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By Tom Bergeron
Livingston | Jan 19, 2018 at 11:37 am

From our print edition

It’s a simple concept: Use less energy and your energy bills go down. Use less energy during peak demand times and your energy bills go down exponentially.

Homeowners have been putting this into practice for years, potentially saving hundreds of dollars over the course of a year.

Energy Technology Savings is bringing this concept to multifamily residential buildings with an easy-to use technology solution that they say is saving landlords hundreds of thousands of dollars in annual energy costs while increasing the value of the property by multiple millions.

It may sound too good to be true, but the Livingston-based technology and energy company already has proven its value to some of the biggest developers and landlords on the East Coast.

It is preparing for what it feels will be a breakout year in 2018.

“We’re a return on information; it’s as simple as that,” said CEO Jeff Hendler, a longtime leader in the energy business who helped co-found the company in 2012.

“We’re gathering information that wasn’t there before by inserting technologies to generate that data. And it’s meaningful data. We then engage property managers to change the way they behave in the building at different times during the day. It can have a dramatic impact on energy costs.”

It’s a cost most multifamily building owners feel is fixed.

Co-founder Brad Klatt knows firsthand how this potential savings has been overlooked.

Klatt was a co-founder of Roseland Properties, one of the most successful multifamily development companies in New Jersey and on the East Coast.

And, for years, Klatt said, he viewed energy costs as a fixed cost, which happen to be an owner’s third-highest cost, after taxes and payroll. After teaming with Hendler and better analyzing energy costs, he now knows better.

The reality: Even in a large multifamily property — one where most of the square footage is used by tenants (who can use energy as they please) — the building owner is still responsible for approximately 50 percent of energy use and costs.

“Take a 400-unit building,” Klatt said. “Tenants may occupy 85 percent of the physical space of the building in terms of their apartments, and pay $100 to $150 a month in electric bills, which may be $750,000 a year.

“The owner has only 15 percent of the building, but he has all the things that draw power: heating, cooling, elevators, fitness facilities, swimming pools — that space by itself, which the owner is in control of, generates the same $750,000 a year in expenditures, which they can’t pass along to tenants. That’s their part of running the building.

“It’s the biggest fixed expense in owners’ minds, and we’ve turned it into a variable expense. We’ve said, ‘You have that team there, you’re bearing that expense yourself, so every dollar that we save, goes right to your bottom line.’”

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Hendler has been in the energy business for more than three decades.

He worked at the Southern Co. from 1996-2003 before co-founding IDT Energy in 2004. He helped spin off IDT into a subsidiary of Genie Energy in 2011. Shortly after, he joined up with Klatt, who was in the process of exiting Roseland a few years after it was purchased by Mack-Cali Realty Corp.

The two decided they wanted to attack energy usage in the multifamily space, a sector they felt was ready for technological innovation.

Hendler worked with a team of engineers and developers to create a utility meter that could collect approximately 36,000 points of data over the course of the year — data points that even the utilities did not request, he said.

Then, Hendler helped devise the software that could display those data points on an easy-to-understand dashboard and app in real time (results are reported in 15-minute units on a daily basis).

From that data, building supervisors can see patterns of usage that can be changed to save energy costs.

“We engage property managers to help them change the way they behave in the building at different times during the day,” Hendler said.

The key, he said, is changing energy consumption during peak hours — when energy companies set the rates for the building.

“We’re going to reduce load precisely at those times when it’s most impactful, when the utility is measuring it, Monday-Friday between 3-6 p.m.,” he said. “That’s when the whole grid is at peak demand and costs soar.

“We can teach them to pre-cool the amenities space or pre-cool the lobby, the fitness area, the lounge areas. We can teach them to preheat the pool and, then, when it comes to those hours during the peak times, throttle back. It can have a dramatic impact on cost.”

Especially at the most important time of the year, Hendler said.

“In a major heatwave, there are certain specific times when changing how your building is consuming energy is incredibly valuable,” he said. “We can show what you should be doing in the late afternoon because (energy companies) are going to measure during those periods. This is what the manipulation of software entitles us to do.

“The data is making it a smart building.”

Hendler said that’s just the start of potential savings.

By recording so much data, Hendler said, ETS also can tell which parts of a building’s energy infrastructure are not working properly. The data, he said, will show it.

“It’s not all about energy management,” he said. “There’s fault detection on equipment; there’s leak detection. If something is not working right, we’ll discover it right away and communicate it in real time, allowing owners to be proactive as opposed to reactive in their building.”

This data, Hendler said, will enable companies to make better decisions when it comes to capital energy-efficiency clean-tech projects, such as solar, battery power or any type of co-generation unit.

