In preparation for Haystack Connect 2015 Ken Sinclair of Automated Buildings asked that I write a bit about why I am so excited to be heading to the conference this May. The following is what came out, and if you make it all the way through, please participate in the poll at the end. Your answer will be used to build our presentation on ‘Attracting Self Learning Assets’. Thanks for reading.
When I first came to SES Consulting in October of 2012, it felt like coming home. The company that Ken and Scott Sinclair have built over the past thirty years is a place where a passion for sustainability can thrive uncompromised by the bottom line. The energy efficiency and building automation business is good. It consistently presents interesting and complex challenges. If done right, it can result is deep reductions of greenhouse gasses, and can even occasionally be lucrative.
Lately, however, it’s been hard to shake the feeling of the wolf at the door. While the pressing need to reduce greenhouse gasses increases with every year, we struggle to scale our impact in response. There are several key challenges that we face on a daily basis:
- The high upfront cost of identifying energy efficiency measures can be a barrier to adoption
- The risk involved in maintaining energy savings has created distrust in the market
- The complex nature of the work makes training difficult
The day-to-day challenges with keeping business moving forward often begs the question: What happens when the stream of early adopters becomes a trickle, when incentive money is used up and the niche jobs are finished? As an industry, we require simple, robust, and market-driven solutions to drive large-scale reductions in greenhouse gasses. This is why I am excited to be heading to Haystack Connect this May.
“To get an early market started requires an entrepreneurial company with a breakthrough technology product that enables a new and compelling application, a technology enthusiast who can evaluate and appreciate the superiority of the product over current alternatives, and a well-heeled visionary who can foresee an order-of-magnitude improvement from implementing the new application.” ― Geoffrey A. Moore, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers
On my inaugural trip to Haystack, I expect to find companies such as these in the dozens. My mission will be to find the appropriate set of collaborators to turn energy efficiency into a mass-market product.
In order to drive mass-market adoption, we need to speak to CFOs, and in order to do this we need to be able to treat energy efficiency like a financial product. Any good investment has several simple criteria. It must be:
- Low Risk
- High Return on Investment (ROI)
- Have a Large Market Size
With the appropriate set of tools, energy efficiency projects can be made to fit these criteria.
- Using reliable monitoring dashboards, investment risks can be minimized by providing real-time, high resolution feedback on measure performance. By having well-equipped professionals monitoring these dashboards, any deviation in performance can be immediately recognized and addressed.
- Returns can be high. Our auditors consistently turn up projects with 2 year paybacks or below. If these measures remain in place for 5 years, the annualized rate of return is approximately 20%.
- The market size is huge, and growing. Researchers at MIT placed the commercial and institutional market size at an estimated $100 billion in 2012.
The key to unlocking this potential lies in accessible building monitoring technology, such as those that will be presented at Haystack Connect 2015. We have seen a drastic reduction in cost of building automation technologies while open source platforms have allowed outside collaborators access to what was previously the tightly held intellectual property. As we have seen repeatedly in parallel industries, at the crossroads of low cost technology and open collaboration lies disruptive innovation. We are ready to open the door to:
- Automated energy auditing
- No cost building analytics
- Supercharged preventative maintenance programs
- Building automation system ‘App Stores’ compounding collaborative growth
For Moore’s ‘Well Heeled Visionaries’, these advances will allow for a drastic pivot. A much simplified version of business-as-usual looks something like the following:
This workflow suffers from the following pitfalls:
- Relies on early adopters to initiate the process
- High upfront financial burden on the client or incentive provider
- High risk that something will derail intended savings
- Many projects do not get financed
As described above, the first three pains can be relieved by appropriate technologies. The last can be solved by off-balance-sheet financing, like traditional ESCO models, or leasing arrangements like start-up SparkFund offers. By relieving all of these pain points, we can effectively create a ‘freemium’ service model that can be marketed to a much wider market. The new model may look something like this:
From start to finish, the client remains cash-flow positive. The product is scale-able across diverse markets, and non-specialists can be involved in many steps of the process. As part of this ‘freemium’ service, the auditor can be contracted to provide ongoing expertise and monitoring for the life of the measure, further reducing the risk.
Only by creating simple, scale-able, and low risk products will be drive the large greenhouse gas reductions we need to live a happy and healthy future. The companies attending Haystack Connect are at the cutting edge of this movement to revolutionize energy efficiency. This is why I count SES Consulting lucky to be included among them.
As the learning manager at SES I will be assisting my mentor, Ken Sinclair, to present ‘Attracting Self-Learning Assets’. We will be giving a collaborative talk on trying to support a new generation of Engineers in their path through this ever-changing career landscape. Help contribute to this talk by answering the poll below.
Hope to see you there,