The built environment is under pressure that it was never designed to absorb. Energy prices are volatile, grids are increasingly constrained and policy timelines are tightening fast. Most buildings were not built for any of this.
In New York City alone, Local Law 97 — part of the 2019 Climate Mobilization Act — now requires most buildings over 25,000 square feet to meet strict carbon emissions caps, with penalties of $268 per ton of CO2 emitted above the limit.
According to the Urban Green Council, while roughly 9% of covered properties currently exceed their 2024 caps, approximately 57% are presently above thresholds set for 2030.
The conundrum for most property owners is that their properties were designed, built and equipped decades before real-time grid interaction was a concept, let alone a compliance requirement.
Innovation, then, cannot wait for replacement cycles. It must work within what is already there. That means pairing existing hardware with software-based ingenuity.
Why Traditional Approaches Fall Short
Let’s start with the most obvious and customary option, at least up until the past decade or so: manual controls. While manual control is, obviously, the lowest lift, allowing property owners to continue utilizing the same processes they’ve been accustomed to, it’s an approach that’s virtually untenable.
Manual controls are reactive, labor-intensive and inherently unable to account for real-time grid pricing or dynamic occupancy, meaning that they lock buildings into rigid performance frameworks in a market that increasingly rewards flexibility.
Moving past the manual option, the most typical automated approach has generally been a hardware-based solution. Hardware- based systems are expensive and time-consuming to install, though in some cases, those investments are warranted.
But the traditional hardware-heavy model carries structural problems, and vendor lock-in sits at its foundation. Since the early 2000s, building owners who invest in proprietary building management systems (BMS) — hardware-integrated controls that tie HVAC management to a single provider — often fi nd that they cannot competitively bid on servicing, upgrades or expansions.
So, if the original contractor’s technicians move on, or the manufacturer discontinues support, the building is left with a system that cannot be modified, integrated or handed over to another provider.
Moreover, proprietary BMS platforms cannot be expanded, integrated with ancillary systems such as metering or security and often cannot execute the kind of energy-control programs now required by regulation.
Timing is also an issue. Installing proprietary hardware takes time, so for a building already inside a compliance window, that timeline may be constrained — if available at all. And even if timing isn’t an issue, there’s the matter of prudent investment: hardware updates depreciate from the moment they’re installed.
Open and software-led systems are the alternative. Not only are they more affordable to install and maintain, but they’re also fundamentally more adaptable, allowing owners to evolve capabilities without an ongoing series of hardware swap-outs.
Intelligent Solutions Interacting in Real Time
Software presents perhaps the most interesting innovation in HVAC in recent years, specifi cally in platforms that allow existing systems and building management systems to interact with the grid in real time.
Rather than replacing equipment, a software-led approach focuses on understanding how a building interacts with the grid at any given moment and adjusting performance accordingly.
A platform connects to an existing BMS, HVAC equipment or metering system, and uses that live data to calibrate load intelligently. Nothing proprietary needs to be installed, and the software layer sits above what is already there.
The energy management impact is measurable. We have found that software-driven, data-led HVAC management frameworks can reduce peak power demand by more than 25% during cooling operations and significantly more than that during heating under certain conditions.
A separate analysis of building energy optimization models published by arxiv.org found that grid-aware software that intelligently aligns HVAC operations with low-cost energy periods has the potential to reduce energy costs and reduce a building’s carbon emissions.
For a large commercial asset that faces Local Law 97 exposure, these are more than marginal gains — they can be the difference between compliance and paying six-figure fines every year.
This approach also relieves additional load on the grid wherever possible. Traditional building operations create demand spikes during peak periods and place acute strain on the grid. This drives energy prices higher for everyone in the market.
Software-led demand management balances that load. Rather than consuming at peak, a grid-aware building shifts or reduces consumption when demand pressure is highest.
According to Memoori’s 2024 market analysis, the global market for energy management software in grid-interactive buildings is projected to grow from approximately $3 billion in 2023 to nearly $5 billion by 2029, driven by a combination of regulatory pressure and the growing sophistication of newer management platforms.
What This Means for Property Portfolios
For property leaders managing existing assets at scale, the software-first model has a specific set of advantages that hardware-centric approaches cannot match.
A software platform that integrates with existing BMS and HVAC infrastructure can be operational in a fraction of the time required to install and commission new physical controls. Across a large portfolio, that speed compounds and faces none of the friction of hardware installation.
Building owners can also enjoy more agency through software-driven approaches. They retain the ability to service, upgrade or change equipment without being held back by proprietary systems’ dependencies. Tech evolves virtually without physical changes to a building.
This intelligence from a single asset can be scaled consistently across dozens of buildings, with centralized control and performance data. That is a fundamentally diff erent proposition from hardware upgrades, which must be purchased, installed and commissioned asset by asset.
This all matters as extreme weather events increase in frequency and intensity, and as grid infrastructure faces growing strain. Much aging infrastructure will require substantial global investment to refurbish, according to the International Energy Agency, so flex and adaptability in an asset is no longer a nice-to-have, but has become a core function.
Working with What We Already Have
Meaningful progress in building performance today does not require replacing the tools that already exist. It requires making them smarter, more responsive to real-time conditions and better aligned with how energy is priced.
For property leaders, this represents an opportunity to unlock measurable value without the disruption, cost or lock-in risk of hardware-heavy upgrades.
Many property owners may not realize it, but they already have most of what they need to optimize their HVAC and comply with local regulations. It’s not the equipment that matters, but how you — or the software you install — put it to use.