“We are helping a building become the first on the East Coast to install a lithium ion battery energy storage system in a high-residential multifamily building,” he said.

There are a number of possibilities, all of which will not only save money, but help buildings with their sustainability targets, Hendler said.

“Maybe they have a central hot water plant, so all the hot water for all the tenants is coming out of one boiler that needs natural gas,” he said. “That’s a great scenario to size a co-generation unit. A generator on site that’s creating electricity … also gives off waste heat, which is captured and used to provide domestic hot water, which also reduces their carbon footprint.

“These sustainability targets are really important, and these technologies will get them to certain benchmarks that they want to reach. But how do you size that? What is the size of the generator needed for their building, what’s a true base load?

“We can see (from the data) what is the optimal type of machine that should go in a building, based on the indigenous data in that building.”

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Getting the data is one thing. Getting someone to use it is another.

ETS officials feel they have that covered, too.

David Klatt, vice president of operations/finance, and Seth Reisman, vice president of energy concierge services, lead the teams that install the units and oversee the building operators using it.

“ETS has a full team of architects, engineers and data scientists that together assimilate the data and their skills into a continuous software guided energy management plan that literally guides the owner’s facility teams and mechanical equipment,” Klatt said. “Their singular focus is to maximize energy savings at the lowest possible cost of implementation. “ Klatt’s team leads the initial installment of the meters and sensors. Prices vary, depending on the size of the building, but it is an approximate $20,000 investment.

The payoff, Klatt said, can come within weeks.

“We send engineers to do a building tour with the building supervisor and gather whatever data is available in terms of energy consumption,” he said. “It’s usually paper copies of monthly billing statements from the last year or two.

“We then do a smart building energy audit, analyze all of the building systems, and present efficiency projects to the clients: Here are the top five things we want you to do. This can be done in two weeks.

“Then, we do an implementation of our software product, smart kit, which is the installation of real-time meters and sensors throughout the building. We create data, analyze it and visualize it for business managers in real time. It takes six weeks to get up and running on that.

“So, in eight weeks, you are creating data transparency and you’re immediately achieving savings based on that data. Once that data is created, the next step is how do I actually change how the building is using energy?”

Reisman then leads a team to help the building workers use the dashboard, which can be viewed on an app.

“Part of our concierge effort is go to the buildings and get them familiar with the tools,” he said. “We train them on setting threshold alerts. We want to know to recognize the anomalies, when is the building consuming way more than it should be or not consuming enough because something is turned off or broken. We sit with them and train them, and now it’s automated and they are getting alerts when these thresholds are broken.”

The app, Reisman said, is easy to use. Fifteen-minute usage can be viewed in color codes (Red obviously is bad; green is good; yellow is in the middle.) “Everyone understands ‘Candy Crush,’” he said. “That’s no joke, we’ve gamified the process.”

Klatt said this has made the benefits easy to see.

“One of the most powerful things that we do is connecting actions and behaviors of people to the data and to energy consumption,” he said. “You might have a guy in a big building with all these controls in front of him and he might turn the temperature from 75 degrees to 76 degrees. He used to not know what he actually achieved. He has no feedback.

“On our platform, you not only can see energy consumption came down, but it’s recorded that it came down because of this action by this person. That goes to asset manager. And that creates an incredible feedback loop, where people not only can see the results of their actions but are acknowledged for them, as opposed to a guy in a room in a basement who has no idea what impact he’s having.”

Reisman said the next version of the software will allow building supervisors to be able to see how other buildings in their company’s portfolio are doing. These not only will help buildings share best practices, but create a running scorecard where buildings can compete against each other to see who is reducing energy consumption the most.

ETS said it already incentivizes building supervisors with gift cards and other tokens for reducing costs and will continue to do so.

The real recognition, they said, comes from the building owners themselves.

“We have owners going to buildings looking to find these people, so they can thank them,” Brad Klatt said. “These are people they may have never seen during previous visits and now they are the first ones being sought out. That’s powerful.”

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Mark Delisi is the vice president of corporate responsibility for AvalonBay Communities — and one of the first believers in ETS.

ETS started working with two AvalonBay properties in New York City in 2015, has added another 11 since and is looking to double that number with more buildings in Boston (and elsewhere) in the next 12-24 months.

“At a base level, ETS is installing smart meters that enable us to see energy consumption on a real-time basis,” Delisi said. “But, what they are really doing is getting the buildings to talk to us.

“We used to have to wait to get the utility bill to see the consumption. With the smart meter, you’ve got a 15-minute delay to learn the footprint.”

The data, he said, is invaluable.

“We can see how equipment is performing,” he said. “We can see if it’s starting to fail and get to it before it happens. We can see how our co-generation equipment is performing. That’s one of the first things ETS did; they found that one of our very large co-gens was not running optimally.”

