“As nodes of the smart grid, smart buildings will become increasingly active participants in the energy eco-system, moving beyond simply being served by the Smart Grid, they can also become an integral part of it”, this is just one of the findings from our recent reports: The Market for Building Performance Software 2016 to 2020 & Smart Buildings Meet the Smart Grid 2015 to 2020.

Demand for electricity continues to grow around the world. In the US, some estimates expect demand to increase as much as 40% by the year 2030. Traditional approaches to meet this demand would require significant resources for additional generation and traditional business models have discouraged end node participation.

Utilities have habitually provided both price and risk arbitrage to the end nodes. This double arbitrage has reduced end-node interest in working with the grid, and reduced consumer propensity to offer premium prices to different power generators. While making the grid “smart” through increased availability of energy-information technologies can offset part of the growth in demand, it is only half the solution. The other half of the solution must be to make buildings smarter and better integrate them into the wider grid.

Today, grid operating margins are slim and volatile energy sources provide a growing portion of the grid’s power. The need for, and benefits from, end node participation in matching energy supply and demand will only grow in the future. Considering buildings consume over 70% of the total electricity in the US, it is essential that they become part of the transformation to make the grid smarter.

Currently, many commercial buildings and almost all residential buildings lack proper infrastructure to be part of such a transformation. The evolving smart electric utility grid will further increase demands on building systems to automatically respond to time-varying prices and conditions. As the grid is operated at shrinking reliability margins and relies on demand response to manage loads; smart building systems will be essential for meeting these needs.

Smart buildings with smart grid interaction are a relatively new system that allows implementation of innovative control technology in order to save energy and reduce cost of energy. It connects technology to the building environment making it beneficial to the residents of the building as well as the environment outside the building.

Features such as dynamic pricing of the smart grid leads to smart use of electricity in a building allowing shutdown and start-up of appliances based on high and low peak periods of dynamic pricing, respectively. When properly connected to the grid, a smart building can either configure itself as a virtual backup station or as a virtual power plant for grid regulation and balance.

Full inclusion of prosumers into the regulatory framework of the electricity sector can also lead to important improvements regarding the network operating conditions. Prosumers can be dynamic actors in the emerging smart grid, and are characterised by their flexibility in responding to the grid contingencies. Demand response can again be used for incorporating prosumer interaction with the electricity grid.

“Adoption of Open Automated Demand Response (OpenADR) standards, which are used to send information and signals to cause electrical power-using devices in buildings to be turned off during periods of high demand is critical to the success of this interface relationship”, states our report.

This relationship may involve regional or national contributions, such as incentives, tax reduction, and initiatives. Through this system central government policies may support the transition of traditional plants, buildings, campuses, and so on, into active players of the modern electrical power system.

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Distribution system operators (DSOs) are the key stakeholders for this transition and their collaboration with the different categories of prosumers is an essential part of any advanced proposal. DSOs are able to communicate with the prosumers within their service areas, exchanging consumption and generation profiles, which are used by the active nodes of the smart grid to vary their power absorption or supply, respectively.

Each end node is essentially a microgrid, supporting multiple systems that provide multiple services to its owners and occupants. A growing number of these microgrids include services for energy generation and storage as well. The operators of these microgrids, homeowners and businesses, are better positioned to optimise benefits and energy use within the end nodes than any remote operator could ever be.

Our extensive reports http://memoori.com/portfolio/market-building-performance-software-2016-2020/ / http://memoori.com/portfolio/smart-buildings-meet-smart-grid-2015-to-2020 provide analysis of the state of both the Building Energy Control Systems (BECS) market and the market for software solutions that rely on outputs from building energy control systems, accompanied by market sizing forecasts. It predicts “a large untapped market of buildings that are capable of interfacing in this way, but have yet to do so, indicates significant opportunities for both building owners and grid operators going forward”.