Nov 18, 2019
Smart buildings have the potential to consume less energy, generate less waste, and provide better quality spaces for their occupants. But just how practical is it for building owners to adopt these new technologies and can they actually improve the bottom line? Terry Young, Vice president of operations at KRP Properties sits down to talk to us about the rise of smart buildings and the importance of training his employees on the ever-changing technology.
Dan Seguin 00:44
Greetings everyone and welcome back. This is Episode 15 of the ThinkEnergy podcast. We spend our lives in buildings at home at the office, community centers, shopping malls, movie theaters, and the list goes on. We're also surrounded by smart technology and gadgets, smartphones that can turn on the heating in your home before you get there smartwatches that track how many steps you take each day. Now that smart technology has made a remarkable entry into commercial office building space. Enabled by technology smart buildings have the potential to consume less energy, generate less waste, and provide better quality spaces for their occupants. Did you know buildings produce 17% of Canada's greenhouse gases, including emissions from generating electricity that buildings use. modern buildings are equipped with 1000s of sensors recording air quality, humidity, motion, temperature and the presence of noxious gas, light carbon monoxide, formaldehyde. These sensors continuously record energy consumption and waste. Smart algorithms running on network computers, analyze sensor generated data in real time to keep the building systems running at peak efficiency while the air is clean and fresh. So here's today's big question: Smart buildings lead smart cities. How practical is it for building owners to adopt these new technologies? And can they actually improve the bottom line? Our guest today is Terry Young, Vice President of Operations at KRP properties. He manages a portfolio of over 30 commercial properties in Ottawa's high tech hub in Kanata. Welcome to the ThinkEnergy podcast,Terry. So what's your take on this smart building trend? What are some of the technologies you've adopted in your own buildings?
Terry Young 03:02
So I don't even know if I'd call it a trend it is a "must-have" moving forward. Basically, what we've tried to do is try to understand how our buildings, use the utilities, be a gas, be it utilities, gas, electric, and or water, and try to understand how that from an energy perspective is being used. But how do I make my clients comfortable. So we've sort of broken it down into three things. safety, comfort and energy. That's how we kind of run our buildings. So some of the technologies that we've put in place is anywhere from, you know, low voltage, DC lighting, LED lights. We've put in, state of the art building automation systems, we run artificial intelligence, the IoT devices, there's millions of them. We've tried probably millions, and we don't have millions, but we've you know, we play a lot in the space to try to make you more comfortable burning less energy.
Dan Seguin 04:07
Quick question, how does AI fit into that? You just talked about artificial intelligence.
Terry Young 04:12
Yeah. So I could I could talk here for like five hours on this. This is my thing. I love this. So what we found is we get data coming in from the sensors and the IoT thing. So we talked about earlier on, how do you maximize the efficiency of how you're running a building? You say, Well, I can turn off the lights at four o'clock when people are going absolutely. But how can holistically you look at how the building's burning its energy and how you're maximizing the comfort to the fourth or fifth decimal place. And this is where AI comes in. So we feed all of the data that we get in from the sensors in our buildings, and we feed it into a data analytics platform. And what that does, it understands how the building is really being used by the people in the building. Okay, and I'll give you a quick example. So if you've got an r&d department who meet every second Thursday, for instance, and what the building will do, it'll start understanding the trends of how that room in that section of the buildings being used. So if it's not being used, the building's going to say, Well, I don't need to light it, and I don't need the air condition it properly. So if I'm only going to do that, if indeed, they use the building, so over time, trending will actually start to occur and the analytics takes over to automatically lower the temperature, turn off the lights, etc. Likewise, these guys are going for pints and they're trying to bugger off every Friday, not that never ever happens, where the building sort of starts understanding that he'll start shutting the lights down three o'clock. Yeah. So So basically, we've been very forced in some of our buildings, you know, putting this AI stuff in, we can save 27, even up to 30% of energy just by turning this stuff off.
Dan Seguin 05:59
Okay, well, that actually flows nicely into the next one. And maybe you have something to add. So the question was around, how does it work? And how does it help make your building minimize energy costs, support the electricity grid and mitigate environmental impacts?
Terry Young 06:18
Yeah, again, great question. And it's quite loaded, and has many levels of answers. So I'll try to simplify it. Minimize the use of every electrical device in your building. Basically, if you have another example, if you got a 60 horsepower motor on the roof drive and a fan, for instance, what that does is now this technology will say I don't need the full 60 horsepower. So at three o'clock in the afternoon, maybe we need 22 horsepower, or six horsepower. So we put variable speed drives in variable stuff. And again, remember, this technology is understanding holistically how that fan works. So you only will use the minimum amount to maintain your comfort. So ultimately, what will happen is twofold. One, you're going to burn less energy full stop. Among other things, and this is where the math is, is sort of very hard to quantify. I don't replace it normally. So if you have a useful motor, you have a useful life and say 18 to 20 years on electric motor, for instance, that's under normal conditions, I've minimized those normal conditions now with the software. So what happens is, I don't need to spend $300,000, or whatever that huge amount of investment from a capital perspective, to buy a new motor 18 years, I maybe want to push that to 22 to 25, you expand your life expectancy, here's the thing, the amount of energy and the amount of everything carbon and everything to build the motor, I don't I'm not throwing it out. I'm not building a new one, I'm actually trying to save and extend the lifespan of what I have already.
