By Przemek Tomczak
We are on the cusp of a massive change in the utility sector worldwide. Smart-meters working collectively with the Internet of Things are going to generate a flood of data but turning that data into insights and those insights into value is going to be a challenge. Change seems inevitable with pull from consumers and push from utilities, national grids and regulators.
There’s been a lot of talk about the Internet of Things (IoT) over the last few years. It’s never reached the levels of hype that something like wearables suffered around 2014, but there’s certainly no shortage of articles explaining why 2016, 2017 or 2020 will be the year of the IoT.
With more and more sensors taking more measurements more frequently, we estimate that by 2025 utilities could be receiving around 900 times more data than they do today.
This increase isn’t just the result of cheaper, more available technology, the IoT coupled with smart-meters offers a lot to consumers, utilities and national grids alike.
From a consumer point of view, it helps you save money by giving you simple apps that let you understand and manage your consumption efficiently whether you are at home or on the move. With some consumers now generating their own electricity from renewable energy sources and selling it back to the grid, the combination of IoT and smart-meters offer a better understanding of their current position.
Consumers are embracing IoT even without support from the utilities companies, regulators or governments. The growth of technologies such as NEST are having a profound impact on consumer behavior, a trend that’s likely to continue as costs fall and the effectiveness of the products rises. In many cases a single unit or group of sensors is collecting data and keeping consumers informed for example about power consumption, carbon monoxide levels and the security of their homes and businesses.
For utility companies, IoT-enabled smart-meters offer robust data about how individual consumers use and generate electricity. This data can help utilities identify and predict outages, and offer promotions according to whether a home or business is energy efficient, helping evolve consumer behavior.
Having deployed wide-area networks for collecting smart-meter data, utilities are also looking behind the meter at smart-home automation offerings with appliances, heating, cooling and lighting all working in concert.
There is also some threat from non-utilities starting to offer power as part of a bundled package, with a number of organizations, from start-ups to fairly large, global innovators, examining forays into the sector. While this is only currently a challenge in liberalized markets, utilities in more closely controlled sectors will need to be aware of the disruption that new-comers can create.
…and national grids
From the perspective of a national grid, embracing the IoT works for both developed and developing countries.
If you have aging infrastructure, IoT-enabled smart meters can enhance the way that you understand consumer behavior, asset loading and utilization. This gives you an opportunity to smooth out the demand cycle and predict and reduce the risk of outages.
For developing nations with fast-growing, electricity-hungry middle-classes, the sensors and control instrumentation that sit within smart meters are relatively inexpensive and enable utilities to support different pricing and billing models, including prepaid and time-of-use rate plans. They also help reduce theft and isolate the reasons for losses on the power system.
Providing energy and power helps support people’s aspirations and can significantly help a country grow, which makes the efficiencies offered by the IoT and smart-metering an attractive proposition for governments and their regulators.
Ready or not, it’s happening
According to Gartner, the information technology research and advisory company, 5.5 million new items will be connected to the IoT every day in 2016, leading to a total of 6.4 billion connected things in use worldwide by the end of the year, a 30 percent rise from 2015. By 2020, that 6.4 billion is forecast to more than triple to 20.8 billion.
This isn’t just fitness bands talking to health tracking sites. In the UK, there’s a strategy to have smart-meters as standard in most homes by the end of 2020, with similar programs being implemented worldwide. Giving consumers the ability to see how they are using power, when and how much it is costing them, could well have a significant impact on their behavior.
As part of this process, the Data Communications Company (DDC) was formally launched in the UK at the start of October 2016 to provide common infrastructure to support wider roll-out of IoT-enabled smart-meters. Funded by the UK’s power industry, the infrastructure will offer a consistent service that will reduce complexity and duplication that would follow if utilities developed and installed their own systems.
British Gas, a large UK provider, is currently offering free power at weekends to homes that switch to a smart-meter, suggesting that the firm puts a significant value on the data that it is going to glean from consumers as well as the urgency that it sees in smoothing out some of the demand peaks that are putting pressure on Britain’s infrastructure.
