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At A/O, next-generation energy efficiency solutions are central to our broader building decarbonisation thesis. This is because energy efficiency improvements are critical for reducing HVAC demand, lowering the costs of electrification.
Energy efficiency startups targeting CRE owners can be segmented into:
i. Thermal insulation solutions, which monitor or mitigate thermal heat transfer via the building envelope or ductwork. Heat transfer in buildings is caused by air leakage or deficient insulation and can be monitored at either the building, portfolio or global scale. Startups in this space include advanced building envelope systems, building envelope inspection software, and thermal imaging to identify heat loss. Solutions utilise a wide range of technologies, including new materials, IoT sensors, AI/ML, computer vision, and satellite imagery.
ii. Space heating and cooling demand optimisation solutions, which include one or more of the following features: real-time energy demand monitoring; energy demand prediction; energy optimisation insights; and, in some cases, autonomous energy demand optimisation. Solutions in this space include energy management systems (EMS) and next-gen building management systems (BMS). Startups utilise a combination of IoT sensors, legacy BMS, new BMS hardware, and AI/ML.
At A/O, we have identified common hurdles faced by stakeholders in scaling legacy energy efficiency solutions across CRE portfolios and geographies.
i. Manually implement HVAC adjustments or;
ii. Adjust profile settings to prevent post-installation performance drift.
In practice, this means the value proposition of EMS and BMS relates to only a tiny subsector of CRE. Small CRE buildings represent c.94% of US CRE building stock. Given their size, they generally opt for an HVAC engineer rather than employing a full facilities management team. Without an existing facilities management team in place, EMS and BMS solutions represent an additive cost rather than an overhead saving because of the added complexity and cost of installing and maintaining a BMS. In this way, there are low adoption rates among smaller installers and HVAC engineers, with a large majority of the CRE market remaining underserved.
At A/O, we are actively investing in solutions that acknowledge and address these frictions.
Advanced BMS solutions, such as our portfolio company Passive Logic, are designed to increase adoption among CRE installers, HVAC engineers and facility management teams, through simplified installation and maintenance processes.
Having first invested in Passive Logic in 2020, A/O joined the $34m Series B round earlier this year. The team’s vision is to deliver an advanced BMS with maximised connected load capacity and the ability to autonomously adapt preset controls in response to external data points.
The introduction of autonomous control serves CRE stakeholders in a number of ways. Firstly, the risk of post-installation performance drift is minimised, improving energy savings.
Secondly, the need for ongoing intervention from facility management teams is eliminated, lowering operating cost and complexity. And, given the modular design, installation complexity is also reduced.
Together, these cost savings increase BMS adoption among CRE channel partners, while improving the reliability of energy savings for asset managers. At the same time, these solutions indirectly increase the adoption of EMS solutions such as Facilio, which require a building to have a modern BMS preinstalled.
Heat transfer through the building envelope accounts for up to 60% of total heat transfer. Energy efficiency solutions in the space either:
i. Minimise heat loss through insulation, or;
ii. Maximise heat storage through phase-change materials.
At A/O, we are particularly interested in emerging material based solutions that minimise and monitor heat transfer in the building envelope while requiring less labour.
At A/O, we are actively investing in technologies that enable buildings to become more energy-efficient while placing less strain on supply chains. Get in touch!
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