IoT Revenue Opportunities for the Utility Industry
The rules that govern the way we conduct business change quickly. New companies are taking over incumbents or creating disruptive changes, like Airbnb in the hotel industry, Uber in the transportation industry and Tesla in the automotive industry. Technology growth creates new opportunities for new entrants in every industry and a lower barrier to entry for competition. Cisco CEO John Chambers predicted that, “40 percent of businesses… will not exist in a meaningful way in 10 years.”
Technology progress is everywhere, from faster computers and larger storage to quicker networks and smaller devices. Advances in technology increase exponentially. As Moore’s law states, processors double in computing power every 18 months. A similar trend is happening in every aspect of technology, with storage, networking, machine intelligence and more. Changes in business models are following, with staff on demand, crowdsourcing and algorithms instead of human decisions.
No company is immune to this change. Every company needs to react and change the way they do business if they want to survive these changes. The utility sector is no different. It is facing a significant transformation with disruptive technologies, an aging workforce, emerging market trends and shifting consumer expectations. According to the 2016 Itron Resourcefulness Index, 74 percent of utility executives view the changing business model as an urgent or growing concern.
The Move to IoT
Historically, utilities have deployed closed, proprietary networks to serve a specific need of the utility, such as enabling the meter-to-cash process. These networks feature two-way communications down to the meter and enable utilities to measure, collect and analyze energy and water usage, but do not have the flexibility or intelligence to support third party devices, edge computing or future applications.
That’s all changing. With new technologies, the utility industry is maturing to become more advanced, expansive and interoperable. Today, a typical system enables utilities to monitor electricity consumption using interoperable and standardized products, including meters, sensors and other edge devices. Intelligent devices communicate and collaborate directly with each other and make decisions in real time. Utilities can access information that allows them to interpret consumption patterns, quickly identify problems and solutions, and more efficiently allocate resources from the beginning. Electric meters can also connect to consumer electronic devices using in-home wireless interoperable standards, giving consumers visibility into their electricity usage.
These new networks are IoT networks and are standards-based, supporting multi-application and multi-tenant capabilities. Utility networks are more like the Internet than like a SCADA system; they can support different applications and different types of traffic at the same time.
An IoT network can create great value by itself, improving operational efficiencies by connecting all sorts of sensors to the network, extracting insights from the data and from the correlation of different sources of data. These networks present a unique opportunity for the utility industry to create new sources of revenue and innovative business models by opening up network access to different service providers, such as neighboring utilities or municipal governments.
The emergence of smart cities creates a real opportunity. More than 50 percent of the world’s population lives in cities today, and that percentage continues to grow. Cities are striving for greater efficiencies, livability and sustainability. The IoT network can help make this possible.