Over the last six months, the Prosperity Blog has been very focused on the topic of energy efficiency, with lots of posts on the subject. Of course, that’s because we’ve been leading the Metropolitan Business Plan effort to identify a catalyzing investment that will grow the energy efficiency industry in our region. And we’re getting pretty close, with our concept of the Building Energy-efficiency Testing and Integration (BETI Center). Here’s the full rundown on what it is, what it does and why:
Market Analysis: Given the region’s unique capabilities and the specific market opportunities, we believe that the highest priority for our energy efficiency industry is software and services. In particular, we see energy services, building energy management systems, ICT enabled integrated systems, green design and construction services, and green design software as the best short term opportunities. However, other opportunities may arise as well, particularly if the region is able to leverage its considerable manufacturing expertise toward the development of products in this industry, such as smart meters, sensors & sensor systems and smart appliances.
To take advantage of these opportunities, our region must take an ecosystem approach, identifying key market barriers and creating an intervention that will significantly improve the overall business climate for local companies to sell energy efficiency goods and services. Our analysis identifies two significant barriers – performance verification and integration:
- Performance verification: Products and designs intended to improve building energy efficiency often underperform when subject to actual conditions, such as varying climates and “the human factor.” This lack of certainty about performance makes it difficult to calculate the return on investment, and therefore serves as a disincentive to be the “first buyer” to purchase these goods and services.
- Integration: Each building contains a complex array of systems that, together, determine energy efficiency: the design of the structure, its component materials, the equipment used to operate it, and the software used to manage it. Testing is often performed on individual components of these systems, but rarely in combination. Without a clear sense of how these systems interact, energy efficiency goods and service providers cannot improve their work to better integrate and leverage each other.
Business Case: To lower those market barriers, we are proposing the creation of the Building Energy-efficiency Testing and Integration (BETI) Center. The BETI Center will allow innovators – researchers, entrepreneurs, manufacturers and service providers – who have successfully developed promising products, applications, designs and services to both work together to learn about integration as well as test new products and services prior to launching them into the marketplace. By creating an atmosphere in which all companies have a better chance to grow their customer base and market penetration, we will catalyze the energy efficiency industry, creating jobs and importing wealth into the region. In fact, if our region becomes the best place to access the market from , we will not only help local companies grow but also attract companies from other places to come here, both to use the fee-for-service programs of the Center and to move their operations and employment here permanently.
Services: BETI Center services will be offered on an á la carte, fee-for-service basis, taking into account the resources and sophistication of the participating individual or firm. An established firm with a new product or service may wish to bring their own engineers into the test facility and use no Center personnel, whereas an independent entrepreneur may wish to access a range of testing and technical services. Services of the Center include:
- Controlled testing: The testing facility will be designed to allow maximum flexibility to create a wide range of testing environments. This could be as simple as simulating a room or office in order to test the performance of a single piece of equipment, or as complex as simulating the interaction of multiple systems in an entire building. Those conducting tests will be able to control all variables and isolate the impact of the test subject. A user of the facility may conduct the tests themselves or may avail themselves of technical services provided by the Center. The Center will be able to provide an evaluation of the results of controlled tests, and can work with testers on product changes in response to those results.
- Real-world demonstration and testing: The Center will establish relationships with owners and managers of residential, commercial, industrial and institutional facilities throughout the region and the state. This network of buildings will be used to demonstrate the effectiveness and return on investment of technologies that have already been proven in controlled testing (either at the Center or in-house by an established firm) and vetted by the Center’s staff. Selected clients of the Center will gain access to this network, and the Center will facilitate and/or underwrite some or all of the costs of the demonstration; alternatively, the Center may use a revolving loan fund to pay for demonstrations and then use the energy cost savings to pay back the loan for future demonstrations. The Center will also be able to provide third-party evaluations of real-world demonstration, working with both the tester and the property owner/user. In fact, the BETI Center may evolve over time to have the capacity to offer a formal “certification” process for building energy efficiency goods and services.
- Industry interaction: The testing facility will be designed and operated to maximize the opportunity for goods and service providers to interact, integrate technologies, form partnerships and generally overcome the scale and fragmentation problems that characterize the industry.
- Business assistance: The BETI Center will link energy efficiency goods and services providers with expertise in various business processes, such as marketing, management, legal and export assistance. These services will only be offered to clients of the Center’s programs.
Potential customers:The BETI Center will be available to any individual or organization that needs to have a product, design or service tested for efficacy, safety, reliability, performance and/or interoperability. To make the best use of resources, the Center will screen applicants to ensure that products and services are, in fact, ready for rigorous testing. The goal of the Center is to promote innovation and foster the development of new jobs in this industry cluster in our region, and so its facilities and services will be open to businesses of all sizes and stages of maturity. In fact, a strength of the Center will be to bring brand new technologies together with established firms to foster synergies and joint learning. Marketing efforts will focus on:
- Researchers: New technologies and ideas emerge from laboratories at universities and research centers, and the BETI Center will provide a place to test those technologies in their earliest stages.
- Start up businesses: Businesses that have built prototypes and begun exploring markets will need to test for safety and interoperability and to determine the level of performance their customers can expect.
- Established manufacturers: Manufacturers of building materials and equipment will need to improve the energy performance of existing products and develop new products that improve building energy performance.
- Established service firms: Architects, engineers, building managers and other service providers will need to upgrade their design skills and may want to develop new, proprietary designs that allow them to expand their building energy efficiency business. In addition, service providers will have the opportunity to learn how they can leverage technology to maximize the efficiency of the buildings they design, build and retrofit.
- National and international customers: By creating a regional business climate that facilitates the best path to the market for energy efficiency goods and services, individuals and organizations in the above categories from other places around the country and the world will be interested in using the Center’s services. Although the BETI Center is a regional economic development tool, there are significant advantages to working with national and international customers, including growing the fee-for-service clientele of the Center and potentially recruiting those companies to relocate their operations and employment to the region.
Next Steps: You can read the full draft Metropolitan Business Plan here. You’ll notice that there’s a lot of detail missing, including revenues and expenses. That’ll come in the next draft, due at the end of July. Comments are welcome on this draft, though, so feel free to let us know what you think!