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The smart way to finance intelligent buildings?

Smart buildings-as-a-service can capture future savings from energy efficiency and deploy them elsewhere in the conversion

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Smart buildings-as-a-service helps owners and landlords realise energy-saving conversions
Smart buildings-as-a-service helps owners and landlords realise energy-saving conversions

A new research paper by Siemens Financial Services (SFS) explores how a smart-building conversion can be achieved without the need to commit capital by using private sector finance solutions that are becoming known as smart buildings-as-a-service.

 

Converting to smart-building technology enables organisations to reduce energy costs, meet regulations such as air quality and provide optimum environments for occupants, visitors and employees. Pressures on public and private sector budgets, however, mean finance managers and chief financial officers (CFOs) are struggling to prioritise capital investment for buildings conversion.

 

A shift in mindset

 

SFS says that smart buildings-as-a-service represents a shift in mindset on the part of financial managers and CFOs even though the more pioneering ones have identified the potential to enhance efficiency and productivity.

 

The study notes that smart technology can reduce energy consumption in non-domestic buildings by up to 25 per cent and the paper explains that smart buildings-as-a-service can capture future savings from energy efficiency and then deploy those savings to self-finance smart buildings conversion.

 

Such solutions, provided by integrated technology-service-finance companies, can usually be structured so that there is zero-net-cost (or even cost savings) across the contractual period for the building’s owner. The conversion, in this sense, can be considered self-financing. When the initial contract period is over, the building’s owner continues to receive the ongoing benefit of reduced energy consumption.

“CFOs in the private and public sector are increasingly recognising the compelling case for smart buildings conversion, but find it difficult to prioritise such capital investment”

“The smart buildings technology market is growing and innovative private sector financing methods are likely to accelerate that growth by allowing organisations to achieve conversion sustainably,” says Gary Thompson, Siemens Financial Services.

 

He added: “CFOs in the private and public sector are increasingly recognising the compelling case for smart buildings conversion, but find it difficult to prioritise such capital investment over other business or operating requirements. The benefit of self-financing arrangements, which harness future energy-savings, is that capital is no longer an obstacle”.

 

The paper estimates the potential for “self-financing” smart-building conversion across 13 countries in three sectors: commercial buildings; government buildings; and hospitals. It can be downloaded at Smart Start for Smart Buildings

 

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