Energy and Industry TrendsDave MolinVP & General ManagerHoneywell Building Control Systems

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• The Current and Future Energy Outlook• Economy and Market Changes• Business Opportunities

Agenda

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Rising Energy Prices

Energy Prices | 1980 – 2035 (2008 Dollars Per Million Btu)

Electricity

Coal

Natural Gas

Crude Oil

SOURCE: U. S. Energy Information Administration Independent Statistics and Analysis (December/2009)

GlobalIssues

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U.S. Energy Consumption

Building automation can control 66% of energy in homes and buildings and can monitor 100%

US DOE Buildings Handbook, 2008

Industry (gas)32%

Transportation (oil)28%

Buildings(electricity) 40%

Residential22%

Commercial18%

Lights 26% Heating 14% Cooling 13% Water Heat 7% Ventilation 6% Office Equipment 6% Refrigeration 4% Computers 3%Cooking 2% Other 13%

Heating 31% Water Heat 12% Cooling 12% Lights 11% Refrigeration 8% Electronics 7% Wet Clean 5% Cooking 5%Computers 1% Other 4%

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Current Situation

• Energy – the catalyst that helped tip us into the recession – It’s in the news everyday– We have the ability to provide relevant, robust and lasting solutions for

building owners and end users• If you’ve been around long enough to have experienced past

energy disruptions, you know they didn’t have any real lasting impact

– This time it’s different and commercial building controls today can address a large enough portion of the energy consumed in commercial building facilities

• We can mitigate uncertainty and risk by reducing the impact of energy volatility on our building owner customers– Demand Response Implementations– Real Time Pricing– Critical Peak Pricing– Eventuality of some sort of cap and trade implementation, etc.

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Is this time really different?

• Energy awareness, cost and volatility

• Shift from new construction toward retrofits and renovation

• Non-traditional competitors challenging the space

• Legislative incentives and mandates

• Standards and code development

• Elevated social conscience

• Capturing savings potential is complex and difficult

Creates Opportunity to Increase Building Performance

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Federal Policy and Legislation

Source: US Dept of EnergyEnergy Efficiency and Renewable EnergyDOE Supplier Summit January 2010

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State Energy ActivityStates ranked for energy efficiency efforts

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Air Traffic Modernization Biofuels Green Buildings Reduced Emissions

Industrial Process Efficiency Energy Efficiency, Demand Response & Smart Grid

Energy Performance Contracts

Fuel Efficiency

Energy Is Our Business

60% of Honeywell ACS Products & Services Related to Energy Efficiency & Consumption

So, what’s a Smart Grid anyway

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Payback Period Benefits Availability

Coal 10-15 Years 2-3 Years

Nuclear 20+ Years 5+ Years

Renewables Exceeds Useful Life of Asset

Varies

Energy Efficiency 2-5 Years Immediate

• Energy Efficiency & Conservation are the Cheapest Sources of Power• Honeywell Products Leverage Existing Infrastructure in Homes,

Buildings and Industrial Plants to manage peak and base-load demand

Economics of Electricity

Efficiency and Conservation are the Best Options

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The Smart Grid

• More than Smart Meters• Control of energy from and

to the end user

• Reduce energy and reduce the load on an over extended infrastructure

• Optimize the Energy Infrastructure

• Smart Production, Delivery, and Use of Energy

Source: 2009 Electric Power Research Institute, Inc.

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Automated Demand Response

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• The Current and Future Energy Outlook• Economy and Market Changes• Business Opportunities

Agenda

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Non-Residential Growth Forecast

Non-Residential Construction to improve, but stay below peak levels for some time

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Vertical Market Growth Forecast

• Office Facilities• Commercial Facilities• Educational Facilities

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Office Buildings

Source: ITR 2012

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Commercial Properties

Source: ITR 2012

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Educational Facilities

Source: ITR 2012

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• The Current and Future Energy Outlook• Economy and Market Changes• Business Opportunities

Agenda

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• Increasingly, facilities are viewed as strategic resources, rather than as an expense

• The facility manager is being elevated to the role of asset manager, supporting the organization's overall business goals

Facility Management Today

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Business Challenges faced by FMs

• Increase efficiency & reduce costs– Multiple user interfaces & redundant system

applications/workstations– Requires significant time to train users– Primary building equipment can be large energy users– Energy supply and demand cannot be optimized without

measurement, analysis and appropriate response• Minimize system downtime & disruptions

– Difficult to implement routine maintenance & cleaning– Too many systems, not enough time/expertise

• Improve decision making– Hard to get at information when you need it– Information exists within different systems– Limited reporting & trending capabilities

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Industry Technology Trends

• Our world is becoming instrumented– Ability to measure, sense & see exact conditions of everything

• Our world is becoming interconnected– In 2011 we are 10 X more instrumented & connected

then in 2006– New ways for people, systems & objects to communicate– Use of the Internet in our daily lives is increasing

• Cisco predicts 15 Billion devices by 2015 and 3 Billion users (40 percent of world population)– It was approx 5 Billion in 2010

• Customer data presentation expectations are changing– People want to see and use data and information the way they do

everything else in their daily lives

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Summary

• Energy is expensive and prices are volatile – and there’s no end in sight

• Measuring energy is the first step in improving energy performance

• Independent forecast creates optimism for construction and retrofit opportunities, but the migration from new construction to retrofit is paramount

• Smart BAS Systems can optimize business performance for building owners