I am not sure who first coined the term “Internet of Things” (or, since everything technical must be an acronym, IoT), but I first heard it in the early 2000s.  I thought at the time it had already outlived its usefulness.  I thought the more mundane term “machine-to-machine communications” (or M2M, an even cuter acronym) was far better, and it appeared the market agreed with me, at least for a while.

However, the IoT is back with a vengeance, and this time the term is loaded with additional meaning that may be elusive.  Early uses of the term conveyed the power of allowing “things” – ranging from vending machines to home appliances to building controls and sensors – to communicate with each other.  The current use of the term implies much more: it’s not just that things should communicate, but it’s about how they communicate.  Things should communicate like the Internet, with the capability of ubiquitous any-to-any communications.  More specifically, they should accomplish this ultimate connectivity via the Internet Protocol (IP) or some relevant flavor of IP.

This more specific IoT understanding is attractive.  The idea of open, layered protocols that mix and match physical media on the bottom of the protocol stack and virtually unlimited applications above them has been fundamental to Internet innovation.  So all things being equal, all M2M communications should be based on IP.   But all “things” are not equal and going all-IP is not necessarily free.  Hence strict adherence to a narrow definition of IoT as being IP-based may hinder innovation more than it helps or at least imply over-hyped benefits that are rarely evident in the world of things.

Everything’s a Peer

One universe of things where this risk appears evident is in building automation and control systems.  A true IoT implies that every sensor, actuator, thermostat, lighting ballast, and switch should be a peer IP-based communication node.  However, these are rarely independent, intelligent nodes on a network, and rather elements of a specific subsystem (lighting control, HVAC control, humidity control, etc.).  It’s highly unlikely that an occupancy sensor will ever need a software download to become something other than an occupancy sensor.  So, top-of-stack application flexibility is not really a relevant benefit for these devices.  The added cost in microcontroller memory and processing of supporting even a stripped-down IP stack in such a device may be higher than any benefit.

On the other hand, the situation of isolated, proprietary, non-connected subsystems that has been the norm in the building controls industry for about 100 years is unacceptable in the long run.  There has been real, if gradual, progress in developing and applying reasonably open and interoperable building control networks using non-IP based specifications such as BACnet, though there are probably still too many such “standards” to choose from.  Using IP networking and the application architectures implied by IP as the basis for subsystem integration and common network transport is not only a good idea but necessary for the continuing building systems evolution.  Applying the IoT model to building controls, though, does not mean everything must have an IP address.  This is similar to the difference between your laptop having IP networking and having the devices within your laptop – disk drives, video controller, keyboard, and so on  – be IP-based.

So as we consider the IoT applied to our own universe of things, let’s be clear on how much Internet-ness we really need to pay for.

In mid-October, San Diego Gas and Electric (SDG&E) regulatory filings indicated that the company has changed plans to deploy a foundational private WiMAX network as part of its ongoing smart grid deployment, opting instead for a mix of various public and private network systems.  This move is noteworthy because SDG&E is a leader in adopting a comprehensive, integrated, smart grid communications strategy.  Its abandonment of WiMAX raises questions about the future of private 4G network technology for smart grid.  Pike Research has been bullish on the future of standards-based private wireless for smart grids, so naturally we’re asking ourselves the same questions.

Utilities have a longstanding preference for private wireless over public cellular (though this is often overstated as vocal proponents of private wireless usually also have pervasive public cellular deployments, especially for advanced metering infrastructure (AMI) backhaul).   However, for critical applications (such as distribution and substation automation), private networks are still considered more reliable and resilient in the face of disruptions, and in some areas, the regulatory preference for returns on deployed assets tilts the field toward private networks.  Private 4G technologies such as WiMAX offer a standards-based private solution with strong performance and are expected to displace the plethora of proprietary solutions available.  SDG&E, CenterPoint Energy, and Oklahoma Gas and Electric (OG&E), as well as many smaller utilities in Canada, were and are heading in this direction.

Smart Grid Communications Node Shipments (Excluding Smart Meters), As % of Total, North America: 2012-2020

(Source: Pike Research)

However, as SDG&E discovered, reserving guaranteed spectrum for such private networks is challenging.  SDG&E had earlier been a showcase customer of Arcadian Networks, which built a product offering around dedicated spectrum that covers most of the United States.  However, Arcadian failed to attract enough customers to convince its investors that such networks were the best use of their spectrum, and ultimately failed.  This is less of an issue in Canada, where WiMAX-suitable spectrum has been reserved for utility use, leading to greater usage.

Against some of these challenges, public cellular companies have more aggressively supported some of the bandwidth and service guarantees required by utilities, enabled by new capabilities delivered by their own 4G networks.  Public telecom carriers have been riding a wave of greater acceptance by utilities for AMI applications (both to the meter and for backhaul), but not all of these are considered mission-critical, at least from the perspective of immediate availability during an outage crisis.

Where will this lead? At Pike Research, we still see a strong trend toward adoption of open standards for public and private, wired and wireless network technologies, and the benefits of integrating these in a unified communications architecture rather than in separate application silos is too great to ignore.  The ongoing post-mortems of recent major storms, such as Hurricane Sandy, should help guide in the private versu public network resiliency debate, if utilities are willing to share their experiences.  We still see a strong future for private 4G wireless technologies but also strong growth of public 4G networks (40% CAGR, 2011-2020, for unit shipments into distribution automation and AMI backhaul applications in North America).   We’ve never said that there will be “one network to rule them all,” much to the chagrin of some network equipment vendors.  Diversity will remain the key defining attribute of grid communications networks long into the future.

