Electricity hikes will increase interest in building management systems By Linda Harding
Electricity hikes will increase interest in building management systems By Linda Harding
With the announcement recently that South Africa's electricity tariffs will be increasing by around 25% a year over the next three years, energy efficiency has become a key business concern. The World Business Council for Sustainable Development finds that buildings account for forty per cent of global energy use. To meet global climate change targets, the council has called for a sixty per cent reduction in energy use from buildings by 2050. In light of these events, South African operations now need to take a serious look at their energy consumption to contain costs. Building management systems (BMS) offer one such solution.
The South African BMS market has been driven primarily by the demand for reduced operating costs from commercial offices and retail centres. More recently Frost & Sullivan has seen increasing demand across other end-user segments. Although these systems are by no means a new technology, they are not widely recognised or understood by the majority of potential end-users in South Africa. In many cases these systems are also perceived as an expensive addition to building operations.
Building management systems combine and integrate various building functions, such as lighting, heating, airconditioning and even security systems over a single platform to control, monitor and optimise their operation and energy consumption. Lighting, heating and air-conditioning can use up to 70% of a commercial building’s energy. An integrated BMS, allowing for the control of all building functions from a user-friendly workstation, can reduce this by up to 30%.
The overall market in South Africa is currently performing well, experiencing high growth off of a low base. This is largely due to the local generation capacity crisis and rising cost of power which incentivise companies to implement systems that lower costs and reduce energy consumption. An increased focus on improving staff comfort will also bolster growth within this market, as numerous global studies have found a strong, positive correlation between improved working conditions and employee productivity.
Given the infancy of the local market, multi-national manufacturers operating in the country rely on the success and benefits of international BMS projects when marketing their systems in South Africa. These projects, which are often based on very different climates, geographic locations, currencies and project aims, may be hard for local end-users to relate to and can hinder a BMS manufacturer’s ability to convince these end-users to purchase their systems.
There has, however, been a fair amount of activity in the local market to find ways to avoid this. The lack of critical mass in South Africa with regards to successful BMS implementations has offered manufacturers and end-users alike a valuable opportunity to establish themselves as early adopters through the development of a local, cutting edge reference project that may be used as a benchmark in the country.
Frost & Sullivan predicts that spending on building management systems in South Africa will nearly treble between 2008 and 2015. To date, only premium commercial end-users such as banks and shopping centres have used building management systems. These are typically the companies that have the desired level of system complexity to justify the initial cost of integration, as the savings realised from this process over the lifecycle of the building more than cover the capital expense. These companies are expected to continue to dominate the end-user market for BMS, with middle-tier commercial end-users likely to begin implementing more systems as and when the local price of the systems adjusts to meet the anticipated increase in demand from these participants.
However, the majority of South African commercial buildings are leased, often under short-term, multi-tenant agreements and tenants are thus unwilling to invest in these systems as the payback periods associated with this installation, in the form of cost and energy savings, have been greater than tenancy duration. Also, installing a building management system in a new building can raise the cost of the building by up to 4%, which has traditionally discouraged developers. In addition, there are currently no government policies or incentives to support the utilisation of building management systems in South Africa.
The low level of recognition of building management systems in South Africa is therefore a significant restraint on the growth of the market. However, the introduction of the Green Star SA rating tool by the Green Building Council of South Africa should promote greater awareness, as the installation of these systems can significantly contribute towards the achievement of a Green Star rating. Additionally, the proposed Eskom Power Conservation Programme is expected to provide a degree of further support, if it is enacted. Following the programme, large consumers of energy will be incentivised to reduce their electricity consumption through lower pricing models. Building management systems offer the solution to achieving these reductions and associated cost savings.
Linda Harding is an energy analyst at Frost & Sullivan.
