Arjun P Gupta, founder & CEO of Smart Joules, a one-stop energy-efficiency partner for commercial buildings including hotels, speaks about the myths surrounding global building rating systems; where the hotel industry stands in terms of energy-efficiency benchmarks; and how Opex-based partnership models can drive energy efficiencies and enhance profitability.
While building rating systems like LEED and others have helped raise awareness about energy-efficient design and environmental sustainability over the last decade, Arjun P Gupta — a civil and environmental engineer by training and the brain behind Smart Joules, a Delhi-based climate action company — believes that the vast majority of buildings flaunting these environment sustainability plaques are far from energy efficient. Most building owners, he says, treat rating certificates as trophies and do not bother much about energy efficiency and sustainability.
“Rating stamps do not give the real picture of the energy efficiency of those buildings. Rating has become a sign of responsibility. However, it has created different kinds of problems,” he said in a one-on-one interaction with HospitalityBiz India. India today has the highest square footage of LEED-rated buildings in the world. These ratings are primarily based on design parameters. Nobody cares about real energy-efficiency metrics of these buildings after they get occupied and operational, Gupta said.
“Everybody wants to look good and fashionable with the rating certificate,” he stated.
A Master’s degree holder from MIT (Massachusetts Institute of Technology), Gupta identified the need for a simple, scalable energy-efficiency solution with an industry focus while working with the Jaypee Group on his return from the US. He realised that most so-called Energy Service Companies (ESCOs) in India were merely equipment suppliers with little understanding of true energy efficiency and building automation.
“As an environmental engineer, I found it sufficiently interesting,” he said, sharing the vision behind setting up SmartJoules in 2014. “We picked commercial buildings because they are major consumers of electricity, more urban-centric, and decision-making is faster compared to large industries.”
In the last ten years, Smart Joules has delivered 60 successful projects, delivering significant savings in energy bills for cooling and heating systems across healthcare, hospitality, and other segments.
While many building-automation companies around the world are European or American, Gupta said their approach is largely manpower-centric and less focused on resource efficiency. Smart Joules’ automation solutions, in contrast, are designed primarily to improve resource efficiency, he emphasised.
He noted that air-conditioning and associated cooling systems are major pain points for building owners and operators, accounting for nearly 60 percent of the energy bill. Due to what he calls a “broken design, execution and operations ecosystem,” accountability becomes a major issue, often leading to continuous guest complaints.
This is where SmartJoules offers its proven ‘JoulePAYS’ (Pay As You Save) model — a performance-guaranteed, quality-assured building-automation solution for energy efficiency. “Our service is based on four pillars: convenience, quality, economy and sustainability. We have built our credibility by converting inefficient systems into efficient systems,” he said, citing case studies from reputed healthcare and hospitality establishments.
Under the JoulePAYS model, SmartJoules undertakes complete retrofitting of the cooling system and bears all capex. In return, the company takes a larger share of the savings in the energy bill for the next 12 years.
“It’s an assured performance and saving every month for 12 years that we are guaranteeing,” Gupta said. Sharing results from a reputed hospital and a premium hotel in Delhi NCR, he noted that the hospital’s annual energy bill dropped from Rs 20 crore to Rs 16 crore — a Rs 4 crore saving in just one year. At the hotel, energy savings reached 40 per cent within the first six months.
Among SmartJoules’ major ongoing collaborations is a heating-system optimisation project for a reputed Marriott property in Delhi’s Aerocity.
Hotels and hospitals have similar HVAC infrastructure, Gupta said, though hospitals tend to be more complex as different areas require varying levels of cooling.
In the hospitality sector, the presence of both asset owners and brand managers makes decision-making more complex. While it appears straightforward from a property owner’s standpoint — since the partnership involves no capital investment — Gupta says it is not as simple as it seems.
Although the Opex model is uncomplicated, owners are often reluctant to share a larger portion of the energy-efficiency savings with the partner. Another factor is the EBITDA valuation advantage that accrues through the capex model.
Based on his experience, Gupta believes that projects where owners prefer a capex model rarely materialise, as they are seldom able to allocate the capital needed for retrofitting.
At a time when most international hotel companies have decarbonisation targets on paper, Gupta feels these brands remain heavily dependent on asset owners to meet those commitments. In the absence of actual intervention, what continues to happen is periodic data reporting by the brands.
