Inside Smarter Buildings: Powering the Infrastructure Transition

Based on Siemens’ Infrastructure Transition Monitor (ITM) 2025 – Buildings Report, this feature explores how the fusion of digital intelligence, sustainable design, and innovative financing is transforming the built environment. Drawing on insights from 1,400 senior executives worldwide, Siemens’ research highlights that buildings are evolving from static structures into intelligent assets—active drivers of decarbonization, efficiency, and resilience. As energy performance becomes central to both corporate strategy and public policy, the report signals a defining shift: the future of infrastructure will be shaped as profoundly by data and design as by concrete and steel.

As nations and industries race toward net zero, a quiet revolution is reshaping the spaces we live and work in. The Siemens Infrastructure Transition Monitor (ITM) 2025, based on a global survey of 1,400 senior executives across sectors, offers a compelling glimpse into this transformation. Its latest edition, Inside Smarter Buildings, underscores that buildings are no longer passive structures—they are now strategic assets at the heart of the infrastructure transition.

The New Frontier of Infrastructure Transition

The report defines the “infrastructure transition” as the global transformation of systems and structures that support energy, industry, and the built environment between 2020 and 2050. Driven by decarbonization and digitalization, this transition aims to rewire the physical backbone of the modern economy.

Buildings stand at the intersection of this change. As the Siemens study highlights, energy efficiency in buildings has now become the number one infrastructure priority for organizations over the next three years. Over half of surveyed executives plan to increase investments in energy efficiency (57%), smart building technologies (55%), and building electrification (54%).

Yet, for all the optimism, the journey remains complex. Progress is uneven, and the real estate sector continues to cite cost pressures and limited access to capital as persistent barriers. “The tools are available, the intent is clear—but scaling solutions requires collaboration across the entire ecosystem,” the report notes.

Retrofitting: The Unfinished Business of Net Zero

Buildings account for nearly 40% of global energy-related CO₂ emissions. The International Energy Agency’s Net Zero by 2050 roadmap calls for retrofitting 20% of the world’s existing building stock to zero-carbon-ready standards by 2030. However, the global renovation rate languishes below 1%, far short of the 2% annual rate required to stay on course.

“Every building is different,” says Susanne Seitz, CEO, Buildings, Siemens Smart Infrastructure. “Return on investment depends on how deep you need to go and what’s already installed. Smart retrofit strategies, supported by innovative financing models and policy incentives, are key to unlocking this opportunity.”

Financial disincentives often slow progress. Tax systems in many countries favor new builds over retrofits, discouraging the reuse of older structures—even though reuse offers clear environmental benefits. “In the UK, for instance, new residential buildings are exempt from VAT, while refurbishments are taxed,” notes Edmund Fowles, Founding Director of Feilden Fowles Architects. “It’s a policy paradox that discourages sustainable design.”

Financing the Shift: From CapEx to OpEx

The report identifies Energy-as-a-Service (EaaS) as one of the most promising models to overcome capital barriers. EaaS allows building owners to shift from traditional capital expenditure (CapEx) to operating expenditure (OpEx) by paying for performance rather than upfront investments.

Under this model, long-term service contracts fund energy upgrades, with payments linked to verified energy and emissions savings. This approach not only reduces financial risk but also accelerates returns. As Siemens highlights, universities, hospitals, and public-sector institutions have begun adopting EaaS to modernize facilities without straining cash reserves.

Start by Using Less: The Case for Efficiency

Energy efficiency has emerged as the cornerstone of decarbonization. “Our approach is to tackle mitigation first—use less energy as soon as possible, then electrify infrastructure and move toward 100% clean energy,” says Dr. Sean Woolen of the University of California, San Francisco.

Despite mature technologies, many organizations have yet to deploy efficiency solutions at scale. Automated controls, predictive HVAC management, and smart occupancy systems remain underused in sectors like healthcare and education, where the savings potential is significant.

