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How does Smart Building Technology Improve Operational, Energy and Cost Efficiency?

In the first of a series of articles on Industry 4.0 in the DACH Region, we focus on smart buildings and some of the technology being used to improve operational, environmental and cost efficiency.

Industrial and technology giants in Germany, Austria and Switzerland (DACH) are increasingly buying, funding or partnering with connected and intelligent manufacturing technologies and data management companies to ensure they are well-positioned for the Fourth Industrial Revolution, known as Industry 4.0. Smart building and construction innovation are an important part of this effort and represent 16% of all M&A deals closed in the Industry 4.0 sector in 2018.  

A smart building is an edifice which utilises connected technology to control aspects of life in the building. Devices are connected to each other and are controlled through a central IoT (Internet of Things) platform, which allows users to swiftly monitor and control these devices via a mobile app or bespoke interface.

Commonly used technology includes automation and data analysis through machine learning, which in turn allows control systems to plan adequate, efficient responses. New constructions in urban areas tend to incorporate smart features from their conception, but smart features can also be added to existing buildings.  

‘Smart M&A strategies play a crucial role in the development of Industry 4.0 by allowing innovative emerging players to leverage additional funding or strategic partnerships with global industry leaders.’

Dr. Peter Baumgartner , Sector Principal

How smart building technology saves energy

Smart building technology uses sensors to monitor a range of energy metrics, which automated controls can respond to, improving energy efficiency. Some of these include:

  • Heating, ventilation and air conditioning (HVAC) – Smart buildings use temperature sensors throughout the building to ensure heating and air-conditioning systems are only used when and where required.
  • Lighting – Sensors detect the amount of light and the number of people in specific areas at a particular time. The automated technology can then decide whether more or less artificial should be produced in this area. Estimates have shown that such systems could reduce energy consumption in lighting by approximately 45%. In addition, smart glass in windows can automatically adjust the amount of natural light flooding the building.
  • Power – Smart buildings can cut power supply to parts of the building not in use using smart plugs. These measures could reduce energy consumption by up to 60%.
  • Remote control – In smart buildings, software reacts to the information provided by smart sensors while still allowing human input. Individuals can set timers on heating and lighting control devices or use interfaces on smartphones and tablets to control them manually.
  • Prediction and detection systems for all of the above – Smart building technology can also detect faults or deterioration in mechanical equipment like ventilators, pumps, lighting or escalators. Companies are thus able to predict when faults may arise, detect and repair them immediately, resulting in less downtime and fewer costly emergency repairs.

Besides these energy-efficient initiatives, smart buildings are often compatible with renewable energy sources, such as solar energy, to provide power. They may even be able to sell power back to the national grid.


Evaluating the benefits of energy saving

Aligning energy use with human use in a building brings significant economic benefits – to the company running a commercial building, or to the occupants of a residential property.

Energy costs in commercial property are substantial, so improving efficiency levels even slightly can make a meaningful difference. For instance, a study by the American Council For An Energy Efficient Economy estimated that, in the US, implementing smart energy-saving measures in just 35% of floor area in commercial buildings of more than 50,000 square feet could save up to $60 billion by 2030. It would also cut total US energy use by 1%.

It is economically rational for businesses to invest in smart building technology for their offices, factories or other buildings, as the ROI is substantial and long-lasting. For instance, MGM Resorts International reduced The Mirage in Las Vegas’ energy spend by 5% by incorporating smart building technology, including smart HVAC.

In terms of environmental sustainability, less energy consumption also means less burning of fossil fuels at power stations. For example, Bloomberg’s new European headquarters is rated as the world’s most sustainable office building. It uses smart building technology such as sensors to monitor natural ventilation, then reacts to the information by turning the air conditioning on or off.


Companies in the DACH region are making a difference

Companies in the DACH Region are spearheading innovation in the smart building sector. OTTO Luft und Klimatechnik, a German company, offers cutting-edge products and services in ventilation and air cooling. In 2018, it produced €120 million in revenue and was acquired by the French multinational, ENGIE.

Another interesting smart building tech company is Twingz, an Austrian smart home energy management platform which uses machine learning and AI analysis to predict energy usage. It recently received €1 million in early funding through the angel investor Angelgate.

These innovative companies continue to attract attention from companies in German-speaking countries, Europe and the rest of the world.


Looking to the future

We can expect advancements in smart building technology to continue, particularly given the widespread diffusion of voice-controlled management software and machine learning.

Smart building technology will continue to be a growing sub-sector of Industry 4.0, boosting energy and cost efficiency for business and ensuring swifter, safer and better-connected processes.

‘Artificial intelligence will play a critical role in the future of Industry 4.0 as it will allow us to maximise the utility of connected systems and gathered data.’

Dr. Peter Baumgartner , Sector Principal

About Hampleton Partners

At Hampleton, we are aligned with our clients and look forward to helping them achieve success through M&A and growth finance, long into the next decade and beyond. 

Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.

With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Technology, IoT, AI, Fintech, Hi-Tech Industrials & Industry 4.0, Cybersecurity, VR/AR, Healthtech, Digital Marketing, Enterprise Software, SaaS & Cloud and eCommerce.

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To contact Hampleton about your M&A or growth financing queries or requirements, or simply to schedule a confidential conversation regarding technology M&A with Dr. Peter Baumgartner or any of our other Directors and Sector Principals, visit https://www.hampletonpartners.com/contact/ and submit your query using the contact form. 


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Sector Principal

Dr. Peter Baumgartner

Dr. Peter Baumgartner is a Sector Principal at Hampleton Partners where he heads our Industry 4.0 and High-tech Industrials practice. Peter brings operational expertise in industries with strong engineering content and has extensive experience of M&A in the sector. He was a partner and managing director at era AG, building the business from a €25 million vendor of electromechanical components into a global enterprise with over €100 million revenues serving the automobile, railway, white goods and smart home industries before selling it to Pulse Inc.

Peter continued his career in industry as the president of the supervisory board of a large German engineering group, and is now on the board of a diversified group holding multiple manufacturing companies. Peter began his career in consumer products supply as a process engineer at Procter & Gamble. Peter holds a degree in mechanical engineering from the Technical University of Munich and a PhD from the Technical University of Karlsruhe. He is fluent in French, as well as English and his mother tongue, German.  Peter is an avid hiker and bicyclist, and enjoys travelling the world.