'The Internet of Things is an enormous opportunity for renewable energy'
Industry players should devise a strategy for thriving in this brave new world, writes Navigant Research's Neil Strother
The fundamental notion of the Internet of Things (IoT) is startling as one considers the disruptive implications of tens of billions of connected sensors and devices sending and receiving vast quantities of data across networks. Harnessing IoT data and turning it into useful applications represents an enormous opportunity for stakeholders who can extract real value for customers.
In the energy sector, utilities already leverage data from sophisticated connected devices, such as smart meters and smart thermostats, in order to operate the grid more efficiently and help customers reduce consumption. Thus, the benefits of IoT technologies are real, and further adoption is accelerating on both sides of the meter, with cumulative revenue associated with commercial and residential IoT products and services expected to total more than $750bn through to 2025, according to Navigant Research.
Relevance for renewable energy
IoT technologies are relevant for renewable energy since these tools can enable the smooth integration of two-way power flows from intermittent distributed resources like wind or solar, and behind-the-meter processes such as on-site energy storage or electric vehicle (EV) charging. In a larger sense, IoT technologies are being established as a fundamental platform that underpins the emerging Energy Cloud, a historic transformation under way in the utility industry that will lead to a cleaner, more distributed, and increasingly intelligent grid. Stakeholders should have a strategy for thriving in this environment, and be able to evaluate how best to leverage IoT technologies to their advantage.
Value in IoT Data
Providing IoT hardware can be a viable approach for some players, but there is a tendency for hardware to commoditise, often leading to reduced margins.
The longer-term value of connected things, however, comes from mining the generated data and using it for important applications that can be repeatedly monetized. In this sense, data becomes the operational currency of a transforming energy industry. For instance, transporting and analyzing data from wind turbines has high value to grid operators, and companies offering these types of networking or data analytics services can reap the benefits.
Similarly, the ongoing value from smart meter data is the ability to more accurately measure consumption for load management and billing purposes. In commercial buildings, connected devices and integrated energy management systems generate data that is crucial for reducing heat or cooling in underutilised zones, or adjusting lights when offices or spaces are empty. In each of these scenarios, having real-time data from devices has enduring value.
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Another key benefit of IoT data is in the realm of preventive maintenance. Smart devices and sensors can send information from remote equipment that indicates a failure is imminent and should be inspected immediately to avoid costly downtime or damage. This functionality is particularly helpful in mission-critical industrial or commercial settings. For instance, a utility managing a solar facility would want to know about a faulty inverter ahead of an expected increase in demand so it could be repaired before the event, or make contingency plans to ensure the continuous flow of power to the grid. Likewise, a facility dependent on refrigeration equipment would want to know ahead of time if a unit was about to go down and repair it in advance to avoid a more costly outcome.
No Smooth Sailing
With new technologies, sometimes there is a blind tendency to see the pathway ahead as smooth sailing. But the IoT should not be seen this way — the technology is complex and there are serious challenges to be solved, such as interoperability, or the lack of it. IoT devices need to communicate and share data in real time, or near-real time. But there are numerous communications protocols and standards in the mix, including Wi-Fi, ZigBee, Bluetooth, and Thread. Until there are more clear ways of seamlessly linking data from disparate devices, there is the risk of being stranded in silos, with a need for workarounds to function properly. The good news is standards bodies are co-operating to solve this issue, but the result of those efforts is still a couple of years away.
Security is the other big issue. Recent attacks on major websites mounted from easily breached IoT devices are evidence that supply-side stakeholders need to take action to thwart the threat. Pressure from elected officials and regulators will spur this effort. But until concrete steps are taken, the doubt about IoT security will linger.
Reasons for IoT Optimism
To sum up, there are reasons to be optimistic about the IoT as a disruptive technology in the renewable energy space. When properly embraced, value can be extracted by stakeholders who leverage the data for applications and services that customers will want to use and pay for. The process starts with understanding the ramifications of IoT technologies, and then developing a smart and enduring business strategy.
Neil Strother is a principle research analyst at Navigant Research, specialising in emerging technologies