The term “Internet of Things,” or “IoT” for short, is one of those buzzwords commonly being thrown around online today, but what does it actually mean? And how might it affect the future of the utilities industry?
According to an Ericsson white paper Transforming industries: energy and utilities published in 2014, the Internet of Things “describes the design and implementation of internet–based systems and solutions that interact with the physical environment.” This encompasses everything from smartphones to smart meters and thermostats, and in the context of the utilities industry, means big changes up ahead in the way they do business.
We’ve already examined the idea in previous blog posts (Are Utilities in Digital Denial? and The Utility of the Future is in the Cloud) that the utility industry has tended to lag behind others in terms of keeping pace with technological advancement. It seems, however, that utility companies are recognizing the need to invest in IoT, with one SAP report titled “CEO Perspective: The Internet of Things for Utilities” citing these staggering statistics related to IoT:
– Utility companies will invest an estimated $201 billion in IoT technology by 2018
– IoT revenue in North America in the year 2020 will reach $2.1 trillion
– An estimated 30 billion smart, wirelessly connected devices will be present in homes and in the utilities industry by 2020.
According to a recent Energy Central blog What utilities expect from the Internet of Things in the year 2016 alone 5.5 million new devices will be connected each day. For utility companies, that’s 5.5 million chances to meet customers’ energy needs in new, more personalized ways. The industry can increase customer satisfaction by analyzing what users are saying about their utilities online and on social media, improve workflow and equipment repair time, deliver energy more efficiently using intelligent assets, and so much more.
As the Ericsson report notes, the utility industry “has always relied on utility-specific protocols for its operational data exchange. But for the past 15 years, it has been moving towards the digital world.” This shift, however, demands both regulatory change and utility companies’ willingness to invest in new technology. For example, Cisco recently estimates that a typical electric utility company would have to make an investment of $8.7 million in IoT technology to achieve a total benefit of $21 million.
It’s clear, however, that IoT is simply one facet of a much larger technological push within the industry, encompassing Big Data, cloud computing, supercomputing, and more. The SAP study describes IoT as “an environment where you can monitor, analyze, and automate in ways that greatly improve customer experiences, streamline key business processes, and create new business models.” Indeed, these are the overarching goals for every technological development facing the new digital utility and every conversation about the future of the industry. Stay tuned and keep checking Utegration’s blog as we continue to explore how these advancements in technology continue to shape the utilities landscape and change the way we do business.