Nonlinear Thinking

Microgrids

Innovation in the generation, transmission and, most importantly, storage of electricity continues apace.  Going well beyond interest by sustainability-oriented consumers, microgrids are emerging as an efficient and effective distributed generation option.  This recent Time Magazine article outlines the potential this technology may hold.

Microgrids have become increasingly popular across the U.S. in recent years, embraced by everyone from community developers to military officials. They have been installed as part of a 40-solar-panel infrastructure project atop a peak in North Carolina's Great Smoky Mountains; used as a way to deliver power to the 2,800 residents of Borrego Springs, Calif.; and implemented at the U.S. Army's Fort Carson in Colorado.

The reason is as simple as the bottom line: the technology offers a way for communities to collect, store and use their own energy, rather than pay for it to be shipped from miles away. In the U.S., microgrids often include batteries, a localized renewable energy source like solar panels, and sophisticated software to determine when to buy energy from utility companies and when to sell any excess power back.

The rise of microgrids comes as part of a broader shift in the ways Americans think about electricity storage and delivery. The grid, long associated with large infrastructure such as transmission lines, power plants and substations, also functions at the community and neighborhood levels. Indeed, microgrid capacity is expected to double by 2020, totaling 4.3 gigawatts in microgrid potential, according to GTM Research, an industry analyst.

 While this is sure to be of global interest, particularly in less developed countries where reliable power is always suspect, the U.S. appears to be on the forefront as an estimated $3.5 billion will be invested in micrograms between 2015 and 2020 with 54% of global microgrid capacity already located in the U.S.

 

Smart Grid: The 5 Minute Overview

 

 

 

Surprising Stats Regarding the Internet of Things

CMO.com publishes a weekly column, "Mind Blowing Stats"  that collects disparate and sometimes arcane data points about a specific topic.  A recent edition of the column highlighted the great traction and movement forward that IoT is achieving though most people, and companies, don't recognize how fast the technology is being embraced.  From the column:

1. In 2008, there were already more "things" connected to the Internet than people. By 2020, the amount of Internet-connected things will reach 50 billion, with $19 trillion in profits and cost savings coming from IoT over the next decade.

2. Connected homes will be a huge part of the Internet of Things. By 2019, companies will ship 1.9 billion connected home devices, bringing in about $490 billion in revenue. Google and Samsung are already ahead of the pack. Google bought smart thermostat maker Nest Labs last year for $3.2 billion, and Samsung purchased connected home company SmartThings for $200 million.

3. Right now, most IoT smart devices aren't in your home or phone; they are in factories, businesses and health care. By 2025, the total global worth of IoT technology could be as much as $6.2 trillion--most of that value coming from devices in health care ($2.5 trillion) and manufacturing ($2.3 trillion).

4. Only 0.06% of things that could be connected to the Internet currently are, which means 10 billion things out of the 1.5 trillion that exist globally are currently connected.

5. By 2020, it’s estimated that 90% of cars will be connected to the Internet as compared to 10% in 2012.

6. The connected kitchen will contribute at least 15% savings in the food and beverage industry by 2020.

7. By equipping street lights with sensors and connecting them to the network, cities can dim lights to save energy, only bringing them to full capacity when the sensors detect motion. This can reduce energy costs by 70% to 80%.

8. GE estimates that convergence of machines, data, and analytics will become a $200 billion global industry over the next three years.

9. More than two-thirds of consumers plan to buy connected technology for their homes by 2019, and nearly half say the same for wearable technology. Smart thermostats are expected to have 43% adoption in the next five years.

10. In 2008, Proteus Digital Health created a pill with a tiny sensor inside of it. The sensor transmits data about when a patient takes his medication and pairs with a wearable device to inform family members if it's not taken at the right time.

11. A whopping 94% of all businesses have seen a return on their IoT investments.

12. Wearables will becomes a $6 billion market by 2016, with 171 million devices sold, up from $2 billion in 2011 and just 14 million devices sold.

13. Currently, 7% of consumers own a wearable IoT device, and 4% of consumers own an in-home IoT device. Nearly two-thirds of consumers plan to buy an in-home device in the next five years, and wearable technology ownership will double by 2015—increasing from 7% in 2014 to 14% by 2015. By 2016, wearable technology is expected to double again and reach a total of 28% adoption rate.

14. Among wearable technology devices, wearable fitness applications and technology stand to see the most growth in the short term, with 13% of consumers planning to purchase within the next year and a total of 33% looking to adopt in the next five years. Smartwatches are the second most popular wearable device, with 5% planning to purchase in the next year and a total of 23% planning to adopt in the next five years.

15. Although the mass adoption of connected technology is likely in the long term, the majority of consumers (87%) haven’t heard of the term “The Internet of Things.”