As a Boston metro area resident, I have the impression that major grid disruptions from catastrophic storms are becoming annual events.  Last year, after outrunning Hurricane Irene, I considered the relative promise of smart grid technologies in the face of natural disasters.  Now, in the wake of Superstorm Sandy, this issue is coming up again.

The fact is that no system intelligence can overcome the massive destruction of a major storm like Sandy.  Transmitting electricity still requires wires (despite advances in wireless power – see our report, Wireless Power), and overhead wires succumb to high winds, while underground wires and equipment are susceptible to flooding.  New York City’s Consolidated Edison, operator of one of the most robust distribution grids in the world, is wrestling with these forces as I write.  Physical reconstruction, by people working long hours, is still needed.

However, distribution automation technology did appear to help me.  At the height of the storm, which was admittedly much less fierce here north of Boston than along the mid-Atlantic coast, the power flickered in such a way that I could almost sense the reclosers and sectionalizers actively executing their fault location, isolation, and service recovery (FLISR) algorithms, isolating the failed segment.  Unfortunately, I reside on that segment, but crews were somehow able to restore power in under 4 hours, even as the storm continued to rage.  Kudos!

As I noted last year, the biggest complaint in the wake of Hurricane Irene was the lack of good and accurate consumer restoration information.  Local regulators here in Massachusetts provided harsh post-Irene assessments in this regard, and the utilities appear to have taken note.  In the build-up to Sandy, I received proactive notifications from my utility detailing what to expect, where to go for information, with even an offer for a smart phone app that could monitor restoration progress.  (This was much more helpful than the inane recommendation of my broadband provider, who asked that I report broadband outages via their website.)  Now, less than 24 hours after the fiercest winds subsided, it’s still too early to see if the local utilities can live up to their promise, but initial responses are encouraging.  If advanced outage and workforce management applications enabled by field-based smart grid technology can help set accurate consumer restoration expectations, then we will have made a major advance.

On the downside, the on/off power fluctuations appear to have damaged my Internet router, and worse, my water well pump seems to have also given up the ghost.  So while I have power, I have no water.  I can’t be sure these were damaged by power spikes, but it seems likely.

As the storm raged I also found myself wondering about all the work that affected utilities have recently put into updating their GIS databases, reconciling cumulative 100-year records of the distribution network with the actual installations in the field, in anticipation of leveraging the models for voltage optimization or other upgrades.  Will work crews coming in from as far as Texas have the same record-keeping prowess and knowledge as the local crews? There’s nothing like a major storm to scramble utility “as-built” records!

Warren Causey, who has earned his right to provocative punditry, postulated recently on Smart Grid News that perhaps demand response and dynamic pricing are wrongheaded ideas.  He’s not the first to make this argument; this question is at the heart of the industry’s hand-wringing over “consumer engagement” for the last several years.  In fact, you could say that the wisdom of driving consumer behavior change is perhaps the only rational consumer argument worth having.

A while back, I argued that opponents on both end of the political spectrum should have reasons to embrace dynamic pricing: Tea-Partiers should support free market-based energy pricing, and Occupy-movement types would surely embrace forcing wasteful power users to “pay their fair share.”  So I believe linking consumers with the real cost of electricity is good idea that, if done well, will benefit many across the value chain.

However, what if the fundamental premise is wrong? The concept of demand response is based on the assumption that electricity, which inconveniently requires generation and consumption to be time-synchronized, is a scarce and expensive resource.  Hence it needs careful optimization.  Will this always be true?

Earlier in my career, my job was defining product requirements for networking equipment and associated silicon.  I argued the finer points of media access protocols, quality-of-service mechanisms, and advanced queuing algorithms, all in the name of “bandwidth optimization,” because, as everyone knew, bandwidth was a scarce and highly valued resource.  That was less than 15 years ago.  Then came cheap, plentiful, high-capacity fiber, dense wave division multiplexing, and advanced digital signal processing for twisted-pair copper wires, and suddenly bandwidth wasn’t so scarce anymore.  And simple (and wasteful) Ethernet, alongside simple (and wasteful) IP, trounced the ATM, FDDI, Token-Ring, and myriad other “bandwidth efficient” protocols of the age.  Eventually this simple but wasteful technology became responsible for dismantling and rearranging the entire telephone industry.  Fortunately, I had the opportunity to ride the fun side of that wave, but many experienced the more destructive side.

One of the commenters on Causey’s SGN article mentions the “Enernet” pitch developed by Bob Metcalfe (Ethernet inventor, venture capitalist, and industry pundit), who claims that the same market dynamics behind the telecom revolution can apply to energy, if we get the incentives right.  Having witnessed Bob’s talk evolve during a stint at one of his companies, I agree with his major points, though the parallels he draws can be overdone.

So what technologies could end the scarcity of electric power?  Today’s fracking-enabled, cheap, and seemingly abundant natural gas is already upsetting the energy management apple cart, at least in North America.  Advances in energy storage and net-zero energy buildings and homes (whether via green construction, local renewable generation, small fuel cells, or a combination) are other potentially disruptive examples.  Even straightforward energy efficiency initiatives may have the side effect of reducing the percentage of load available for demand response.

Does this mean that we should ignore the near-term benefits of dynamic pricing, demand response, and other supplier-grid-consumer connections? I think not.  But Causey is right that our industry must be open to challenging fundamental assumptions, and be on the watch for inevitable waves of creative destruction.