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/ ©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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2
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.
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED4 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED4
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED6 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED6
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED7 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED7
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.
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED8 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED8
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED9 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED9
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:
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED10 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED10
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED11 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED11
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
(Source: Navigant Research)
Server Storage Operating System Software
Infrastructure as a Service (IaaS)
Server Storage Operating System Software
Platform as a Service (PaaS)
Server Storage Operating System Software
Software as a Service (SaaS)
= Provided by vendor
= Provided by customer
Niche Focus
Breadth Focus
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED12 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED12
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
(Source: Navigant Research)
Increasing Complexity
Sensors and ControlsLED Lighting
Networked Lighting Systems
Cloud Services
Visual Light Communication
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED13 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED13
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
(Source: Navigant Research)
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED14 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED14
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED15 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED15
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED16 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED16
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
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED17 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED17
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
(Source: Navigant Research)
/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED18
BENJAMIN FREASPrincipal Research [email protected]