The future green economy of the construction industry

Reducing energy consumption has become a call to arms for governments and energy producers as they strive to secure alternative energy sources. But the energy crisis isn’t just leaving disgruntled consumers and households in the dark. It is forcing large industries and even factories to cut production or shut down.

We can no longer mince our words or drag our feet. It’s time to start implementing the solution we’ve had on the table for a while. Decarbonization – the reduced dependency on and eventual avoidance of fossil fuels – combined with digitization.

Decarbonization needs to happen in every aspect of our lives and create a major shift in how we produce goods, construct buildings, move from point A to point B, engage our supply chains and use electricity. How each industry approaches decarbonization may be slightly different, but the premise of striving for greater sustainability will remain the same. For this discussion, let’s focus on the construction sector.

Decarbonization and the construction sector

The construction sector accounts for a staggering 40 percent of global energy consumption and a look at the volume of construction projects worldwide shows that demand in this sector shows no signs of slowing down. Even more amazing is the fact that the way we manage and operate buildings accounts for 27 percent of the world’s carbon emissions. So when we consider that the global building area is expected to double by 2060, there is a need to transform this sector into a more sustainable and energy efficient sector.

Together with our customers, we see one of the most effective ways to promote energy efficiency as using the Internet of Things (IoT) and digital solutions to provide the data needed for better energy consumption management. As the saying goes, you don’t know what you don’t know, which makes the visibility that IoT devices and the data they offer through the digitization of building management so crucial in determining where inefficiencies exist.

That’s just the beginning. Digital solutions in the construction industry are paving the way for enhanced energy and power services such as generation and storage, microgrid control and EV charging solutions, and even holistic asset performance management. Using Digital Twin technologies, which provide a way to digitally discover an optimal solution before physically deploying it, also results in improved optimization, better lifecycle performance, and immediate energy savings benefits.

Data is at the core of it all. With data, organizations can actively (and effectively) leverage automation and AI technologies — the benefits of which we haven’t scratched the surface of yet — but which we can already see to improve energy use and drive cost savings.

Requirements of a digital change

However, an industry traditionally unwilling to accept responsibility or bear the costs of digital technologies has held us back. In short, many players still pull horse-drawn carts in the 21st century.

But the tech is getting old, which means it’s also becoming more affordable. Sensors are cheaper, the cloud is maturing, and X-as-a-Service business models are paving the way for purchasing models that allow companies to buy what they need and only pay for what they use. This shift has a positive and direct impact on the bottom line as it enables the shift from CAPEX-intensive investments to more flexible OPEX options.

A real challenge for the construction sector is that many of the technologies used by the industry have historically been proprietary. These systems are already old, sometimes unwieldy and often – legacy. As such, the solutions required to support a digital roadmap must be open, modular, flexible enough to integrate and work with these legacy solutions, and of course, be secure. The latter, security, is crucial, especially as cybercriminals have been able to take down entire networks simply by using poorly secured IoT devices.

Partnerships for the construction sector must also be given greater focus in order to promote decarbonization and digitization. There is no way a supplier, seller or company can try to offer everything to everyone. To face the energy crisis successfully, all industry members need to work together. And when it comes to technology, that means building an ecosystem of products and solutions that “play well with others,” from devices that collect data to software that makes sense of it.

No time to wait

Time is of the essence, and it’s not just because of the energy crisis we’re facing from the southern tip of Africa to the heart of Europe and across the United States. There are also laws and agreements which, if not followed, will have far-reaching consequences.

For example, the report “Net Zero by 2050. A Roadmap for the Global Energy Sector” by the International Energy Agency (IEA) specifies the schedule for decarbonization in the building sector that is compatible with the Paris Agreement. To cite the report’s findings, it said that by 2030 all new buildings should be carbon-free and universal access to energy should be facilitated.

It goes on to say that by 2035, most appliances and cooling systems sold should be best-in-class to ensure energy-guzzling appliances are no longer in use. And it sets 2040 as the deadline for retrofitting 50 percent of existing buildings to zero-carbon levels. The bottom line? By 2050, more than 85 percent of the building stock should be CO2-free.

It’s a big request. And one that few are ready for.

Also, let’s not forget the breadth of vertical markets, each with their own potential for energy savings and decarbonization. Whether we’re considering hospitals, municipalities, data centers, etc., it’s important to use the right technology for the right outcomes based on their unique needs. Only then do we bring together the essential building blocks for successful Smart Cities.

An example of this is the Bremerhaven-Reinkenheide Clinic. For most of our customers, it’s not just about building sustainable buildings over the long term. Instead, energy costs urgently need to be reduced. For example, our long-term customer Klinikum Bremerhaven-Reinkenheide, a hospital near Hamburg, Germany, asked us how we could manage it to reduce energy costs while meeting long-term decarbonization goals.

The first step was the creation of a comprehensive decarbonization roadmap, in which we were able to show synergies between optimized energy purchasing combined with flexible, decentralized energy production by enabling a range of services.

It was the foresight and the will to rethink the energy consumption of the Bremerhaven-Reinkenheide Clinic that put the hospital on the path to decarbonization. With flexibility and energy procurement services, the customer saves around 320,000 euros in energy costs each year. The company can now leverage those savings and invest in its core business to continue providing patients with world-class care and treatment.

Not just high goals

The construction sector can undoubtedly handle the energy crisis and the shift away from fossil fuels if it uses everything it has at its disposal. This includes software, collaborative digital technologies and a new mindset, beginning with a move away from proprietary ego systems towards purpose-driven ecosystems built on partnerships.

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