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Smart Cities: An intelligent efficiency tool

With the advent of the internet of things our built environment is learning to speak. This data can tell us a story about how to improve resource use in cities and buildings. It can revitalize cities by galvanizing investment into distressed assets.

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Written by DeletedUser

The adoption of sensors, smart grids, and the internet of things is awaking our cities. An increasing amount of data is available about our homes, appliances, energy use, water systems, and public places. We can automate a large portion of the energy efficiency (EE) industry through a web-analytics tool that data-mines information on a building, its energy use, appliance age, the weather, local rebates, and financial incentives - all from imputing an address. This company, Samba Energy, is an early-stage example. They have created an estimation tool for solar. The user inputs their address for a quote analysis and it spits out a solar estimation for your home using Google earth, public solar radiation data, the local rebates/incentives, and average solar prices in your area.

Imagine each building’s blueprints and architectural data represented in a digital version that is tapped into the internet of things. The digital version of the building would be constantly updated as its feed-back loops change, the building could tell its digital version “the refrigerator is old and can be replaced by this energy efficiency fridge, you can buy it here at this group discount rate.” Each building would have an intelligent digital version of itself that is updated as more data becomes available or is inputted. This information could be used to greatly improve efficiency, save money, reduce carbon emissions, improve quality of life, and activate the economy.

The software would give a clear breakdown of the return on investment for each retrofit project and could compare that directly to the return on investment of a USA treasury bonds or the S&P 500. The return on investment from building retrofit projects is often above 25%, exceeding what an investor can get in the market. Energy efficiency is called ‘the low hanging fruit’, however, it there is plenty of fruit left hanging on the tree. People often don’t invest in energy efficiency because it is a complicated process with multiple technologies and stakeholders involved. In addition, the engineering costs to make estimations for small homes outweigh the potential savings. Furthermore, it is the industry norm to consider a building a continual cost with depreciation built into the financial model, instead of a potential money generator. Imagine changing the paradigm, and conveying to each home owner that they can continually make a profit from their home by saving energy, like a small business, and not only upon the sale of the asset.

In addition the software/website could manage an investment vehicle to give low-interest loans for building retrofit projects. The home owner could then retrofit their building without being capital constrained. As mentioned in the Thailand Building Retrofit Inspiration Post, building retrofits have shown to be low-risk investments. The site could create a peer-to-peer lending platform, akin to Kiva.org, allowing people who want to invest in a socially impactfull ways to loan funds to reduce energy use and thereby carbon emissions. An accredited social investment fund could achieve a great impact return on investment by providing a debt guarantee to reduce the risk for loaners. Another option could be to have the home owner borrow the money through a utility-partnered investment fund. They then pay the loan off over time through their utility bills (which would remain the same, despite the energy use being reduced, the utility would keep the difference until the balance has been paid off).

Another revenue model for the software/website is to create a bulk-buying consortium to reduce the cost of products, such as One Block Off the Grid does with solar. The site would take a percentage of the sale for each product purchased through the tool, or each referral to a contracting service, such as Solar City.

The interesting space here is around creating efficiency in the efficiency business by automating the time-heavy, costly part of the EE business. The price of equipment is only a fraction of the project cost; so by improving the estimation, data-analysis process, and funding mechanisms, you can reduce overall costs and risks, improve project-efficiency, and make it worthwhile to retrofit small homes - thereby activating the long-tail of the EE and small-scale renewable energy industries. In that way we can improve the returns for each home owner by reducing the cost of the overall process.

As more and more data is available and the adoption of smart grids and the internet of things takes off, this intelligent efficiency tool would become more effective. It will revitalize cities by proving the intelligent investment into the retrofitting of distressed assets, thereby stimulating the economy and improving the quality of life.

What resources (money, time, people, technology, etc) will your concept need to be successful?

A team of software programmers, user interface designers, and experts in the build environment will need to come together to build this first prototype. The technology is available, it is about putting the pieces together. It would take approximately 2 months to build the first prototype. Money is the inverse of hard-driven people in this case being that money is only needed to pay for talented individuals at this stage.

What steps could you take to implement this idea today?

This could be built in the next few months with the right team. It requires time and people with the correct talents to build a good user experience. While this seems very futuristic and difficult, it is actually very possible today! You can access every rebate and financial mechanism in the USA, broken down by county, at http://www.dsireusa.org. You can use Google Earth and NASA for all weather data. And you could begin by partnering with utilities or other solutions providers such as opower.com. The information and tools are out there and available, its just about getting out the word!

How can your idea be scaled so that it's implemented in cities around the world?

The great part about this idea is that it can work in cities around the world. While the data-mining algorithms will have more impact in cities that have more data-available, this information can also be inputted manually. Energy efficiency and building retrofits have been used to improve livelihoods and jump-start economies around the world.

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DeletedUser

Nat: another idea. This could go hand-in-hand with manufacturer guarantees (e.g., "10% or more reduction in costs for 1996 models and older.") If the savings did not meet the guarantee, manufacturers could provide a rebate in exchange for more detailed information about why, based on this web system. Therefore investors could know their 25% savings is really a good investment, since it is practically guaranteed. Likewise, manufacturers would sell more of their product since it would ease switching over (and many of their models have a lot of revenue coming in from servicing their models as well as selling them, so conversion is key) and have more information about any glitches in their model to fuel their next round of R&D or support design. Exciting synergy!

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