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“To me, a smart building is one that understands its environment”

Buildings are an integral part of everyday life. With people spending a lot of their lives indoors, it is more important to ensure that these buildings are safe, secure and comfortable. Cedrik Neike, CEO of Siemens Smart Infrastructure and member of the Siemens Managing Board, explains why buildings have to be smart to meet these expectations, what role smart buildings play in the future of energy grids and why, for once, the sky is not the limit.

Mr. Neike, what is a smart building to you?

Cedrik Neike: Buildings have been there for thousands of years. In the past, they did not know if someone would enter or leave them. They were not exactly dumb, but unaware. With digitalization, the building now gets to know about its occupants. It can provide feedback, not only to the residents, but also to the facility managers and the owners. So to me, a smart building is one that doesn’t just stand there, but one that understands its environment, interacts, learns and adapts.

This is not exactly a technical definition.

We at Siemens believe that first of all, a people-centered philosophy is required. Before focusing on a technology, you have to find out what that technology can do for the people using it and how they are affected by it. By 2020, up to 50 billion devices will be connected to the Internet of Things, with one fifth of these being used in buildings. The amount of data being generated by IoT devices is immense and is only set to grow. Capturing this data is important, but not enough. The key to smart buildings is how the data is used and analyzed. This allows a building to be more flexible, more personal and, ultimately, more productive for us humans.

What benefits does a smart building have to offer?

Let me start with the builders. Thanks to digitalization, they are capable of building digital twins, accurate digital representations of future buildings, which makes construction much more efficient. In other words, a building can be smart right from the beginning. For the owners, however, the smart building adds value by giving feedback, for example on how it is operated most efficiently. It can detect problems before they become real issues. This helps to reduce operating costs and increases productivity.

What about the people living and working in smart buildings?

Remember that we spend 90 percent of our time in buildings. We want to be as comfortable as possible, as safe and secure as possible, and we want to leave the smallest ecological footprint as is feasible. If the smart building knows that I’m there, it will make sure that I’m secure from a fire and an intrusion perspective. It will give me the right room temperature and the ideal air quality to cater to my health.

Globally, buildings consume about 40 percent of all energy. How can smart buildings help reduce this massive share?

Up to 50 percent of the energy an average building consumes is being wasted. We are heating rooms that don’t need to be heated, we are lighting rooms that don’t need to be lit. We do a lot of things that we shouldn't do. The good news is that according to recent studies, improvements through digitalization and inter- connectivity can reduce a building’s ecological footprint up to 80 percent compared to an average building. I wouldn’t even stop there, because it’s not only that buildings consume energy. In the new world, they will also produce energy, becoming intelligent prosumers that interact with the world.

As prosumers, buildings will play a new role within the energy system. Where do you see the benefit?

Just like buildings, the grid will also become smart. Let me explain about a concept we’re currently testing in Canada. We’ve got a substantial research grant from the Canadian government for a couple of provinces where they have a lot of electric heating systems. We started integrating the buildings into the grid. We want to store for example excess energy as heat, which is very easily done in boilers. In other words, you start using your smart buildings as batteries, not electric batteries in this case, but heat batteries. We’re currently experimenting on a system which allows shaving peak loads and storing energy for times when there are lower production levels. For Canada, the goal is to build what we call a virtual power plant. In this concept, buildings become part of a distributed power plant. If it works out, one or two coal-fired power plants won't need to be built. I find this very strong.

When buildings produce extra energy, there’s an opportunity to sell it to the market. How big is the potential in terms of profit?

The great thing about renewable energy is that you are able to give part of this extra energy back to the grid and therefore contribute to the community. In this way, you make the building a productive asset in the ecosystem. We’ve worked with LO3, a start-up in Brooklyn, New York. Together, we built a microgrid using blockchain. This allows a building owner to sell his excess solar capacity so that others in the neighborhood can run their air conditioning based on his renewables, instead of using energy from a power plant. The idea is to build a microgrid which basically is a trader’s community. Imagine you’d sell your extra capacities to the coffee shop next door, and in return you would get free coffee. The concept raised quite some interest. There are plans already to replicate it in Australia.

How do these prosumers fit into the concept of a smart city?

What did the Internet do to computers? It started to connect all computers and let them interact with each other, making each one more intelligent. The same will happen to smart buildings. They can be connected to the city’s electricity grid, the gas, the water, the heating grid. They will become part of a smart ecosystem, in which everybody knows how to interact with each other. That’s why the internet example is a very good comparison. Of course, nobody will ever build a smart city from scratch, but a city will become smarter as its buildings become smarter.

The digital transformation is far from completed. What will the buildings of the future be capable of?

I always say the sky is the limit. In this case, I should actually say the roof is the limit, because buildings will always have a roof. Interaction between buildings and their users is certainly a trend that will gain further traction. Ultimately, we strive to get to a point of unconscious interaction, where the building is intuitive, where occupants go about their daily activities with no direct interface to the digital building. At some point, the building will hopefully be smart enough to predict occupants’ needs, creating an environment that cares for its occupants as well as those living nearby.

Cedrik Neike, CEO Smart Infrastructure, on smart buildings