If making buildings more energy-efficient is the cheapest and fastest way to make money on green investments, why isn’t every office building owner in the land doing it? The answer is the up-front cost.
But Retroficiency, a startup out of MIT, says its software and deep data analysis can make the process of identifying which buildings in a portfolio of hundreds are ripe for efficiency retrofits, a lot easier and cheaper. On Wednesday, the Boston-based startup announced an $800,000 angel round from investors including World Energy Solutions (s XWES), as well as a working relationship with major property management firm Jones Lang Lasalle (s JLL) that will give it a chance to test the tech out in the real world.
Retroficiency’s Software-as-a-Service (Saas) platform is designed to replace a lot of the manual and time-intensive work that energy services companies (ESCOs) and property owners must go through today to plan and execute efficiency retrofits, company CEO Bennett Fisher told me in an interview last week.
The idea sprang from Bennett’s experience in the commercial property management world before entering MIT Business School, where he found customers who were contemplating energy efficiency retrofits saying they were having trouble justifying the up-front costs.
Property owners and managers aren’t the only ones tackling this problem, he added — ESCO’s will typically spend up to $100,000 to audit a project they’re bidding on, he noted, with no guarantee that they’ll land the contract.
Retroficiency’s software aims to cut those costs by delving through tens of thousands of pieces of data to compare potential retrofit target buildings to others of the same square footage, age of construction, use and occupancy patterns and reams of similar data.
The end result, Fisher said, is a “very accurate characterization” of each building’s energy use, typically within 3 percent accuracy. That can help narrow down which buildings are fruitful targets for energy savings, vs those that won’t offer as much payback, he said.
From there, Retroficiency’s predictive analytics software can be used as a tool to fine-tune detailed building energy statistics to use in the actual retrofit project — narrowing down the list of which building systems to replace first, versus which ones to save for later, for example. Retroficiency culls its data from a number of sources, many of them proprietary ones, Fisher said, though he wouldn’t disclose details on those sources.
Retroficiency isn’t aiming to actually control building energy systems, as are many of the new platforms coming from giants like Honeywell (s HON), Johnson Controls (s JCI), Siemens and Schneider Electric — all of which are also ESCOs, by the way. Plenty of startups are also targeting this space, including Scientific Conservation, Building IQ, Incenergy, Advanced Telemetry, Cimetrics and others, and IT giants such as IBM (s IBM) and Cisco (s CSCO) are also moving into building management via partnerships.
Still, Fisher does see a role for Retroficiency once the retrofit is completed, again drawing from its constantly updated database, which can keep abreast of price changes for various efficiency products and services to keep building managers abreast of new ways to save money.
Jones Lang Lasalle — the global property management firm that’s tackled such high-profile efficiency retrofit projects as the Empire State Building — said in a prepared release that it plans to use Retroficiency’s software to help it improve its energy-auditing capabilities across its portfolio. The startup is also in talks with several major ESCOs, Fisher said, though he wouldn’t name any.
There’s certainly a large market waiting to be tapped. Buildings consume 40 percent of the energy in the U.S., and estimates indicate that up to half of it is wasted in one form or another. The American Council for an Energy Efficient Economy predicts that efficiency upgrades in commercial and industrial buildings could represent a $250 billion market over the next decade.
Just how valuable Retroficiency’s software might be to that market is yet to be proven, of course. ESCOs no doubt have their own, increasingly sophisticated predictive models and audit-assisting tools to make their jobs easier, and as building automation platforms become more prevalent, they may well take over some of the functions the startup is seeking to fill.
At the same time, energy efficiency is becoming less of a luxury and more of a requirement in many key markets. New York City will soon require all buildings over 50,000 square feet to benchmark and record their energy use, and the state of California’s new CalGreen building codes, put into effect this year, include a host of energy efficiency requirements that could be adopted by other states in the years to come.
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For more research on building energy efficiency check out GigaOM Pro (subscription required):
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