 

The True Internet of Things

A recent article in the Deloitte Review by Tom Davenport and John Lucker provided some much needed context around the quickly expanding conversations on the Internet of Things (IoT).  Having written about the IoT often over the past 15 years, I have witnessed the term be applied too often to the mechanics of machine-to-machine (M2M) communications with less thought given to the broader impact of all those devices connecting and sharing information and data.  While we are still trying to get our hands around Big Data and ensure that we realize all the value we can derive from that aggregation and analysis, IoT will almost certainly create more data, often in much greater detail, than what many have imagined big data will comprise.  For Davenport and Lucker, the real imperative in IoT is to focus on the integration, analysis, value-add, and action processes around IoT data.  To that end, they define IoT as much more than M2M .

The “Internet of Things” (IoT) is often described as a collection of connected sensors, but it is actually a much more complex concept. It involves not only the connection and integration of devices that monitor the physical world—temperature, pressure, altitude, motion, proximity to something else, biometrics, sound, images, and so forth—but also the aggregation, relationship, and analysis of the information those devices create in order to take action on the situation, and the business and technology changes required to use the data and analyses.

Davenport and Lucker propose a hierarchy of sophistication when leveraging all the data and information created by an IoT ecosystem.

Local Sensing

At this local level of the IoT, the activity tracker is typically connected to one or a few other devices for simple actions and data gathering.

Data Integration

Integration of the data is necessary for analytics and control to take place.  At the moment, this is the most challenging area of the IoT.

The Analytics of Things

Much of the benefit of the Internet of Things lies in our ability to leverage the (useful) data we collect with it.

Cognitive Action

This is the business problem that the IoT is solving for your company or its customers.

The Landscape for the Internet of Things

The growth in Internet of things will far exceed that of other connected devices. By 2020, the emergence of mass-market smart phones, phablets, and tablets, combined with a mature PC market, will result in an installed base of about 7.3 billion units, used by an expected human population of 7.7 billion.  In contrast, the Internet of things will expand at a much faster rate, resulting in an installed base of about 26 billion units at that time. Installed base is the key metric here because it drives the value of service revenue, and it aggregates communications bandwidth and data center activity.

Source: Gartner Inc.

Building the Smart Grid

We always endeavor to uncover and share great treatments of topics aligned with the themes of Nonlinear Thinking and this recent article at Bloomberg.com on the advances being made by investor-owned and public utilities across the U.S. in building the smart grid is one to share.  It provides both some great background on why the smart grid is so badly needed and how it is being built and is excerpted below.

The U.S. utility system sits astride one of the world’s great marvels, the grid. And as with so much of U.S. infrastructure, it’s crumbling because of too little investment and lack of imagination. A $876 billion asset, the grid is an amalgam of almost 7,000 power plants that discharge electricity over 450,000 miles of high-voltage transmission lines and more than 2.5 million miles of feeder lines. All this is managed by 3,300 utilities serving 150 million customers. It’s been called the biggest machine in the world.

It’s also something of a relic. Much of it was built after World War II and little updated since the 1970s. A position paper by the Chicago-based Galvin Electricity Initiative describes the grid as “aging, unreliable, inefficient, insecure and incompatible with the needs of a digital economy” and “in dire need of modernization.”

The basic idea is to refashion the grid to manage electricity distribution in the same way that the Internet manages data. While talk of a smart grid has been around for decades, the concept is gaining momentum -- even urgency -- as evidence piles up showing the aging grid’s shortcomings.

Power outages are up 285 percent since 1984 and the U.S. ranks last among the top nine western industrialized nations in the average time that it takes to get the light back on after power failures. Outages cost businesses as much as $150 billion a year in lost continuity, according to the U.S. Energy Information Administration.

Half of U.S. homes still have mechanical meters that require workers to show up and read them. Utilities deploying such meters have little knowledge of their customers’ energy use or interests beyond a monthly bill; they are simply load.

Beyond improving reliability, the basic idea is this: When all energy-use data is digitized and flows freely between power generators and customers, the smart grid will know exactly how much power is needed, when and where, eliminating much of the waste, overbuilding and guesswork inherent in the current analog system and enabling enormous strides in energy conservation.

Many also see the smart grid as fundamental to the utility system being able to absorb and manage disruptive changes that are remaking the U.S. power paradigm. A surge in rooftop solar has turned tens of thousands of consumers into generators. Power is now flowing two ways in America and regulators and green groups are pushing utilities to integrate more and more of this power -- yet keep the grid stable.  Sensors on the old, dumb grid checked for trouble every six seconds. The new phasor units look 60 times a second. With energy flowing at almost the speed of light, this is a significant improvement.

