Dan Probst: Smart Buildings and the Smart Grid

We recently looked at the 10 U.S. cities with the most advanced smart grid programs and  infrastructure, and compared them to national averages key economic indicators. The result?  “Connected” cities have an annual GDP growth rate that is 0.7 percent higher, an unemployment rate that is a full percentage point lower, and office occupancy rates 2.5 percent higher than the norm.

Cities that embrace smart grid technology are winning the competition for new businesses and job growth. This is due more to correlation than causation—companies are not uprooting and moving solely to gain the benefits of the smart grid—but it refutes the notion that investment in energy infrastructure is should be a low priority for cities looking to improve their economic viability. In fact, it should be a high priority for business-friendly cities.

Smart grids offer companies several benefits. First, they reduce the overall cost of energy by reducing waste, including the roughly 10 percent of electricity that’s lost during transmission and the 30 percent of that ENERGY STAR estimates is wasted once it reaches buildings. On a related note, access to a smart grid creates an additional incentive for owners to invest in on-site power generation, as the surplus power can be sold back to the utility. Distributed power eliminates transmission waste and, in cases such as wind and solar power, avoids greenhouse gas emissions.

In addition to reducing energy cost and carbon emissions, smart energy infrastructure also helps to prevent blackouts. Distributed power plays a part in this—on-site generation methods provide backup power when local service is lost—but smart grids are also important. The largest power outage in 2011, affecting roughly 7 million people in the southwestern U.S. and northern Mexico, started with a mistake make by one repair person and cascaded across five utility grids before the aging technology could react. The estimated $100 million in damage that resulted is a conservative number.

Power outages do $150 billion in damage to the U.S. economy every year, according to ENERGY STAR program. Sources that track blackouts note that they are getting larger and more frequent every year, due in part to stresses on power infrastructure. That fact alone is reason enough to invest in smart grid technology. And energy savings provide sufficient cause for owners to install smart technology in their buildings.

But the real value will come when smart grids and smart buildings are the norm rather than the exception. We can barely imagine the innovations that will arise from two-way communication and artificial intelligence, just as today’s web-based capabilities were virtually unimaginable 20 years ago. Smart energy infrastructure may not change our lives to the same extent as the Internet and smartphones have, but the opportunity for energy efficiency and reliability is too great for us not to pursue it.

For more on the state of building automation, check out this video on Jones Lang LaSalle’s IntelliCommand portfolio monitoring and control system.