Dan Seguin 08:01
The only thing is maintenance.
Terry Young 08:03
Exactly. And again, again, they come back to the artificial intelligence, predictive maintenance. So this is the artificial intelligence gives us the ability to predict based on trending analytics now, so we actually be able to maintain and operate even when I say 100 times better, literally 100 times better than we did before.
Dan Seguin 08:21
So these improving these system efficiencies, like event, venting and lighting you're talking about does actually affect the bottom line, and I would assume in a positive way. And also with regard to your your carbon footprint.
Terry Young 08:37
Yeah, well, so so not to get too technical. But the more efficient, you can run a building, obviously, the less money that you have to spend to run it. So right, that's the bottom line number. Likewise, you create a brand when you run a building like this, that people want to be there, and they're willing to pay a premium sometimes to lease this space in a building like that, because their operating costs are lower, and they're more comfortable. So it's good business, very good business.
Dan Seguin 09:07
Okay. What are some of the potential barriers, though, to the adoption of smart building solutions? Like I mean, are there any talk to me maybe about return on investment? Maybe the inconvenience factor downtimes to get that set up?
Terry Young 09:22
Yeah. So not too much downtime, return on investment, certainly. What probably the biggest, if not, it's not anything, it's usually about the money to do this, how when, where all that kind of stuff we can play with, but coming up with the million dollars or the 350,000, or whatever it is. That's the biggest problem have. Some of this technology, the payback is not even quantifiable. For years, 10 years, 12 years. I'm a finance guy. And that doesn't make any sense. So, you know, after seven years, there's not really a return. So we try to, you know, put if, if it's any less than three years, it's a pretty good business. Sort of decision, the biggest besides the money is, and again, before I continue to number two, there are specific financial institutions that were specialize in this too, by the way. So if you gotta if you've got a building, or you're in the space where you don't know exactly what to do, and you don't think you have the money, most of our lending institutions, now they do have specific people who understand the technology and are willing to loan you money to buy the technology, because that's what they're really specifically, their expertise there. So there's divisions of these and the big all the big banks have divisions now. And we often get third party financing from these guys. Okay, so that's one, the financing check. Number two is we're having a big issue with HR. So it's one thing to put in a great system, and it's amazing, who's gonna run it. So at the end of the day, you still need a smart human behind everything. So you know, we often say, Well, you know, working ourselves out of a job, never, you will always always need somebody to understand the number and how to run it. So, you know, most of our workforce is probably like, in everybody's outfit. You know, they're 55. And over. Yeah. And so we're bringing a lot of this technology in, and we were struggling trying to find the expertise to run it.
Dan Seguin 11:27
Yeah, that was that was one of the questions actually, that I had, now that you have this advanced technology in your buildings? How do you convince the operators that you have in hand, to join that smart workforce? And how do you recruit, are they are they there yet? Do you have that workforce available?
Terry Young 11:47
No, I don't have a fully, you know, our workforce is is again, probably 60% is over 55 years old, we have adopted a lot. What we've done is we've had to change the way we do business a little bit. So when we purchase something, we don't purchase just the thing, I purchased training for the thing. Okay, you see how that changed a little bit. Now, he come back to the economics now. So the ROI, because I've just increased my bill a little bit. But in order to maximize like golf lessons, and I use this example, 1000 times, so I buy a brand new set of ping golf clubs. And if I give that to a person who doesn't know how to play golf, the ball is still gonna be in the woods. Yeah, it's best to buy the big golf clubs and get a golf lesson or two. Yeah, it's worth the 1200 bucks, it really is. And this is where we are right now. So we've done in all of our building automation systems, or AI, I bring the guy in, bring the boys in, and we have, here's how I can make my client because we're very, you know, we're, it's almost a personal thing for us. And so it's our clients, it's my clients, if I can make you more comfortable by sitting in some training and doing a little better job, that's what I'm going to do. And most of our guys are very, very dedicated like that. So you know, training, training, training is the key. And at the end result, when we look and we and I obviously bring numbers to all this and benchmark this. We're doing better. So we make our clients more comfortable. And by burning less energy, life is good. That's basically our job. Cool, you know?
Dan Seguin 13:17
Yeah, will optimization of these systems provide data that can translate into actionable asset repairs or replacement?