Such successes give the smart grid momentum, though hurdles remain. A smart grid linked to smart homes and smart businesses raises cyber security and privacy issues. There are remaining technological challenges. An American Enterprise Institute report, while nodding to the virtues of an Internet-like grid, said controlling megawatt hours across a smart grid is far more complex than controlling megabytes on the Internet, analogous to “going from controlling a toy drone to a Boeing 777.”

 

Smart Grid Spending Explodes

A new report by ABI Research on utilities and smart grids spotlights the rapidly increasing capital investment in the component technologies that form the backbone of smart grid infrastructure. We have discussed aspects of the smart grid in the past here and here but the pace of investment is becoming parabolic as the benefit and value of the technology is becoming more profound.

A smart grid is an electrical grid that uses information and communications technology to gather and act on information, such as information about the behaviors of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.

According to the ABI Report,

Spending by utilities transitioning their networks to Smart Grid capabilities reached $23.68 billion in 2012. Highlighting the growing momentum behind the spending, 2012’s total alone represents 48% of Smart Grid spending to date. During the year, spending on transmission and distribution capabilities surpassed smart meter investments as utilities increasingly looked to improve their core networks and maximize the benefits of their growing Advanced Metering Infrastructure (AMI) deployments.

Smart grid spending in 2012 was up 47.1% from $16.10 billion in 2011 as remaining government stimulus funds were spent in the United States and utilities around the world increased their own investments. Even so, these remain the early years of Smart Grid investments and spending will continue to grow over the next five years to reach $80.8 billion during 2018.

Key areas for strategic investment in the smart grid build out remain the same as they have been for the past decade, including:

• AMI
• Demand Response
• Grid Optimization
• Distribution Automation
• Software and Application provision
• System Integration
• Connectivity

You can read more of ABI’s research on smart grid here.

Addendum: Social Business Gains Traction

As an addendum to an earlier post on social business, this chart from the second annual MIT and Deloitte Social Business Global Executive Study and Research Project survey on how businesses use social media suggests that the concept of social business is being adopted aggressively across all industries.  How well and how strategically it is being adopted is still an open question.

 In all 12 of the major industry sectors covered by the survey, the percentage of respondents who said social software or social business was “important to their organization today” increased from the previous year’s survey. No industry sector declined and none remained flat.

Interestingly, the industry sector with the strongest year over year increase in the survey was energy and utilities, moving from 7% of respondents ranking social business as “important” in 2011 to 29.1% in 2012.  That exponential increase may be linked with the increasing adoption of smart grid technologies that allow utilities to more easily interact with their customers.  A 2012 research report by Navigant Research predicted that by the end of 2017, the number of utility customers using social media to engage with the utility companies would rise from 57 million in 2011 to 624 million.

Unsurprisingly, for the second year in a row, the technology/media/telecommunications sector respondents were most likely to rate social business as important to their organization with 87% saying that social business was important or somewhat important to their organizations in 2012.  A bit more surprising was that the education (82%) and professional services sectors (76%) followed closely behind.

Another finding from the survey was that while companies in most industries are generating social data from their initiatives, few businesses were analyzing the data or integrating it into their organization’s systems and processes.

The new study from MIT and Deloitte will be released in July.

Demand Response and Learning Thermostats

In the electricity distribution world, demand response (DR) represents a dynamic demand mechanism for managing customer consumption of electricity during traditional heavy load or other critical times via incentives based on price. Solution, software and hardware providers have been attacking this space for over a decade in North America.  That includes incumbent providers (meter companies), electric utilities themselves, and a newer generation of startups building on increasingly sophisticated connectivity platforms (cloud, Wi-Fi).  One of those startups is a company in Palo Alto that has been generating some significant “buzz”.

Nest Labs designs and manufactures a sensor-driven, Wi-Fi-enabled, learning, programmable thermostat that is now in its second generation.  Nest is led by Tony Fadell, a former Apple executive with a stellar pedigree, having helped bring the iPod and iPhone into the world. He and co-founder Matt Rogers recruited an A-list team from Apple, Google, Microsoft, and Logitech, to drop but a few names.

With some solid market success selling the thermostat under their belt, Nest announced this week an expansion of their solution to incorporate DR as part of the overall value proposition, using the Nest thermostat as a platform for managing energy during peak times.

 

Whether the DR solution from Nest (called Rush Hour Rewards, BTW) is materially different than some of the other offerings already in existence is not yet clear.  However, the announcement included the creation of  new residential demand-response programs with Austin Energy, Green Mountain Energy and Southern California Edison, along with an existing one with Reliant Energy.  Combine that with the founders Apple heritage and the current Nest buzz could begin to make DR more top-of-mind with consumers.