The Industry

The Building Controls and Energy Management Industry began with the energy crisis's of the 1970s and specifically starting in 1973 with the first Arab embargo.

At the time the industry was dominated by five major players that manufactured, installed, serviced and maintained electric and pneumatic controls. These players included what is now Honeywell, Johnson Controls, Siemens (Powers Regulator) and Invensys (Barber-Coleman and Robertshaw). The first three really dominated the market with almost 90% market share with Honeywell and Johnson Controls splitting the market with 40% each. Each manufacturer began to offer to their customer base centralize control with what was called supervisory control systems that were non-computer-based systems utilizing relay logic. Beginning in the mid-and late 70s each manufacturer began to offer computerized controls based on various computer manufacturers such as Texas Instruments, DEC and their own computers as manufactured by other divisions, such as Honeywell computer division. 

With the advent of personal computers starting in the early 1980s a new industry was formed where all that was needed was the ability to write software and manufacture electronic boards instead of owning huge manufacturing plants with expensive tooling and engineering. This then became the first significant change to the building controls market in almost 60 years. Companies such as Andover Controls, Alerton Technologies, Automated Logic Controls, American Auto-Matrix, Control Systems International, and about 25 other manufacturers entered the market with little more than good software running on a personal computer and electronic boards. These companies sought out independent businesses such as Automatic Building Controls, Inc. to distribute and service their products. Each system had its own unique software and its own unique communication protocol.

The business model at that time was to buy into a facility or campus with your software and hardware, and since each company was exclusive with their offering, make your money through enhanced margins on service, maintenance and additions. This business model was no different than the IBM model of one-stop shopping where the customer was at the manufacturers and local exclusive distributor’s mercy. Since this business model favored each manufacturer over the customer's needs by 1985 major customers especially in the higher learning institutions began clamoring for a more open process of buying building automation and control systems.

ASHRAE (American Society of Heating Refrigeration and Air Conditioning Engineers) heard the pain of their constituents and began developing an open protocol called BACnet (Building Automation Control Network). At the same time a private company called Echelon began development of a standard communication protocol called LonWorks which would be a competing protocol to ASHRAE's BACnet. With the advent of open protocols the second-tier control manufactures quickly turned their efforts to bring about new products based on these protocols. The traditional building automation and control companies such as Honeywell, Johnson Controls and Siemens continued to manufacture and support proprietary protocols or versions of one of the open protocols that were made proprietary. After all it was not in their best interest, since they controlled about 80% of the existing building automation market to open up their customer base to upstarts such as Alerton Technologies, Automated Logic Controls and Delta Controls.

By early 2000 these protocols became more mainstream and as customers demanded their implementation the major manufacturers went on a buying spree and bought such companies as Alerton (Honeywell), Tridium (Honeywell), Andover Controls (Schneider Electric), Control Systems International (Schneider Electric), and Automated Logic Controls (United Technologies, Carrier) to name just a few.

Suddenly beginning around 2005 everyone wanted a piece of the building automation and controls marketplace such as nontraditional controls manufacturers Tyco, United Technologies, General Electric, Schneider, and now Cisco, and even IBM. Each of these manufacturers/suppliers business model is based on controlling and owning not only the IT enterprise such as Cisco and IBM but also the facilities enterprise that will now be attached and controlled by the CIOs in each organization.

As stated by Cisco in the September issue of Harvard Business Review their number one market opportunity is to be a significant player in the development of the smart grid and in order for the smart grid to work buildings will have to be retrofitted to also become smart. As a new concept Cisco refers to the traditional IT network as the "North side" and the traditional building automation and control networks as the "South side" of the IT infrastructure.

Several other market forces have come into play that have significantly enhanced the traditional building automation and control marketplace. The number one force is the sustainability and green movement which is driven by climate change. As part of the market the USGBC (United States Green Building Council) developed a rating system for new and existing buildings called LEED (Leadership in Energy And Environment Design). The focal point of this new rating system is the reduction of energy and each building's carbon footprint. As spelled out by the EPA, buildings use about 40% of the energy and carbon in the United States and have the most opportunity for savings and reduction.

