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Friday, Jun 14, 2024
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Hotels Get In-Room Help Saving Energy

Hotels waste a lot of energy when they heat and cool the booked — yet empty — rooms of travelers. And those sky-high utility bills end up taking a sizable chunk from the hotel’s bottom line.

“Hotels are one of the few businesses open 24 hours a day, 365 days a year,” said Phillip Kopp, founder and CEO of Conectric Networks LLC. “The problem is that they’re actually unoccupied most of the time. Unless guests are sleeping, these rooms are empty.”

At the same time, hotels can’t exactly force customers to be environmental stewards and turn off air conditioning when they leave the room. Forward-thinking hotels are in quite the pickle, trying to balance environmental sustainability and utility cost savings with customer comfort.

Conectric Networks, a cleantech startup in San Diego, has developed an artificial intelligence control system for hotels to better manage their energy costs.

In short, Conectric provides hotels with sensors that can tell when a room is occupied and when it is vacant. Then, through its AI-enabled software, Conectric can “turn down the dial” on electricity usage. Think of it as the “internet of hotel things.”

The first generation of this system is already installed at 14 sites, including AccorHotels and Barceló Hotels.

Saving the Grid?

Phillip Kopp

Founded in late 2015, Conectric has already made some huge inroads in the energy management industry. That’s because Conectric’s service does a whole lot more than save hotels on their energy bill. Its energy management system could be the answer to what Kopp calls “the U.S. power grid crisis.”

“We live in an entirely electric society that’s depending on a system — the U.S. power grid — that’s highly unstable and on the verge of collapse,” Kopp said.

That’s because the massive influx of solar power has caused an unregulated energy dump into the power grid that can create problems for energy management.

“Solar customers are essentially using the grid as their battery storage, but they’re not paying for its infrastructure,” said Eric Clifton, CEO of battery firm Orison, in an interview earlier this year. “As more customers put power on the grid, it becomes a real problem. Utility companies have to buy power in blocks from a regulated market, and putting excess power from renewables on the grid upsets the balance and makes it difficult to manage.”

IoT Networks

Kopp said the situation is a little more urgent than most people realize.

“The whole energy grid is imploding, and their nearest-term solution (besides killing the solar industry) is installing batteries everywhere that can store and release energy,” Kopp said. “Alternatively, we can use Internet of Things (IoT) networks that can turn things on and off when it’s convenient for the grid.”

This IoT management of power is called “the virtual grid,” and it’s a concept that could mean big money to whichever company figures it out.

Conectric is eyeing this market for the future, but managing (and reducing) the electricity draw of major facilities like hotels is a good place to start.

$4 Million Grant

The energy sector is taking notice of Conectric’s ideas. Conectric is sharing a $4 million grant from the California Energy Commission and the California Center for Sustainable Energy to pilot its energy management system for hotels here in San Diego.

As part of the grant, Conectric will install its system in two hotels, and consultants from Europe will analyze the value of the hotels’ savings to the power grid at large.

Ideally, Conectric will be able to save enough power per hotel that the hotel will — for all intents and purposes — be classified as an “electricity generator.” Not because it’s creating power, per se, but because it’s saving so much power that it’s creating “negative energy.” And negative energy is just as valuable to utility companies as new energy, Kopp said.

“Essentially, these buildings will receive payments from SG&E just like (nuclear power plant) San Onofre,” Kopp said. “Because the hotels are now ‘generators.’ ”

Making It Pay

How does this benefit Conectric? Well, the startup actually owns all of the above-referenced payments from SDG&E and other energy distribution companies. But that doesn’t mean the hotels miss out on the extra cash. Conectric plans to keep about 70 percent of the payments, and distribute the remaining 30 percent to the hotels that are saving energy.

So the value proposition for hotels is twofold: save money on the electricity bill by reducing energy waste in unoccupied rooms, and later receive cash payments from utility companies via Conectric for the excess power being saved. That could be a lot of savings for a service that only costs about $10 per room per month for the hotel.

And the value proposition for utility companies is also clear. In fact, Pacific Gas & Electric Co. in Northern California just agreed to pay any hotels’ upfront costs to use Conectric’s service so that they can benefit from the power savings.

Kopp said that once Conectric has landed 10 new contracts in that territory, it will begin raising a $3 million Series A round of funding.

By 2017, Kopp said he expects the company will generate about $3 million in annual revenue.

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