The energy and utilities industry needs to transform. With increased focus from business and political leaders, the industry is under pressure to become more energy efficient, do a better job of conserving our natural resources and reduce global carbon emissions. And the industry needs to make it easier for consumers and businesses to become partners in those goals. To help accomplish the transformations, industry-leading companies are employing intelligent devices – including smart grids, meters and appliances – that are changing the way people interact with utility assets, services and companies.
Evidence of transformation underway
The truth is that the industry is already in the process of transformation. The energy and utilities industry is the second largest vertical (behind manufacturing) in terms of spending for IoT related products, solutions and services. Consider the following:
- The global smart meter installed base of 400 million devices in 2014 is estimated to double, growing to over 925 million by 2020, making it a leading IoT device.
- Revenues for smart grid sensors are projected to grow nearly ten-fold, from 2014 to 2021.
- In 2020, the Asia-Pacific region will account for almost 65 percent of the global smart meter installed base.
- By the end of 2015, annual smart grid spending in China could total $20 billion, with smart meters comprising $2 billion of that total.
- The smart lighting installed base, estimated at 46 million units in 2015, is projected to grow over 5 times to 2.54 billion units by 2020.
- The global number of connected devices being managed by utility companies is projected to grow to 1.53 billion in 2020, more than triple the 485 million devices reported at the end of 2013.
These facts suggest that leading utility companies are working hard to connect assets, people, products and services to capture detailed usage information that can enable real-time decisions by both the utility company and the consumers of utility products and services.
Benefits for utility companies
Utility companies that invest in the Internet of Things are doing so to improve asset performance, reduce costs, lower supply chain risks and empower employees and consumers. Three of the most common IoT energy/utility solutions are:
- Smart grids: Smart grid sensors can improve utility operations and performance. Utilizing these sensors in IoT systems, the industry can build intelligent networks across entire geographic regions to help share peak loads and monitor the electric grid in real time. These sensors allow physical assets to be connected to other machines, systems and people. Over time, these sensors will become more intelligent with embedded software and analytics being used to diagnose asset health. These smart grid sensors will collect and create large volumes of data that enable utilities to improve energy efficiencies, services and customer engagement.
- Smart meters: In the “old days,” a meter reader would visit every building to record monthly usage data that was used primarily for billing purposes. Today, we are seeing a transition to smart meters. In the near future, almost all energy consumers, whether residential or business, will have smart meters to monitor power, gas and water consumption in real time. These smart meters will provide a wealth of information that can help utilities and their consumers in many ways – from allowing fully automated billing based on time of use or network status (e.g., with prices rising and falling according to peak and trough usage) to enabling meter-to-appliance communications to help change consumer energy behavior.
- Asset monitoring and maintenance: Using drones, small robots, embedded cameras and other IoT sensor devices, utility operators can better understand the condition of the entire asset network in real time. They can collect a variety of data, including temperatures, pressures, flow rates, vibrations and calibration. Maintenance workers can use this information to help plan for preventative maintenance on both above-ground assets as well as those below ground, such as buried cables, wires or pipes.
Other areas where the IoT is assisting Utility companies include the monitoring of fleets, detection of energy loss/theft/fraud, and faster response time when outages occur. Water companies are also using smart sensors to manage water resources throughout the value chain, from the management and control of water treatment quality, to leak detection and remote metering.
Benefits for users of utility services
For both consumers and businesses, smart meters, machines and appliances will provide a “smart building” IoT network that generates the data, analysis and insights that can reduce energy usage and costs. On the consumer side, smart meters, smart lighting and smart appliances will give homeowners a real-time view of utility usage and allow them to closely monitor their energy use and identify ways to reduce costs, such as running the dishwasher or washing machine when the energy tariff is low. Businesses will also rely on the same technology to realize a greater level of savings. For example, businesses can capture and monitor energy usage from each floor of a large office building. Analyzing the data, the building’s IoT network can identify areas of wasteful energy use and help the business cut costs.
Developing a comprehensive IoT strategy
In time, the IoT will touch nearly every area of utility operations and customer engagement. While many utility companies are already investing in one area of the IoT, most have not developed a company-wide IoT strategy. For utility industry companies, now is the time to develop that comprehensive strategy.
Consider these top priorities when building your IoT strategy:
- Focus on security. The cost of data breaches is increasing; security should not be an afterthought when building your IoT strategy.
- Implement cloud computing and big data and analytics. These are enabling technologies that must be in place to optimize any Internet of Things strategy.
- Reinvent the end-user experience. Brainstorm how smart sensors, data and analytics can improve the user experience, including helping consumers and businesses manage their usage and control their costs.
- Embrace innovation. Strive to achieve higher efficiency and embrace new business models by exploring new ways to leverage advancements in e-commerce, mobile, cloud, big data, and predictive analytics solutions based on in-memory computing and machine-to-machine (M2M) communication.
- Plan holistically. Build smart grid, smart meter and asset monitoring strategies. Consider how smart sensors can impact all areas of the business, all utility assets, all employee work activities and all potential customers/users.
- Pilot, learn, adapt. Don’t wait for the perfect implementation time window. Consider using agile methods to quickly pilot and learn. Then continue to innovate as you implement the entire strategy.
Leading utility companies that leverage the IoT will be better able to react and adopt innovations faster. They can quickly disrupt the status quo and reinvent an entire industry that needs transforming. They can be more efficient, more productive and smarter. In a marketplace where change is happening at a rapid pace, those that don’t embrace the Internet of Things may not survive. So the message is clear: lead the transformation by embracing the Internet of Things.
To learn more about how the IoT is impacting other industries, browse our full industry series.