As the built environment races toward net-zero by 2050, the construction and real estate sectors face mounting pressure to slash energy consumption and carbon emissions. While traditional retrofits and equipment upgrades have long been the go-to strategy, they are often slow, costly, and insufficient on their own. According to a KPMG report, outdated hardware isn’t the main problem—poor energy management is.
The solution? Strategic Energy Management (SEM) supported by artificial intelligence (AI). Experts suggest that combining SEM with AI can reduce building energy waste by up to 30%, far surpassing the 5–7% savings typically seen with SEM alone.
Why traditional energy retrofits fall short
KPMG’s report, How AI is Helping to Improve Energy Efficiency and Management in Real Estate, highlights key challenges in current energy efficiency strategies:
- Slow implementation: Retrofits can take years to deliver measurable results.
- High upfront costs: Upgrades to boilers, chillers, or HVAC systems often require significant capital investment.
- Limited scalability: Even large retrofitting programmes fail to deliver the rapid, system-wide cuts needed to achieve global climate targets.
Instead of treating efficiency as a one-off project, the report argues for a shift to continuous energy management supported by AI and SEM principles.
What is Strategic Energy Management (SEM)?
Strategic Energy Management (SEM) is a structured, organisation-wide framework for reducing energy use. It moves energy efficiency away from ad-hoc initiatives toward systematic, long-term practices.
The SEM framework in practice
KPMG outlines a five-step cycle at the heart of SEM:
- Assessment – Audit existing energy use and infrastructure.
- Planning – Set measurable efficiency goals and allocate responsibilities.
- Implementation – Deploy solutions, from tuning existing equipment to installing new technology.
- Capability Building – Train staff and integrate management systems.
- Monitoring and Continuous Improvement – Track, review, and adjust performance in real-time.
On its own, SEM delivers 5–7% energy savings annually. But when paired with AI, savings climb dramatically.
AI as the game-changer in energy efficiency
AI brings automation, adaptability, and predictive intelligence to SEM, ensuring that efficiency targets are met day-to-day rather than once per year.
How AI optimises energy management
- Real-time monitoring: AI analyses sensor data on occupancy, weather, and equipment performance.
- Automated adjustments: HVAC and lighting systems are fine-tuned minute by minute to match usage.
- Predictive maintenance: Machine learning forecasts equipment failures before they occur.
- Human oversight: Facility managers remain in control, while AI handles repetitive, data-driven optimisation.
“AI is already helping buildings cut waste by 20–30% in our projects, no matter the climate or the age of the property,” said Donatas Karčiauskas, CEO of Exergio.
The three tiers of SEM
KPMG’s research highlights three progressive stages of SEM:
1. Optimising Existing Systems
- Tuning HVAC, lighting, and controls for daily operational efficiency.
- Ideal for immediate savings.
- Increasingly supported by AI to accelerate results.
2. Upgrading Outdated Equipment
- Replacing boilers, pumps, or chillers with modern, energy-efficient alternatives.
- Requires capital investment but builds on the efficiencies gained in Tier 1.
3. Integrating Renewables and Long-Term Power Contracts
- Adding solar, wind, or green energy purchase agreements.
- Most effective only once baseline consumption is under control.
Why Culture Matters in Energy Management
KPMG stresses that hardware is secondary to management practices. Without a culture of active energy management, even the most advanced AI tools or renewable systems won’t deliver optimal results.
Exergio’s Karčiauskas echoes this sentiment: “Efficiency isn’t a one-off upgrade—it’s how you run the building day after day.”
The report calls for a human-centric AI approach, where AI provides transparency and actionable insights, while managers set goals and retain oversight.
Key Benefits of AI-Enabled SEM
Implementing AI within the SEM framework offers tangible benefits for digital construction and real estate operators:
- 20–30% reduction in energy waste
- Lower operating costs across building portfolios
- Faster ROI compared to large-scale retrofits
- Improved occupant comfort through intelligent HVAC adjustments
- Scalability across different building types and climates
- Alignment with ESG goals and net-zero strategies
KPMG’s latest findings underline a crucial shift in the real estate and construction industries: achieving net-zero is not just about hardware upgrades—it’s about smarter management.
By embedding Strategic Energy Management (SEM) and augmenting it with AI-driven solutions, building owners can reduce energy waste by up to 30%, future-proof assets, and accelerate progress toward climate goals.
As Exergio’s own real-world case studies confirm, AI-enabled SEM is already delivering measurable impact today. For digital construction leaders, the message is clear: the future of energy efficiency lies not in waiting for the next retrofit cycle, but in making efficiency a continuous, data-driven management practice.
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