By Sanjoy Malik, CEO, Urjanet
This article was originally published on GreenBiz.com
Energy management is of increasing importance to business leaders across many corporate functions, driven by increased energy supply options (including renewables and storage); opportunities to reduce energy use and cost; increased focus on corporate responsibility and sustainability; and significant product innovation across the industry. Energy is no longer considered a line item cost, but a resource that can be optimized and reduced with benefit to the enterprise.
Data are the foundational enabler to all of these activities. Two key sources, utility bill and smart meter data, can be used to enable better decision making, which makes it easier to baseline current energy usage and model potential scenarios to reduce it. In many cases, the difference between successful and unsuccessful facility and energy management initiatives is accurate, timely and complete data.
Unfortunately, there are significant barriers to many building and energy management professionals who are seeking energy data to propose and implement new initiatives. First, the energy market is fragmented, with a few hundred major investor-owned utilities serving most of the major metropolitan areas, and over 3,000 total electricity utilities across the U.S. (including natural gas utilities, the total number of energy suppliers is over 4,500).
Across these utilities, there is a varying range of data made available to customers: in some utility territories, 15-minute interval data is widely available, but in others, only a small set of aggregated monthly totals is provided.
“Two key sources, utility bill and smart meter data, can be used to enable better decision making, which makes it easier to baseline current energy usage and model potential scenarios to reduce it.”
Additionally, the formats that are used to provide these data vary widely; the best-case scenario is a utility that enables customers and third parties to connect to an application programming interface (API). For an enterprise with national operations, this might require dozens or even more integrations, costly to develop and maintain.
The Green Button standard does seek to simplify and standardize the energy data distributed by utilities, but it is still a work in progress. Using paper utility bills is another option, but digitizing bills is a complex task that might be outside an enterprise’s core competencies. Even many vendors that serve the energy industry will admit that collecting energy data at scale is challenging, costly, and error-prone.
Given the substantial opportunities that advanced energy management provides, the collection and normalization of energy data could be outsourced to firms that specialize in just this capability. This would enable other firms in the energy industry to focus on their core offerings, such as: renewables, energy optimization or sustainability and compliance with national and local regulations.
Offering data as a service
The data-as-a-service (DaaS) model is very common across multiple markets, especially for any data set that is challenging to collect, manage and centralize. For example, there are firms that specifically collect and provide weather data to many other product and service providers. The data suppliers focus on collecting accurate weather data and making it easy for other organizations to use.
They work with enough product and service providers to justify the significant investments made in data completeness and quality. Many firms need weather data, from the agriculture industry to news outlets, and paying a small fee to collect it from a third party is much more reliable and cost effective than each firm doing it independently.
“The data-as-a-service (DaaS) model is very common across multiple markets, especially for any data set that is challenging to collect, manage and centralize.”
Another data-as-a-service example is navigation and maps. A few firms have invested in detailed map and navigation data and sell it to many other firms that require maps for their products. Think of how many websites and apps embed Google Maps. Most are not navigation firms and do not have the subject matter expertise to build their own map and navigation database. But, at a reasonable cost, providing a map interface to supplement the core offering adds value.
Additionally, there are a few credit bureaus that provide individual scores to all credit card companies and other financial institutions. A credit score and accompanying report is considered a foundational part of assessing which financial products and services to offer consumers. Credit card companies, for example, require accurate credit information, but it’s not a core part of offering financial products. These firms are happy to let a subject matter expert firm own this part of the solution. Credit card companies make money off the interest on customer accounts, not the credit scores.
Offering other service models
These data-as-a-service offerings are similar to software-as-a-service (SaaS). Many firms provide cloud-based, subscription software in a SaaS model. Like data-as-a-service, customers of the software service avoid purchasing and maintaining hardware, do not have to worry about upgrades, and can instead focus on running their businesses.
Even Amazon Web Services provides the computing infrastructure that many small and large firms need to develop and provide cloud-based software for their internal teams or customers. This Infrastructure-as-a-service (IaaS) model means that firms can move into the digital age without procuring much hardware. They don’t need to worry about the capital costs, maintenance or upgrades.
This “as-a-service” model also is available in the energy industry for raw cost and usage data provided by utilities. Instead of collecting, integrating and normalizing energy data from many sources (the utilities themselves), and at significant cost, enterprises and energy service providers can instead collect such data from a single source, normalized and error-free.
“Like data-as-a-service, customers of the software service avoid purchasing and maintaining hardware, do not have to worry about upgrades, and can instead focus on running their businesses.”
The Energy-data-as-a-service (EDaaS) model holds great promise for the industry. There are various firms providing services within the energy industry that could benefit from a single source of energy data, including:
- Accounting and finance. Many firms provide energy budgets, pay utility bills and forecast future costs and progress towards reduction goals. These activities require significant process-oriented operations and analysis capabilities. Adding the acquisition of energy data may be too much effort for these firms.
- Energy optimization. Energy performance in many buildings can be improved using more detailed data, analyzing it and creating statistical models that include other variables such as weather and occupancy. Firms that provide such analytics products can scale their operations by using a standard energy data provider.
- Energy procurement and supply. Energy purchasing decisions are complex and firms that provide these services typically invest in analysis of historic bills and bidding and negotiating capabilities to find and secure the best prices on energy. By using a third-party for the raw energy data, they can more quickly make decisions about the procurement strategy for their clients.
- Sustainability and compliance. Many firms are investing in greater transparency around energy performance, using sustainability reports and other public information disclosures. Many large cities are starting to mandate that building owners get Energy Star scores to benchmark their properties. Both of these processes can be expedited by more quickly and systematically collecting energy data via a third party.
Just like many other markets, energy-data-as-a-service enables various industry players to focus on the core offerings and let a third party provide the foundation energy data that enables them to deliver their products and services. This model reduces costs to the energy industry and enables greater innovation by addressing a key barrier to many firms in this space.