Energy management and performance improvement

Energy management and performance improvement
Technology group

Once various energy efficiency measures have been deployed in a building, energy management and performance improvements can be put in place as a set of tools to: (1) Ensure energy systems’ performance meet the design intention, through proper commissioning during building handover procedure. (2) Monitor, evaluate and manage the energy performance to optimise occupants’ comfort and a building’s functions, while maintaining energy efficiency, through Building Energy Management System (BEMS). (3) Improve the energy performance of the building through Energy Performance Contracting (EPC) by a qualified Energy Services Company (ESCO).


Commissioning originally referred to the testing and rectifying deficiencies of heating-ventilation-andair-conditioning (HVAC) systems of a building to meet established standards prior to the owner taking over the building. Today, commissioning recognises “the integrated nature of all systems that affect a building performance, impact sustainability, workplace productivity, occupant safety and security” (US GSA, 2005). Commissioning is considered as a quality control process that presupposes correct functions and performances of all technical systems and building components during building handover. In many countries, commissioning is a mainstream practice and compulsory under building codes. Tools to assist commissioning activities have been developed and range from a simple checklist form to a sophisticated matrix form. The matrix organises various commissioning aspects against the stages of building development from design to operation. Various computational tools have also been developed to assist the commissioning activities. An example is the MQC_JP matrix developed for Microsoft Excel users. The matrix enables the storage of large number of data and easy navigation. MQU-JP matrix can be customised to suit a specific project (IEA, 2008).

Building Energy Management System is a computer based control system installed in buildings. BEMS integrates the monitor and control of mechanical and electrical systems within a building into an overall control and optimisation strategy related to energy, occupant comfort, etc. Systems and subsystems to be managed by BEMS include but are not limited to chillers, plant optimisation control, lighting features and dimmer controllers, indoor air quality control, plumbing and other electrical-related systems. BEMS has the capability to respond proactively to alarms and trace the sources of problems. BEMS also gathers, analyses and controls building performance data such as temperature, humidity, levels of carbon dioxide, room illumination, etc., of various spaces in a building. BEMS’s components are generally laid out in a four-level system:

  1. Sensors, switches, etc., at the field (equipment) level
  2. Outstations and discrete controllers at the control level
  3. Central station with a computer based control system at the operation level
  4. Central station communication via gateways at the management level.

BEMS, in its most recent form, benefits from advanced development of intelligent/smart technologies and communications, such as wireless technologies. These technologies empower BEMS to extend its scope, such as optimising energy efficiency through interoperable services and dynamic control of multiple equipments and technological systems. Other advanced approaches include communication among sensors, context-aware, user-adaptive, prioritisation of information, etc. (European Commission, 2009). For example, lighting sensors from a room’s daylight system can send signals of overcast sky to BEMS. The system then analyses data from motion sensors installed in the room to detect whether the room is in use, in order to decide to whether to automatically switch on supplemental artificial lighting. Such data are also used to determine whether air-conditioning in that particular room should be turned off or remain to be on.

Energy Performance Contracting (EPC) is a performance-based procurement method and financial mechanism for building renewal. The utility bill savings resulting from the installation of new building systems that reduce energy use are used to pay for the cost of the building renewal project. A ‘Guaranteed Energy Savings ’Performance Contract includes language that obligates the contractor, a qualified Energy Services Company (ESCO), to pay the difference if at any time the savings fall short of the guarantee.’(EPC Watch, 2007). ESCO provides integrated solutions to achieve energy efficiency and thus energy cost reduction. ESCO’s activities include:

  1. Carrying out energy audits
  2. Providing consultancy services to improve energy efficiency
  3. Operating and maintaining installations
  4. Facility management, energy management including demand monitoring and management
  5. Modifying/upgrading electricity-consuming equipment
  6. Providing energy and thermal energy supply from district heating/cooling, co-generation or trigeneration.

Payments to ESCO services are linked to the performance of the implemented solutions (KPMG, 2009).

Feasibility of technology and operational necessities

Energy management and performance improvement can be applied in all climatic contexts. The practices are most suitable for commercial buildings (offices, retails, hotels, etc.) and large-scale mixed-use complexes, in which the technological systems are complex and require a systematic approach to manage.