Terry Young 13:26
Oh, absolutely. Oh, I did. Yeah. Yeah, no, we're a lot. I wouldn't say all, but a lot of our capital investment that was based on analytics. And basically we break these numbers in. And we can cross reference that now from a financial perspective, see, understand how much from an operational perspective we've been spending on a certain asset class, be it a fan or a motor, something like that. And then the analytics have come in and say you've repaired this 66 times you have 88 service calls, heat and cold calls. There's an issue, there's a and you know, you there's a red point here, you should look at replacing this, because there's a couple of parameters that aren't looking good. Now, if you didn't have some piece of software, looking at this, there's no way that you could, you know, we have 10s of 1000s of devices, you'd never be able to do that. But this AI stuff, when you open the screen, it actually comes up with a green, red and yellow. So if it's red, we got to look at it. If it's green, we're good. And it sort of categorizes in a hierarchy perspective, what I need to look at exactly and remember every point is being looked at so I know right down to the thermostat if there's an issue.
Dan Seguin 14:39
We're talking a lot about the technology but you have these providers also they're closely linked to that the building automation systems of this world if you want, are you able to expand on your partnership model to execute on your smart building strategy?
Terry Young 14:54
Oh, absolutely. The reason the only reason why are successful is because We have great partners. And shout out to you guys as well. The Hydro Ottawa guys, we budget and we look at what we're going to do based on your recommendations and your expertise. You have teams of really smart people, get them around the table, they're more than happy. They're some of the smartest guys in our business. Ask him for advice. What a concept. You know, so we literally get partners, and that's exactly we don't have vendors and clients and we got partners sit around a table, and we got lots of smart people. We got building automation, guys, we got cybersecurity guys, i t guys, utility guys. And they're all wanting to try to make a difference. So you sit around a table, you put a sort of a pathway, and you can It's amazing. What what can be achieved with smart people around the table. And then so you layer then the finance piece, you layer, the analytics piece, you layer the smarts, there's no way you can make you the right decision has to float to the top. Okay? So you never you don't second guess yourself anymore. So if you have to spend a million dollars or 5 million, whatever it is, you know, beyond the shadow of a doubt, you've made a really good decision because everybody around the table is in the same direction as you are.
Dan Seguin 16:20
Let's look at the other side of the spectrum. All those good decisions. But is there something that keeps you up at night? What makes you nervous?
Terry Young 16:31
Cybersecurity? You know, I sit on a pile of boards, and we have a conference every year with real calm, which specifically understands how the operational side of the building operates. We're all online now. Okay. And it's vulnerable, in certain circumstances, how you are online from a building perspective. So there's, there's bad guys in the world, unfortunately. And, you know, for whatever reason, they're trying to be destructive. And how you can sort of solve that, or how to barricade those bad guys to come. You know, because you don't want your clients, you just want to keep lights on, keep them warm. And some bad guy wants to stop that, unfortunately. So we put up a pile of sort of cybersecurity and firewalls and a whole pile of IT things that some, again, one of our IT experts, sort of helps us out with, but at the end of the day, I'm worried that as we get further and further down the line, everything is online, everything, you know, there, there's a cybersecurity issue, and that there's a cost to that. And so we got all this data is out there, we have our buildings are our clients, sorry, rely on us as landlords to ensure that, that they're safe, and their lights are on and their their heat and cold. So, you know, as we get more and more technologically advanced, we have to combat that every single day. The building of yesteryear was, don't let the guy in by the electrical switch in the electrical room, lights are still going to be on. That's not the case anymore. You know, you're going even this bill is probably no light switches. Most of our buildings don't so if you you know, so that that's that's probably what keeps me up the most.
Dan Seguin 18:32
that was very informational. I appreciate this. Listen, thank you very much for joining me today. I hope you enjoyed it. I did. If someone wanted to connect with you, what's the best way?
Terry Young 18:42
Hey, my phone for sure. call my office KRP properties or firstname.lastname@example.org? Absolutely. I have a LinkedIn profile as well. And I enjoy speaking on this topic. very passionate. Yeah, I Well, I like it, it's better. The buildings that we run are better because of it. And I think as a society, and as a community, we're very fortunate to have very tight knit community. If we all chat, which we do our carbon footprint as a whole as our industry can drop, because we're just doing things a little better, a little cleaner, so I can learn from somebody they can learn from us how to do a little bit better. I think we can you know how to eat an elephant one bite at a time. So I think we're going to do really good things here.
Dan Seguin 19:25
Thanks again. Tori. Thank you. Have a great day. You too. Hey, folks, thank you for joining us today. I truly hope you enjoyed this episode. For past episodes, make sure you visit our website hydroottawa.com/podcast. Lastly, if you found value in this podcast, we'd appreciate a rating on iTunes, or maybe even tell a friend or a colleague. Anyway, this podcast is a wrap. Peace, everyone.