Light Communication


TRADITIONAL LIGHTING VALUE CHAIN

• The building owner ultimately makes the purchasing decision and is the primary market actor• The electrical contractor, subcontracted by the general building contractor, is responsible for

electrical systems installation—including lighting• The distributor stocks and sells lighting products to contractors and end-users• The systems integrator is responsible for creating the control riser and commissioning the

system once it is installed

Lighting Value Chain

Bui

Lighting Distributors

Control Software

Control Hardware

Lighting Manufacturer

Systems Integrator

Installers

Building Owner and Operator



LEDS ARE CHANGING THE NATURE OF LIGHTING

• Lamps sold as replacements for existing lamps that have reached the end of their life are a substantial portion of annual unit sales

• The longer lifespans of LEDs will lead to overall declines in the global lamp and luminaire markets

Average Lamp Life by Technology

(Sources: Navigant Research, U.S. Department of Energy)

$-

$5,000

$10,000

$15,000

$20,000

$25,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

($ M

illio

ns)

Incandescent HalogenT8+T5 T12CFL & Misc. Fluorescent HIDLED

- 10,000 20,000 30,000 40,000 50,000 60,000

Incandescent

Halogen

CompactFluorescent

LinearFluorescent

HID

LED

(Hours)

Lamp Revenue by Lamp Type, World Markets: 2014-2023

(Source: Navigant Research


SERVICES IN LIGHTING ARE NOT NEW

• The range of services falling under the Lighting as a Service (LaaS) umbrella definition draw many models- ESCOs pioneered the business model of delivering energy efficiency upgrades as a service

through performance contracts- The solar PV market uses power purchase agreements (PPAs) to sidestep upfront cost

hurdles • LaaS is charting new territory by leveraging the physical location of luminaires and

networked lighting system features

Professional Services

Auditing

Project Management

Commissioning

Network Design

Maintenance Services

Lifecycle Maintenance

System Optimization

Data Analytics

Managed Services

Turnkey Service Arrangements

Other Services

Financing

Third-Party Ownership

Value-added Services


LIGHTING AS A SERVICE (LAAS)

• Service arrangements do not represent new business models or disruptive market developments

• Some companies provide a continuum of offerings, others simply layer additional services ono the equipment they sell

• The common thread among the definitions is that there is a long-term engagement and predictable flow of payments from end user to service provider

Lasts between approximately 2 and 12 years

The vendor or a third party can own the equipment

Lighting equipment gathers and manages data to inform decisions

May include technical, maintenance, or other services

Some form of long-term third-party management relationship


THE LAAS SPECTRUM

• Services falling under the lighting as a service (LaaS) definition span from basic services to advanced services- Basic service agreements address lighting

upgrades alone and do not span into the realm of network-driven, cloud-based data services

- Advanced service agreements include Long-term lighting system management agreements and can include financing

• The advanced side of the spectrum captures service arrangements that expand into the new world where leveraging the position of networked lighting equipment to gather and manage data can inform actions or decisions

Spectrum of Service Arrangements Deemed LaaS



BENJAMIN FREASPrincipal Research [email protected]

spark16 presentation: iot, data, and new business models are disrupting building energy efficiency...

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