Good practices of building commissioning during handover normally include verifying performance against the intentions set at the early stage of building design, ensuring installations have undergone onsite inspection, that all technical systems have been tested and any faults have been rectified. Commissioning of advanced technologies/systems requires training operating/facility management staff and educating of potential users. A building user guide is also provided during the commissioning procedure to explain the operational procedures and functions of complex technical systems. Handover of complex and large-scale buildings often involves an independent commissioning agent. Third party involvement can help eliminate hidden deficiencies, which would otherwise not be detectable until the post-occupancy period (Lohnert et al., 2003).

While building commissioning is, in most cases,an essential part of a good building contract, BEMS and EPC require the support of building developers/owners. To optimise its potential and cost effectiveness, BEMS can be best incorporated during the design stage. The information can then be included in both drawings and specifications related to a building contract. During the building operating stage, BEMS requires personnel to operate and monitor. User interface and manually override functions have to be in place for possible intervention in case of system break down and/or emergency situations. BEMS can also be applied to existing buildings to monitor and subsequently optimise energy performance. BEMS is, in fact, one of the technologies that can be used by ESCOs to monitor and manage the energy performance of buildings.

ESCOs often start a project by defining the baselines: existing energy consumption patterns and rates, equipment inventory and conditions, occupancy, existing energy saving measures, etc., through surveys, inspections, spot measurements and short-term metering. After implementing technological interventions by the ESCOs, the baseline conditions are used for computing potential savings in energy consumption and monetary terms. Based on the baseline conditions, ESCOs develop project specific measurements and a verification plan. The plan includes specific technological interventions, their potential energy and monetary savings, verification methodology, maintenance schedule and cost, and payback period. After installing or upgrading the technological intervention measures, post-installation verification is deployed and often includes commissioning. This is to ensure that technological intervention measures are designed, installed, and tested. Post-installation verification methods can be surveys, inspections, sport measurements and short-term metering. Subsequently, ESCOs are often required to carry out periodic performance verification and submit the results in a report form, documenting the actual saving achieved. These activities also provide operational feedbacks, facilitating any necessary fine-tuning to the installed intervention measures.


Figure 1: Typical process of ESCOs.

Feasibility for implementation

Implementation of energy management and performance improvement requires institutional supports and capacity building activities as catalysts. Subsequently, as experience has shown, the markets can become self-sustaining.

Building commissioning is more feasible for implementation. It can be included in building contracts as a common agreement between building developers and builders/contractors. This can be done as long as there is an agreement between the involved parties, in countries or regions without special institutional settings for commissioning – e.g., legal requirements to mandate commissioning in contracts for complex building types.

BEMS requires capacity building to train highly-skilled technicians to install and operate the system. The key capacity building areas include but are not limited to:

  1. Knowledge of the individual mechanical and electrical systems, their installation, operation and maintenance requirements
  2. Knowledge and analytical skills, in order to comprehend the optimisation of overall energy performance through inter-operable and dynamic control of individual electrical-related systems/equipment
  3. IT skills to operate, manually override (when needed), and maintain BEMS.

A sound institutional setting, including a financing system, forms a good foundation for EPC services. For example, a non-subsidised electricity price and the availability of a feed-in tariff are good incentives for ESCOs to grow their renewable energy services - i.e., combined heat and power plant operated using renewable primary energy sources. In least developed countries, capacity building and financial assistance from international organisations will boost EPC services, which in turn help mitigate climate change and, at the same time, improve quality of life.

Status of the technology and its future market potential

Among the three practices and technologies discussed under energy management and performance improvement, building commissioning is the most feasible one to be implemented widely. Commissioning has been evolved from ad-hoc implementation of individual technological systems and equipment (such as air-conditioning systems) to include comprehensive whole-building commissioning. The tangible benefits of building commissioning have recently been appreciated and the practice has become popular in many parts of the world.

The implementation of BEMS is more common for commercial buildings than for residential buildings. BEMS is a proven and popular technology in developed countries. However, the technology is still not common to many users in developing countries, which are also huge potential markets for BEMS. Taking South Africa as an example, in the context of rising energy prices, BEMS, which has long been considered as an unnecessary capital expenditure, becomes justified as one of the effective technologies to reduce energy consumption in complex and large-scale buildings. It is reported that the South African market for BEMS earned revenues of US$19.2 million in 2008; this figure is estimated to reach about US$57.3 million in 2015 (Alternative Energy Africa News, 2010).

