The internet of things (IoT) has taken the nation by storm. However, its value to an apartment operation is as varied as the nation’s rental product itself. While home chore automation and security have inspired a surge of innovation and enthusiasm, a more direct and obvious driver of cost recovery is already in place for many apartment properties: energy management.
The ability to remotely monitor and control things in the physical world has already changed much of our everyday life, from how companies manage physical assets to how cities operate.
Being able to monitor, manage and acquire data on objects from anywhere has also enabled data-driven decision making, further optimizing system performance, processes and operational intelligence.
McKinsey, a global research firm, estimates that the application of IoT in the area of residential energy management will save over $110 billion in energy annually by 2025. In addition to residential automation, the research notes the impact of smart city initiatives. Municipalities that implement smart meters to reduce loss of electricity through distribution, and sensors to detect water leaks, are projected to add as much as $69 billion in savings per year globally.
For apartment owners and operators, the value proposition on asset energy conservation is simple to prove, and with the right platform, not difficult to implement.
Connecting the dots from utility consumption to consumer
IoT has come with a lot of buzz and even more hype inside the apartment world. Many promise disruption. Few connect the dots to ROI.
Further complicating the ability to quantify the payback is the fragmentation of the apartment business model. The apartment business is not a single business—but many businesses. These days, it’s not even always apartments, but can be single family homes.
The automation of energy management is definitive on delivering ROI. Implementing energy management across different products, regions and payment models is driven by one thing: Everyone uses energy. While complicated by disparate billing methods and more, much is being done to strengthen the connection from energy provider to consumer and to positively impact that relationship.
If we’re unified on the goal of reducing energy consumption, how do we, as owners and operators, get there? And what is the value opportunity with the technology that’s available now?
Just as Uber and others turned transportation into a service, so too do apartment operators have the opportunity to turn energy management into a service. It begins with data.
Facility IoT vs. home IoT and the expansion of ancillary services
Facilities IoT includes equipment with sensors connected to a network. This ecosystem exchanges, stores and collects data which can be used to benchmark, analyze and economize a business operation.
Facilities IoT is the bedrock of many hotels, hospitals, factories—and apartments, at least in common areas. The history of energy management is found in environments with a single line of sight to the building owner, often with short term residents who were purpose-driven: hotel guests, hospital patients, and factory workers. These spaces are also workplaces.
Resident IoT includes light bulbs, dropcams, voice assistants—those devices, controlled over the internet that are portable and owned and operated by the resident.
Home IoT, on the other hand, includes features like smart door locks and thermostats. These devices belong to the apartment owner but are operated by the apartment renter.
In addition to the rented unit, apartment owners often include ancillary services as value-adds to residents. Ancillary services are where residents are offered features and services connected to their apartment. Those can include traditional services like internet, or newer services like notification of a package arriving in a smart locker.
The added capabilities provided by home IoT devices will make a new generation of ancillary services possible.
Apartments are different
Apartments are homes. And apartments are facilities. Split incentives means the owner is responsible for the asset and the non-owner (renter) occupies the space. In office space, for example, building owners can adjust temperatures to find the perfect balance between cost and comfort. This is not possible with apartments, where control of the residents’ space is private and protected.
For decades, federal agencies have worked to collect and identify the nation’s energy consumption across all built environments in order to plan for future needs. Apartments are one of the last, but also one of the largest, sectors to benchmark energy usage. Acquiring whole building data has been fraught with challenge since resident utility consumption wasn’t available under existing privacy laws. New laws and aggregated data have begun to open the doors to identifying paths to conservation.
Following other commercial sectors
Buildings are far from static structures. The convergence of IoT and energy management has turned the built environment into a data-rich field. An effective energy management program can capture, communicate, and analyze crucial energy and operational data, and transform this data into tangible operational performance.
Environmental sensors for temperature, humidity, occupancy, and leak detection are game changers—when integrated as a whole property system. Meters already monitor utility consumption for water, air, gas, electricity and steam (WAGES). Analyzing this data and understanding what it means is a new degree of visibility and operational intelligence. Such diagnostics and control delivers significant movement in preventative maintenance and energy efficiency.
Connected sensors, meters, and controls create the physical infrastructure, as do computing gateways, software and the cloud. The key is putting the ensuing data stream to use. In an apartment environment, that means engaging both the operations team and residents with knowledge, while highlighting what’s important.
Residents who are provided information on their energy consumption in real time, in a way that does not raise privacy concerns, are empowered to make positive changes. Controlling heat, lights and appliances remotely benefits everyone. Setting rules for actions like turning down the heat at night or turning on the dishwasher when electricity rates drop is a win for residents and owners. Such a system should provide notifications when it senses residents are wasting energy, for example, by having the air-conditioning on when they are away. Yet, it cannot be seen as hectoring and must be easy to use. Smart thermostats with default settings are high-value, particularly for student and senior properties.
While luxury and other higher-end market rate communities should focus on making certain facilities IoT integrates with resident IoT, the bottom line is data.
A unified platform gets relevant data to those who need it, as well as enabling information sharing and collaboration.
Essentially, integrating technologies to deliver better insight and, in turn, better performance is the fastest way to pay-off. A whole-system operation rests in the platform and its visibility into the widest view of data points.