Economic Times (ET): Sustainability is in focus nowadays. How important is sustainability when it comes to building spaces or maybe even large factories, and what does Johnson Controls control have to offer as solutions?
Vijay Sankaran (VS): Ultimately, buildings comprise 40% of all global emissions. So, even to take out 10% or 15% out of the emissions is significant for society. Johnson Controls has been in business for 140 years, and has always focussed on the building space — building equipment, building control systems…. So, we are uniquely positioned with our OpenBlue platform to take all the data from within the building, bring it up into the cloud in a secure and standardised way and then apply AI and machine learning. We then help create recommendations that can autonomously optimise the building space. For example, using closed loop control, we can tell when a space is being underutilised, and subsequently we can increase the temperature slightly in that space or we can optimise the fan speeds or we can turn off the lights so that we can reduce the energy consumption, thereby reducing the net-zero carbon output as well.We have a technology solution called Net Zero Advisor platform that guides companies and other entities to meet decarbonisation goals by a certain time. So, you can go to a planner and say ‘I want to decarbonise by 2040’. Based on what your current baseline is, the system will generate recommendations on how you can actually achieve those goals. The system will also help you implement them using real-time closed loop control within the building footprint. So, using these capabilities, we feel like we can take a significant bite out of that 40% emission output.
ET: We have a set of sustainable goals that the world wants to achieve. You have technologies which can help us reach those goals. Are existing technology enough for us to meet those goals?
VS: I think the technologies continue to improve, to help meet the goals. I strongly believe that sustainability is an ongoing journey and I think that there are things you can do in a facility just through digital solutions. But beyond that, you can take things to the next level and change the equipment, so that the equipment is more energy efficient and more carbon efficient. For example, by adopting a low-refrigerant chiller, you are reducing some of your emissions. Or, by bringing in a control system that connects all the equipment types in your facility, you are able to do more optimised and autonomous control. Similarly, by bringing in LED lighting, you are again driving energy efficiency improvements.
So, there are things you can do just through digital solutions alone to improve your efficiency. But to truly get to net zero, you have to potentially look at the actual technologies you are using inside the building. You also have to look at the types of energy that you are getting from your utility provider. Some of our customers who are very motivated to get to net zero have deployed their own solar grids on site. They have created their own battery arrays on site. They have signed power purchase agreements to buy clean energy. We are launching a solution called grid interactive optimisation that allows us to actually optimise what the building generates and what upstream providers generate to create the best carbon-efficient path for consuming energy.
Vijay Sankaran, vice-president and chief technology officer, Johnson Controls.
We are constantly developing new technologies around cooling, which is one of the biggest consumers of energy and the biggest producers of emissions inside a building. But then a large part of what we are also helping with is through partnerships in power generation, because at the end of the day, the way upstream power generation happens and what buildings consume in terms of power is what matters to emission.
ET: In terms of achieving those goals, is something like a Scope 1 easier and when you go down, maybe like a Scope 3, is that tougher in terms of technology and the cost involved?
VS: The Scope 3 norms are a lot about what your suppliers are doing in terms of the goods you manufacture. You can mandate your suppliers to produce parts and other raw materials in more carbon-friendly ways, but you depend on them to help you comply with Scope 3 norms. On the other hand, Scope 1 and Scope 2 are much more under your direct control. This means, depending on how aggressive you want to be, you can make more conscious choices like replacing technologies in the building or changing your power generation sources.
So, some that want to be net zero by 2025 or 2030, they can go build a solar array as part of their power generation. That will very quickly take a big chunk out of their carbon emissions. Now, is that economically the best choice that they might make? It depends on where that organisation is located. It may make more sense in certain geographies like Australia, for example, where sunlight is very prevalent versus here in India where the climate and the cloud cover may make it a bit more unpredictable and you may not be able to get that sustained solar energy to take a real bite out of carbon emissions. I would say most companies that I have seen are in the 2040-2050 kind of timeframe, when I see their net-zero goals plotted out.
ET: And what about the cost involved?
VS: This is where our sustainability business, our net-zero business, really helps companies because it can be a very costly proposition. What we will do is we will give them a package that says ‘Okay, here are all the things and actions that you need to do and the investments you need to make’. And by the way, we will bring financing to help make that happen. So, for companies that are capex constrained, we offer business models that allow them to do the implementation up front and then we can finance that project over an extended period. And as part of that, as they generate savings on energy, we can actually use that to offset the cost of the project.
ET: You have recently opened your third OpenBlue Innovation Center. What does the centre aim to achieve and what are your focus areas?
VS: Yes, this is our third one in India. We have a growing presence of software engineers based in India and we really wanted to create an innovation space in Bengaluru with all the expertise around software. The focus of this space is going to be around areas of new exploration like AI, EDGE buildings and technologies, security, and how it all comes together in terms of developing our OpenBlue platform, which really is seeking to create that smart autonomous building.
ET: So, the other two centres that you have already, what are they into and how is this one going to be different?
VS: All our centres are focused on innovation, but you could think about it as having slightly different focus areas. The one we have in Pune is largely focussed around customer experience and how do our customers see the data around OpenBlue and our entire enterprise software as a service. The one in Hyderabad is heavily focussed on the security space and how we are bringing OpenBlue connected security to life. The one in Bengaluru would be more focussed around EDGE-based technologies, AI and R&D. So, we are really trying to position each of the centres to have a unique focus area. We felt in Bengaluru, with the type of talent that is available, we could advance some of the up-and-coming cutting-edge areas.
ET: What are your growth strategies this year, especially for India?
VS: If I look at the biggest growth vectors for Johnson Controls, it is in three areas, all of which have digital at the core. Number one is in connected services. We want to leverage the power of data and connectivity, to be able to manage more of our customers’ footprints in terms of chillers, control systems and security. We now have a strategy of connectivity, where we can manage all of that remotely through an operations centre that we have set up.
Second, we are growing our digital business, to provide more software-based solutions to customers who want to understand where they stand in terms of net-zero compliance, how their assets and facilities are being used, and how employees are using the spaces as they return to office.
And then the third one is around sustainability. As more and more companies put out plans around decarbonisation, we offer both the advisory services and the implementation services, and the financing to help them with their net-zero goals. These really represent our major vectors of growth globally and in India.
