Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
It’s a truism at this point that the built environment is responsible for 40% of greenhouse gas emissions. Though this oft-quoted statistic may have lost some of its meaning in recent years due to chronic overuse, one thing certainly remains clear: there is ample opportunity for us to make progress against climate change by focusing on how we operate our existing building stock.
Within the broader building operations playbook, automated demand management is poised to become a transformative tool for improving energy performance, lowering emissions, reducing costs, and supporting the resilience of the grid.
So, what does automated demand management, or ADM, mean, and who can benefit? At its core, ADM refers to operational strategies that optimize how and when buildings use energy, shifting consumption patterns in response to real-time factors like grid demand, weather, and renewable energy availability. This dynamic approach, which introduces external factors to the equation in addition to internal building operating conditions, can help real estate teams build upon traditional efficiency measures to achieve even greater savings – while measurably impacting emissions and relieving stress on the grid.
Real estate at a crossroads
From where we sit in 2024, it’s clear that real estate faces rising pressure to address its contribution to global emissions. At the same time, U.S. electricity demand is projected to grow by 9% by 2028 and more than 50% by 2051, driven largely by the rapid rise of data centers, EVs, and building electrification.
These trends – while positive for long-term sustainability – also present several immediate challenges. Higher demand means higher emissions when clean power isn’t sufficient to meet the increase (and conventional power sources must cover the difference). It also means added strain on aging transmission and distribution networks, and greater risks of brownouts and blackouts during severe weather events. Ultimately, the convergence of all these factors could result in higher energy costs for end users, compounding the need for buildings to find intelligent ways to optimize operations.
Real estate sustainability teams and building staff are in a unique position to lead the charge toward greener buildings, but doing so will require a shift – not just in how buildings operate, but in how they do so with respect to the grid. While conventional, inward-looking operational efficiency measures are critical first steps, ADM represents the next phase of the journey: buildings that can contextually respond to changing grid conditions and occupant needs, and make real-time adjustments that optimize energy, carbon, and costs accordingly.
The evolution of operational efficiency in buildings
Historically, building operators have focused on improving operational efficiency by optimizing systems to reduce energy waste and extend equipment life with an eye towards occupant comfort. This has typically involved using real-time data to refine schedules, identify anomalies, and tweak controls settings – all essential practices that are the backbone of good operating practices. However, these methods often require ongoing manual intervention from onsite staff, which can limit their impact and scalability.
They also do not take into account an increasingly important piece of the equation: the grid. When is the most clean energy available – and when are electricity rates cheapest? An efficient and well-operated building should be able to leverage more advantageous grid conditions to drive further efficiency gains and both carbon and cost savings.
ADM represents precisely this next step forward. Through machine learning and automation, ADM solutions enable buildings to dynamically adjust operations based on the above factors. This allows for more precise control over energy consumption, empowering operators to reduce usage during costly peak demand periods and reallocate consumption when energy is both greener and cheaper.
Ultimately, ADM represents a shift from reactive to proactive energy management. Instead of relying on fixed schedules and manual analysis and adjustments, ADM leverages predictive algorithms to anticipate a building’s energy needs and adjust consumption in real time. It’s a step-change in operational efficiency that empowers building teams to maximize energy savings and reduce emissions more holistically than with traditional approaches alone.
Real-world impact: Reducing load, cutting costs
In practice, ADM enables buildings to shift heating and cooling loads to off-peak times when clean power is abundant and energy is cheaper. For instance, a building can pre-cool spaces in the early morning hours and reduce cooling during peak periods, resulting in notable cost savings and a lower carbon footprint. In this scenario, thermal mass works in a building’s favor, enabling operators to engage in pre-cooling or pre-heating during off-peak times and then allowing buildings to coast through peak demand hours later in the day – with minimal impact to indoor comfort.
This ability to shift load is especially beneficial in regions where utility costs are heavily influenced by peak charges. By minimizing energy use during these periods, ADM can lead to significant reductions in operating expenses and monthly bill fees. For building owners and operators, this dual benefit of increased efficiency and reduced costs makes ADM an attractive solution.
Moreover, as more regions adopt time-of-use pricing and demand response programs, the financial advantages of ADM are only likely to grow. By automatically adjusting energy consumption in line with these programs, buildings can not only avoid peak charges but also benefit from utility-provided demand response incentives for curtailing usage during critical periods.
Building resilience through demand management
The benefits of ADM extend beyond energy and carbon savings. By reducing energy demand during peak hours, buildings can help stabilize the grid, making it more resilient during high-stress periods like heatwaves and inclement weather events. This capability is especially important as grids become more reliant on renewable energy sources, which fluctuate in availability throughout the day.
By reducing demand when renewable energy is less available, and shifting it to times when it is highest, buildings equipped with ADM help smooth out energy consumption patterns, reducing the need for backup fossil fuel power plants and contributing to a greener and more stable grid.
Final thoughts: A practical, multi-pronged approach to decarbonization
Achieving building decarbonization doesn’t always require costly retrofits or large-scale upgrades. ADM offers a scalable and data-driven operating strategy for reducing emissions, enhancing efficiency and increasing resilience, all without major capital investment. One thing is clear: real estate must pursue a range of strategies to effectively address the challenges ahead.
While costlier emissions-reducing interventions – such as investing in battery storage or electrifying conventional heating equipment – are equally important, the comparatively lightweight and cost-effective nature of ADM means that most building owners and operators can get started today and begin realizing the benefits immediately. A multi-pronged approach that intelligently combines operational and capital improvements will be essential to our success.
On the whole, as buildings become smarter and more responsive, next-generation operational efficiency measures like ADM can enable the real estate sector to transition from passive energy users to active participants in a cleaner, more sustainable energy network. By leveraging tools like ADM, real estate can shift from being a major source of emissions to a key player in the net zero transition.
This article was written by Zoe Williams, Director of Marketing at Infogrid (acquired Aquicore, current GRESB Partner).
References:
“ICF Report Projects 9% Surge in US Electricity Demand by 2028“. ICF. Accessed September 30, 2024.