EPC has been implemented in many countries. The practice originated in North America, and has since been extended to other developed and economies in transition countries, and at the present is increasingly found in developing and even least developed countries. In 2002, the US market revenues for ESCOs reach about US$2 billion (Goldman et al., 2005). In Europe, Austria and Germany are the leading markets for ESCOs. In Austria, between 1998 to 2003, 600 to 700 public buildings were renovated using EPCs (Bertoldi et al., 2005). In Asia, especially in the context of rapid urbanisation with a large existing stock of retail space, offices and commercial buildings, EPC is becoming increasingly popular, especially services related to energy efficient air-conditioning. In Eastern Europe, EPC has been found to be popular in providing centralised heating, and combined heat and power plants, to address cold climatic conditions. Thanks to the support from international organisations,in Africa, EPC is also found in the area of offgrid renewable energy solutions. In South America, especially in the Caribbean where the tourism sector contributes significantly to GDP, ESCOs can be appealing to the hotel sector.

How the technology could contribute to socio-economic development and environmental protection

Energy management and performance improvement contribute to environmental, economic and social development through:

  1. Continuing energy efficiency from the building design stage to actual building operation, reducing life-cycle GHG emission from buildings
  2. Monitoring and optimising the performance of buildings for both occupants’ comfort and energy efficiency
  3. Creating new jobs, offering additional green financing mechanisms, and supporting a low carbon economy through emerging EPC services.

The benefits of building commissioning include:

  1. Ensuring good performance of technical and technological systems, and improving their life cycle
  2. Increasing owners and occupants satisfaction by enhancing environmental health and comfort level
  3. Reducing training and familiarisation costs for facility management staff
  4. Lowering utility bills by being energy efficient, and improving building occupants’ productivity. The operating cost of buildings with proper commissioning has been reported to be 8% to 20% below that of non-commissioned buildings (US GSA, 2005).

The key contributions of BEMS include:

  1. Providing building owners/occupants with optimisation of energy usage,while maintaining indoor environment quality.
  2. Offering early warning and detection of problems for the connected equipment and sub-systems, and ease of problem diagnostics.
  3. Reducing energy consumption by providing real-time energy consumption for connectedenergyconsuming equipment/appliances. The IPCC highlights recent research indicating that BEMS can save energy consumption for space heating (up to 20%), for lighting and ventilation (up to 10%), and for overall building operation (5% to 20%) (Levine et al., 2007).

The main contributions of EPC are:

  1. The opportunity to target and improve the energy performance of the large existing building stock.
  2. The opportunity for existing building owners to have electricity-consuming equipment and systems upgraded and renewed. Replacing outdated energy-intensive equipments and systems with more efficient ones at no/low investment cost to the building owners.
  3. A green financing mechanism that can unlock the financial bottleneck of large-scale implementation of energy-efficient and renewable energy technologies.

Financial requirements and costs

The financial requirements for building developers/owners to implement energy management and performance improvements vary from a one-time cost for building commissioning, investment-operating-maintenance cost structure for BEMS, to no additional investment cost for EPC.

The one-time cost of building commissioning is often planned upfront and included in the specifications of a building contract. In more complex building projects, independent commissioning agents are often brought on board. Their fees are often borne by the developers/owners.

BEMS can be considered as a technological feature incorporated into a building. It, therefore, comes with investment, operating and maintenance costs. The investment cost varies depending on the sophistication of the BEMS, and the level of complexity, number and size of the mechanical-, electrical- and other subsystems connected to the BEMS. The operating cost often includes the cost of electricity consumption from sensors, computers, and other electronic equipment related to the BEMS, as well as salaries for facility management personnel. A budget should also be set aside for maintenance costs related to repair and replacement of BEMS parts/components and upgrade of software and hardware.

EPC requires minimal or no investment-cost-sharing from the building owners. The cost to carry out energy audits and modifying/upgrading equipment and systems is, in most cases, borne by the ESCO. ESCO then gains a return on investment through monetary saving from electricity bills after the upgraded systems are in place. EPC benefits existing building owners, who receive new/upgraded equipment and systems without or with little investment cost. During the auditing and upgrading period, some disruptions to building operations are nevertheless expected.


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