Although the LEED rating system is a non-governmental self policing institution it is quickly becoming a standard for all buildings. With both private and governmental backing there are several pending bills and regulations that will codify LEED and make it not just a voluntary standard but a mandatory standard. The EPA in conjunction with both the legislative and executive branches have in the new energy bill the following, "According to a summary of the bill, new buildings will be 30 percent more efficient in 2012 and 50 percent more efficient in 2016. Those standards will increase five percent every three years. That means that by 2030, new buildings will be 75 percent more efficient than they are today — 25 percent below the efficiency standard Obama originally promised." As part of this legislation ASHRAE, in conjunction with both the USGBC and the IES(Illuminating Engineering Society) are developing a standard called ASHRAE 189.1 that will be codified in most local and all federal and state building codes by the end of 2010.

Not only do the regulations require more energy efficiency they also require extensive reporting and accounting that will need to be tied in with real-time information enhancing the building facility enterprise with additional information. As part of the LEED standard, commissioning and retro commissioning becomes a prerequisite to achieving this standard. Additionally, per a Lawrence Berkeley National Laboratory report published on July 21, 2009 on Building Commissioning: A Golden Opportunity for Reducing Energy Costs and Greenhouse Gas Emissions it states the following about the results and paybacks: "The results are compelling. We developed an array of benchmarks for characterizing project performance and cost-effectiveness.

The median normalized cost to deliver commissioning was $0.30/ft2 for existing buildings and $1.16/ft2 for new construction (or 0.4% of the overall construction cost). The commissioning projects for which data are available revealed over 10,000 energy-related problems, resulting in 16% median whole-building energy savings in existing buildings and 13% in new construction, with payback time of 1.1 years and 4.2 years, respectively. Median benefit-cost ratios of 4.5 and 1.1, and cash-on-cash returns of 91% and 23% were attained for existing and new buildings.

High-tech buildings were particularly cost-effective, and saved higher amounts of energy due to their energy-intensiveness. Projects with a comprehensive approach to commissioning attained nearly twice the overall median level of savings and five-times the savings of the least-thorough projects "

Additionally it says this about the new business model of commissioning: "The fledgling existing-buildings commissioning industry has reached a size of about $200 million per year in the United States. Based on a goal of commissioning each building every five years, the potential size is about $4 billion per year, or 20-times the current number. To achieve the goal of keeping the U.S. building stock commissioned would require an increase in the workforce from about 1,500 to 25,000 full-time-equivalent workers, a realistic number when viewed in the context of the existing workforce of related trades. Commissioning is more than “just another energy-saving measure.” It is a risk-management strategy that should be integral to any systematic approach to garnering energy savings or emissions reductions.

Commissioning ensures that building owners get what they pay for when constructing or retrofitting buildings. It provides “insurance” for policymakers and program managers that their initiatives actually meet targets, and it detects and corrects problems that would eventually surface as far more costly maintenance or safety issues.

Commissioning is an underutilized strategy for saving energy and money and reducing Greenhouse gas emissions while managing related risks. Reasons for this underutilization include a widespread lack of awareness of need and value on the part of prospective customers, insufficient professionalism within the trades, splintered activities and competition among a growing number of trade groups and certification programs, a misperception that it is not cost-effective in smaller buildings, the absence of commissioning-like requirements in most building codes, and omission or obfuscation of the strategy in most energy-efficiency potentials studies.

It is important to strike a healthy balance between standardization and recognition that each building is unique and must be approached with an open mind." As more and more facility owners recognize the value of commissioning, and retro commissioning they will start to implement programs including add-ons and middleware that automate the retro commissioning process. Software programs such as those developed by Cimetrics, Sensus MI, Ceport and Scientific Conservation will become more and more prevalent.

Finally, the opportunity to provide multiple and lower cost nodes will become a reality with more and more inexpensive and reliable wireless technology. This new disruptive technology is built around low powered, no power, and lowpan-IPv6. This technology is already available in Europe and beginning to be available in the United States. This new wireless technology will provide low-cost information that will need to be secured, managed and configured for optimum productivity.



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