Quarterly meter readings become live data
IoT-enabled smart-meters offer a great deal of data that can help enhance understanding of demand, customer generated electricity, and asset utilization. And it’s constantly updating data. In the past, domestic meters were read once a month at the very best. With the new, relatively cost-effective technology in place, utilities can be receiving consumption data around-the-clock. Leading utilities are now capturing data from sensors behind the meter to help customers better manage their energy use.
The enhanced data gives utilities an opportunity to identify, predict and respond far more quickly to events and outages on the grid. Using IoT technology, repair crews are often able to find the cause of an outage more quickly, leading to faster diagnosis and quicker resolution. In some cases, repair teams are being sent out to fix an issue before the customer realizes that there’s a problem.
Opportunities in face of increasing competition
In some markets customers are able to switch from energy suppliers and retailers, placing pressure on utilities to reduce electricity costs. Even in virtually monopolistic and duopolistic markets, the rise of new technologies and solution providers is creating challenges.
In the US, Apple has received approval to sell energy, capacity and other services, while Tesla owns SolarCity, bringing together both energy capture and storage. The firms that take advantage most quickly and start making data-driven decisions are likely to be in the best position to fend off these new rivals and potentially thrive in an increasingly competitive environment.
It also creates opportunities for data-partnerships between power utilities in different parts of the world. Comparing data between cities, provinces and countries was once an impossible dream but with the implementation of data exchange standards such as Green Button in North America and the smart-meter data hubs in Europe, benchmarking energy data will become possible while protecting individual customer privacy.
It’s not the data, it’s what you do with it
The massive rise in the number of live data sources creates three problems however. Firstly, as the sheer volume of data that utilities can receive moves from a trickle to a flood, managing it is going to take a fundamental reappraisal of how utilities deal with data. With the current generation of smart meters, utilities have to deal with over 100 times more data than before. With additional sensors being deployed in homes and businesses, and with newer meters taking measurements more frequently, utilities could be faced with a deluge of data over the next five to 10 years.
Secondly, it’s all very well having lots of data, but you need to be able to analyze it to turn it into something useful. Data without insight is just numbers. To stay competitive, firms need to ensure that they are committed to the quality of data that they are collecting and making decisions and taking action based on what data reveals.
Thirdly, firms are going to need to make sure that they are respecting privacy laws or risk falling foul of regulators.
Lessons from other industries
Some technically advanced industries have been gathering data for years, but they’ve tended to simply dump it in massive data warehouses in the hope that someone can eventually make some sense out of it. That’s not the way that it should work.
Leading organizations have executive sponsorship to use information and analytics for improving their products, services, operations and sales. For example, the health sector is making some real inroads into turning data into insights. Specialists in the industry are taking anonymized data about patients’ health conditions and outcomes, and genuinely improving medication and treatment.
The good news is that these rapid advances in data science can be quickly applied in the power industry. Some utilities are already starting to enjoy tremendous efficiency gains. For example, one utility by applying data science techniques on their smart meter, asset and other data, was able to predict outages days in advance and take preventative action. This reduced operational costs and significantly improved overall reliability and customer satisfaction.
Massive growth potential by embracing change
By harnessing the potential of the IoT, these firms are processing and analyzing data from the growing numbers of smart meters and combining that data with a myriad of other sources such as live weather reports, and generation and asset performance data. This gives those firms a far firmer grasp on current demand, potential for asset failures and events that could impact the power grid on a day-to-day and intra-day basis. It enables firms to revisit assumptions, business and operating models, and make data-driven decisions.
In the end, IoT connected to smart meters offers a far more efficient and environmentally friendly use of power that matches the requirements of utilities and consumers in virtually every market worldwide.
Reports of the industry’s inevitable death-spiral are overblown, but with technology evolving so quickly, utilities need to be taking steps to ensure that they understand what steps they need to take to make the most of the changing conditions.
Kx delivers the highest-performance and most cost-effective sensor data management platform available for utilities, telecommunications, manufacturing and Internet of Things applications.
Kx for Sensors is an integrated platform for ingesting, processing, validating, estimating and analyzing real-time, streaming and historical data from IoT, sensors and enterprise systems. It is fully extensible for organizations to power their existing and new IoT and sensor analytics.