Utilities will account for two-thirds of the 30 billion smart, wirelessly connected devices in homes and industry worldwide by 2020, according to recent research. Already smartphones, tablets and laptops are being connected with smart meters and other microchip-bearing pieces of energy-related apparatus.
For energy suppliers, connection provides a potential mine of marketing and operational opportunities. For consumers, escalating energy bills have made it more worthwhile to limit energy consumption. But tweaking the central heating temperature is not going to be a priority for most people even if it is from a smartphone.
A more significant development in ways to rein in energy use is technology that takes the chore out of keeping consumption under control. The opening in the market is clear: British Gas estimates that 7.8 million empty homes are being heated every year.
The emergence in the UK of remote and automatic central heating control from smart mobile devices is the first sighting of the type of set-and-forget technology that promises to abound in the next decade. Computer-controlled thermostats enable people to manage their energy with the level of convenience that has fuelled the explosion in e-commerce. For energy firms, empowering consumers through smart technology could be pivotal in attracting and keeping customers.
Three players in computerised thermostat technology have established themselves in the UK: British Gas-owned Hive; Google subsidiary Nest Labs; and German firm Tado. Each one uses mobile device apps to simplify the process of adjusting the central heating from anywhere. Functions include the capacity to set up schedules that respond automatically to the weather; taking signals from a mobile GIS app to fire up the heating when a resident is heading home; and learning from householders’ manual tweaks to their heating to replicate them automatically.
Energy suppliers’ involvement in smart, connected technology also carries risk. Should the security of the system be breached or the installation fail to fulfil claims for its performance, then energy companies will not get much sympathy. So the pace of growth of smart technologies in energy will depend on how close they can come to combining flawless performance with effortless usability and impregnable security. Naturally the companies are keen to have assurance. The degree to which they have confidence in the technology and its usability will be a crucial influence on the rate of expansion in their deployment of connected devices in energy (see box).
Meanwhile, falling costs of interconnecting devices could accelerate development. “By 2020, component costs will have come down to the point where connectivity will become a standard feature, even for processors costing less than a dollar. This opens up the possibility of connecting just about anything, from the very simple to the very complex, to offer remote control, monitoring and sensing,” says Peter Middleton, director at research firm Gartner.
According to the US-based Utility Analytics Institute, expansion of the “internet of things” means energy companies can anticipate “unprecedented opportunities” to up their productivity, improve real-time decision-making, and design innovative services.
Hive’s director of technology, Kass Hussain, counsels against pushing consumers too hard too soon. “Now you trust us, now you’ve used the app for a little while, now you know what the bounds of it are, now we may start offering you automation,” he says.
A powerful spur for machine-to-machine growth in the energy sector will come from smart metering. Its information and communication infrastructure under the stewardship of the Data and Communications Company (DCC) will create new openings. But it brings trepidation too. Npower’s smart programme director, Neil Pennington, summarised this recently at an industry seminar: “Testing must be robust: end-to-end across industry parties and the DCC and in live situations. If interoperability is not consistent and systems and processes are not fail-safe, it risks undermining consumer confidence.”
Even before smart metering is in play, the installation programme carries significant risk. The need to enter homes increases reputational risks from poor delivery. According to consultancy EY: “With so little upside the energy supplier is looking carefully at the costs and risks.”
Research firm Analysis Mason has forecast utilities to account for 67 per cent of overall machine-to-machine device connections worldwide by 2023. Meanwhile, AT&T and IBM have this year formed an alliance to develop systems with a focus on utilities.
Adrian Tuck, vice chairman of an association of companies seeking to establish an open wireless communications standard – the ZigBee Alliance – counsels the energy sector to prepare for technology-driven disruption. “I believe we are about to go through a revolution in the energy space every bit as big as the telecoms revolution,” he says.
Energy sector business strategists will differ in their interpretation of what is needed for success in a digital utility market. But crucial requirements will include assured resilience and reliability, and the customer experience. The internet of things offers energy firms a real opportunity to connect better with its customers.
Angus Panton, director of utilities, SQS Group
Testing regime
A major UK energy company with an investment in machine-to-machine energy control viewed the technology as having a near ambassadorial position for the company, according to Jonathan Lloyd, a manager with testing house SQS. “The energy firm felt that the customers’ experience of the app or the website would drive how it was perceived by the public,” he says.
The dominant issue was the user interface: “Usability was a massive part of the testing. The company was incredibly precise about what it wanted. So even when the slider tracked a little unevenly that was considered to be a defect.”