Utilities are facing complex pressure. According to the U.S. Energy Information Administration’s IEO 2016, the world’s energy consumption will rise by 48% by 2040. Solar energy growth worldwide is rapidly expanding, especially as the cost of solar panels improves and efficiencies swell. In the U.S. alone, the IEA expects it to grow 43% by 2022. Utility companies are likely to struggle with this expansion for obvious reasons. This, along with aging infrastructure, inadequate equipment, and no ability to tell consumers – many of whom want to move towards lower cost, more eco-friendly energy solutions – where they are using energy, is impacting the ability of the average utility company to compete.
Implementation of IoT can drastically change this. Many utility companies are still on the very edge of adopting this technology. Simply, the investment in a smart grid, smart meters, and home automation can allow utility companies to comprehensively recapture the energy industry, drive top-line growth, and improve consumer perception.
Take a closer look at why this matters, how it is done, and how competitors are beating many organizations.
Implementation opens doors and opportunities
When the utility industry adopts IoT, it is creating new opportunities to connect with the consumer, with the grid, and with the world. Suddenly there is an influx of data streaming into the utility that they can harness to make decisions. For example, companies can utilize home automation to monitor consumer use, then adjust access as necessary. They can gather information on how to deliver services, manage infrastructure, and continue to meet consumer needs.
Simply, consumers today no longer need to rely on utilities. As the spread of solar and wind continues to grow, so do the options available to consumers. Now, a customer can tap into a neighbor’s solar panel system and effectively go off the grid without making a large investment. Solar sharing programs are developing throughout the country. And, while some utility companies continue to fight against this energy savings through pushing against solar incentives offered by states, the fact is, they are better served by embracing the opportunity.
Connecting utilities creates fluidity, introduces new opportunities for revenue
In the 1920s, Nikola Tesla said:
“When wireless is perfectly applied, the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole. We shall be able to communicate with one another instantly, irrespective of distance. Not only this, but…we shall see and hear one another as perfectly as though we were face to face, despite intervening distances of thousands of miles; and the instruments through which we shall be able to do this will fit in a vest pocket.”
This depicts the true effectiveness of IoT. Here’s a simplistic application of how it could work to not only improve how utilities function, but also to create additional growth.
End-to-end connectivity from generation to consumption supplies incredible data and insight. It provides opportunities for utilities to streamline function and meet spikes in demand. It allows utilities to better manage infrastructure and function, creating more overall stability within the network. This provides an opportunity for the utility to move more sources of energy into the system, including wind and solar power, creating a new source of revenue and growth for the organization.
Why so slow to adapt and what’s that costing utilities?
IoT has grown significantly over the last decade. The utility industry has not. It’s clear why this is. Utilities are risk-adverse and should be. They need to manage a very important infrastructure and service and cannot jump on as changes occur.
The problem is startups are disrupting the industry. They are stepping up as costs drop and providing consumers with new options. This leaves utilities in a very difficult situation. They need to improve their services, better manage their costs, and offer renewables, or they will be disrupted by those that can.
IoT provides an effective solution to this problem. According to Business Insider adopting just one type of IoT innovation – smart meters – promises particular cost savings and benefits: “The cost of installing smart meters will be over $100 billion, but the financial benefits will reach nearly $160 billion.”
Perhaps one of the most important concepts utilities can take away is that IoT adoption can lead to not just growth, but survival in a changing world. Organizations that adapt will provide a better level of service to the consumer and a more stable, cost-effective, and reliable energy source; organizations that don’t adapt will be left by the wayside.
Listen to the podcast “IoT for Utilities: Get Smart, Run Smart!” for information about how utilities can implement IoT in an effective manner. With implementation comes opportunity, as well as long-term growth potential in an industry that’s already being disrupted by solar and wind.
Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Utilities.