The data helps AvalonBay reduce its energy costs in a number of ways, Delisi said.

One of the biggest is that it now has an opportunity to participate in demand response programs with utilities, as it does in New York City.

Simply put, during peak demand times (such as summer heat waves) AvalonBay promises to reduce its consumption to agreed-upon lower targets, thus helping the utilities avoid being overloaded. If AvalonBay can do so, it not only gets a lower bill, it gets a rebate check from the utility.

“We know that we can, through our onsite behavior, drop our consumption at peak times,” Delisi said. “And the utilities pay us to do that. If we hit our targets, we get cash. Last year, we got two checks that totaled more than $140,000.”

Delisi said a company cannot enroll in these programs unless it has the smart meters and the data.

“This has been a process,” he said. “The next step is really to start to look at how we can shave load with technologies such as battery — how can we add a solar component. I’ve got a large strategy around renewables. Start adding that in with this basis of data and it’s incredible.

“The story ETS is telling, and that I’ve now fully bought into, is a data story. This is an Internet of Things story, a Big Data story, a technology story. There’s a lot of real positive things that we can do now because we have that data and these buildings are really truly talking to us.”

Delisi said the equipment — and the monthly fee that comes with it — has long since paid for itself.

“I’ll be honest, and I’ve said this to ETS, there’s a component of all that they are educating us on that we are probably going to take in-house,” he said. “It’s just the way it operates, and we don’t necessarily need to pay an ETS to provide it.

“But there is a component of what they are selling, the technology platform, that is a true value add that will always be there and we’ll never be able to recreate in-house.

“When I took a chance on ETS, it was as the head of sustainability, on the green side alone,” he said. “From a cost standpoint, it’s been worth every penny. We recouped the cost to them and then some. I wish I could have gotten it out faster.”

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As it starts 2018, ETS said it is in 180 buildings.

That’s double the number from a year ago.

A year from now, Hendler and Klatt feel that number could triple.

“We really planned it for 2019,” Klatt said. “We didn’t think it could happen that fast, but we have clients literally lining up for five- and 10-building presentations.”

AvalonBay is the firm’s biggest partner, but there are plenty more big names — which is leading to more growth.

“When people heard we are doing things with Moinian, we had people lining up,” Klatt said. “We’ve got Ironstate, Kushner and Roseland on the waterfront in Jersey City. Who doesn’t want to see what they are doing?”

The growth is organic, too.

“(Companies) will start with a few buildings, but then they give us more,” Klatt said. “For instance, Roseland just gave us a handful of more buildings. They start with a pilot, then they go to a city, then they add the whole portfolio.”

Right now, most of the properties are located in New York City (50 percent) and Boston (30 percent), with some in New Jersey, mostly along the Gold Coast.

The business plan includes growth in all of those areas, plus Washington, D.C., and California.

It also accounts for competitors.

Hendler and Klatt just aren’t sure where they will come from.

Their services, they say, may not have enough value for vendors to try to replicate.

“People who make machines that cost a half a million (dollars) are not playing in this,” Klatt said. “They are not going to hire the body count to do all this.

“Our sense is that the utilities, who are getting the most benefit from this, will likely spawn intellectually capable groups to do this. That’s where we think the competitors will come from. All the other people who live in this ecosystem are not positioned broadly enough to compete.”

That being said, Hendler said he views utilities as a friend.

“We’re not looking to displace the utilities, we see ourselves as a partner with utilities — and they see themselves as a partner with us, because the data helps them think through their loads.”

Klatt said how the system helps society is an added benefit, one that could have a huge payoff.

“Think if all the buildings in New York City would move to real-time meters, think about the difference and reduction in consumption,” Klatt said. “And, then, if they had even more intelligent software than we have today — and we’re getting smarter every year, with every new building — think about the amount of power differential and how that’s such an incredible differential for the power grid.”

ETS, Hendler and Klatt said, is a perfect example of how the Internet of Things is having a big impact.

“We’re leading the way in digitizing the multifamily space,” Hendler said. “And, what we’ve discovered along the way is that our platform improves exponentially with every building we bring on, because what we learn we can share with the other buildings.

“The data helps us see an issue that we identify in one building, and we can now warn 150 buildings.”

Klatt said it’s just a matter of letting the buildings talk. And listening.

“Buildings are not dumb,” he said. “We just didn’t have the capacity to get the data that’s flowing out, assemble it, analyze it and then utilize it.

“It really is intuitive, but nobody ever took the data and made it available.”

Conversation Starter

Reach Jeff Hendler, CEO of Energy Technology Savings at hendler@etsemerald.com or (908) 517-3728.