The power is on - Energy innovation through IoT technology
Path to value realization in the electric power industry
Every electric utility must evaluate its own path to value realization through IoT technology based upon its starting point and a thorough evaluation of “what’s next?”
Increased efficiency, conservation efforts, and alternative power sources have eroded demand growth in the electric power industry. The projected growth from now until 2040 is less than 1 percent. This level of growth is no longer enough to maintain the current system without raising rates. Yet, tighter emission regulations, greater reliability expectations, and the aging transmission and distribution system require more than maintenance; they need expensive upgrades and replacements. The most straightforward response— raising rates—is not always attractive, as both utilities and their regulators are charged with keeping rates affordable, and higher rates increase the competitiveness of alternatives to utility-provided power.
The electric power industry, must look beyond its traditional cost-of-service model and focus on asset utilization and streamlining costs through operating efficiencies. Technology, particularly Internet of Things (IoT) applications, offers a range of possibilities for how electric utilities can move forward.
Innovation is part of the electric utility heritage. Tapping into this tradition is essential to meet today’s challenges and create a more intelligent grid. The IoT offers exponential technologies that utilities can deploy and leverage to find new ways to explore and extract incremental value from the intelligent grid. However, the path forward is not always clear. The Information Value Loop provides a structured framework to help understand how to create and capture value from information in order to more clearly define the road ahead. Applying the value loop to electric utilities, we see three key phases in the further adoption of and value realization from IoT technology:
- The first and most foundational phase is resilience, in which the fundamentals of grid reliability and durability are based on the ubiquitous deployment of grid sensors connected via standards-based protocols.
- The second phase is enablement, in which the aggregation and analysis of collected data enable utilities to actively manage a wide variety of devices both using and generating power within the grid.
- The third and final phase introduces new methods of optimization and competition by using the data generated from the previous phases to allow all stakeholders to make informed decisions about power usage, generation, and future investments.
Every electric utility must evaluate its own path to value realization through IoT technology based upon its starting point and a thorough evaluation of “what’s next?” It is important that management does not focus entirely on technology—rather, technology needs to be considered and planned for within the context of a utility’s capability model. The utility’s barriers to the adoption of these new IoT tools can be high, but the risk and cost of not pursuing them is greater.