The UAE’s recent initiative—retrofitting 60 government buildings with advanced efficiency technologies—illustrates what’s possible. The project targets a 27% reduction in energy and water consumption, equivalent to saving 15,400 metric tons of CO₂ annually.

Digitalization: Intelligence at Work

Digital transformation is proving to be one of the most powerful enablers of sustainable infrastructure. Over half of ITM respondents believe digital tools can cut costs (56%) and emissions (53%). Digital building platforms now unify systems, data, and workflows across entire facilities, enabling predictive maintenance, operational transparency, and autonomous optimization.

“Unfortunately, many organizations still don’t know what’s installed in their buildings,” observes Seitz. “Driving understanding of the status quo is the first step toward smart refurbishment and predictive management.”

Digital control systems are unlocking new perspectives on energy management. “AI will push this further,” notes Brian Motherway of the International Energy Agency, “but we must pair advanced technology with good design and sound equipment standards.”

Top benefits of smart buildings identified by the report include improved operational efficiency, greater transparency, and strong ROI. Importantly, digital ecosystems are not just improving building performance—they are redefining how organizations plan, operate, and maintain their assets.

Case Studies: Transformation in Action

Real-world examples from the report showcase how intelligent systems deliver measurable results:

• San Juan de Dios Hospital, Spain integrated Siemens’ digital building management platform to manage HVAC, lighting, fire safety, and security through a single interface. The result: 35% annual energy cost savings and a safer, more efficient environment.
• University of Toronto Scarborough Campus (UTSC) optimized its geo-exchange heating and cooling system using data-driven commissioning. The outcome was a 33% reduction in natural gas use, 4% lower electricity consumption, and over 1,000 tons of CO₂ savings annually—achieved without major infrastructure replacement.

These examples demonstrate that decarbonization doesn’t always demand cutting-edge technology or heavy investment; it often begins with intelligent operations and system optimization.

Policy and Leadership: Unlocking the Regulatory Levers

According to Cristina Gamboa, CEO of the World Green Building Council, efficient buildings represent the “most immediate and cost-effective lever for decarbonization.” The sector could eliminate 11% of global emissions by 2035, equivalent to taking one billion cars off the road for a year.

Yet, more than 50% of new global construction is still not covered by building codes. Moreover, while 84% of countries reference buildings in their Nationally Determined Contributions (NDCs) under the Paris Agreement, fewer than 10% include detailed implementation plans.

The Siemens report calls for governments to integrate the buildings sector into NDCs more effectively, supported by tools like Siemens’ NDC Scorecard for Sustainable Buildings, which helps identify best-practice policy measures.

The Next Leap: Autonomous Buildings and AI

Artificial Intelligence is rapidly emerging as the next frontier. Survey respondents identified AI-driven prediction, automation, and digital twins as the top three technologies shaping the future of decarbonization.

Grid-interactive and autonomous buildings can already communicate with the power grid, adjusting operations in real time based on electricity prices or carbon intensity. “If a building receives a peak warning on a summer afternoon, it can relax cooling for 30–60 minutes, saving costs and supporting grid stability—all without affecting comfort,” explains Thomas Kiessling, CTO, Siemens Smart Infrastructure.

While respondents see cybersecurity as a valid concern, most agree that the benefits of autonomous buildings far outweigh the risks. A majority (54%) say they are ready to implement autonomous systems within their facilities.

Conclusion: Building the Future, Intelligently

The Siemens Infrastructure Transition Monitor 2025 makes one thing clear: the technologies, strategies, and financing models to decarbonize buildings already exist. What’s needed now is coordinated implementation, stronger policy frameworks, and collaborative ecosystems to drive large-scale adoption.

As Siemens concludes, “Existing buildings are not just legacies of the past—they are opportunities for a better future.” The era of smarter, cleaner, and more resilient buildings has begun, and its success will define the speed and scale of the global infrastructure transition.