Navigant Research Blog

IoT and Millennials

— March 24, 2017

The much studied Millennial generation has some issues with Internet of Things (IoT) devices. A new survey says this cohort of young American adults—ages 18 to 29—is the least likely to own an IoT product. This trend presents a challenge for utilities attempting to promote programs like demand response that can link to IoT products such as smart thermostats, air conditioners, or appliances.

According to the study conducted by the Association of Energy Services Professionals and strategic marketing firm Essense Partners, 85% of Millennial respondents do not own IoT devices. The percentage of non-IoT device owners in the other age groups is as follows: 79% for ages 30-44; 81% for ages 45-59; and 84% for the 60 and older group. The study was conducted among 2,700 consumers.

Among respondents who do own IoT devices, the Millennials also represent the least likely cohort to take part in utility programs. They participate at half the rate of those in the 30-44 and 45-59 age groups, and almost a third of the rate compared to the 60 and older set.

Of course, the main reason for lower ownership of IoT devices among Millennials is they are less likely to be homeowners. Therefore, they are not as likely in the market to buy IoT devices that can help manage energy usage.

But there is another reason lurking around the edges: they are worried the most about the devices being hacked. In a survey conducted by KPMG, 74% of Millennials say they would use more IoT devices if they had more confidence that the devices were secure. Among the other age groups, 63% of Generation Xers hold the same view about device security and nearly half of Baby Boomers (47%) say the same.

Part of the Solution: Device Security Standards

One way to boost confidence among consumers and drive adoption of IoT devices is for industry stakeholders to agree on security standards. An effort that has surfaced recently is being spearheaded by Consumer Reports (CR), which is promoting a digital consumer protection standard, along with its cyber expert partners (digital privacy tools provider Disconnect; privacy policy researcher Ranking Digital Rights; and Cyber Independent Testing Lab). The CR privacy standard has four key features: products should be built to be secure; products should preserve consumer privacy; products should protect the idea of ownership; and companies should act ethically. The full standard is in its first draft, and CR expects stakeholders to help shape and improve it going forward.

The need is evident for IoT device security standards such as CR’s and others like NIST’s Cybersecurity for IoT program and UL’s Cybersecurity Assurance Program. Navigant Research applauds these efforts to create standards, as noted in its report, Emerging IoT Business Models. Utilities would be wise to get behind these efforts as well to ensure that their customers, including skeptical Millennials, gain the confidence to adopt devices like smart thermostats and feel more willing to take part in demand-side management programs.

 

Tech Companies Signal Important IoT Infrastructure Moves

— February 24, 2017

Several influential high technology companies have recently announced new strategies and partnerships as they build out the foundations for the expanding Internet of Things (IoT). These moves are likely to have important implications for the energy sector as utilities and their customers adapt to and adopt emerging IoT technologies.

The recent announcements cover a range of IoT areas, including smart grid, security issues, industrial use cases, and payment management. Oracle and Huawei extended their cooperative smart grid efforts by signing a memorandum of understanding dubbed a power IoT ecosystem partnership. The new deal calls for both parties to promote and sell an end-to-end advanced metering infrastructure solution aimed at helping utilities improve customer experience, increase operational efficiency, save energy, and reduce emissions. For its part, Huawei will provide tools for managing smart meters, communications networks, and headend systems; Oracle will leverage its meter data management software, smart grid gateway, and related solutions for utilities.

Cybersecurity and the Industrial IoT

AT&T, IBM, and Nokia have formed a new alliance to beef up IoT security. The new group, IoT Cybersecurity Alliance, will not set standards, but will instead focus efforts on conducting research, educating consumers and businesses, and influencing standards bodies or policymakers. Symantec, Palo Alto Networks, and mobile security company Trustonic are also founding members of the alliance.

Meanwhile, Nokia, Qualcomm, and GE Digital announced the successful demonstration of a private LTE network aimed at the industrial IoT market, specifically targeting companies operating in remote locations or sites where connectivity can be difficult. This would be a good fit for some utilities or companies engaged in energy exploration. Live field trials of the private network are expected to continue throughout this year.

Nokia separately introduced its worldwide IoT network grid (WING) in a bid to boost the IoT market. The IoT grid as a service offering is aimed at enterprises seeking a one-stop-shop for IoT needs across multiple geographies.

Visa and IBM have established a new partnership that will utilize IBM’s Watson IoT platform for extending digital payments to wearables, connected cars, and other devices. The idea is to enable commerce from any connected thing. From a connected car perspective, this could be useful for EV owners who need to charge their vehicles and pay for the electricity in a more seamless way and from a variety of suppliers.

Signs of a Wider Trend

On their own, these moves might not amount to much. However, when seen as part of a larger IoT trend, they represent another milestone along the road toward a much more connected and automated world. For utilities and other stakeholders in the energy industry, it pays to stay abreast of these IoT moves, as many are likely to have an impact on both sides of the meter.

 

Transformative Winds Moving Electric Utility Industry in New Directions

— February 13, 2017

AnalyticsThere is a new wind of transformation blowing through the North American electric utility industry, and this change was palpable during the recent DistribuTECH conference in San Diego.

Evidence of a transformation came during numerous conversations I had with technology vendors and utility representatives at the conference. There has been similar talk of change at past D-Tech events, but this year the words have action and momentum behind them. Granted, the transformation taking place now remains at a relatively early stage in certain domains—microgrids and energy storage, for instance. Furthermore, some of the shifts currently taking place might still be struggling to gain traction 10 years from now. But as whole, changes in the industry are tangible and are moving beyond theoretical talk and pilots.

Among the innovations on display at D-Tech:

  • Microgrids: Schneider Electric and Duke Energy jointly announced the deployment of two advanced microgrids in Montgomery County, Maryland. The two systems will provide service to the county’s public safety headquarters and its jail. The goal is to ensure these facilities have more reliable and efficient power and to improve resiliency in the event of major storms or natural disasters. Perhaps the most unique aspect of this project is its microgrid as a service (MaaS) financing model. This arrangement eliminates many of the upfront costs to the county, making the microgrids more affordable to the municipal entity.
  • Customer-centric grid: Utilities are starting to more fully embrace the concept of customer-centricity. Oracle unveiled its new Network Management System version 2.3, which enables a utility to aggregate data from distributed energy resources (DER) like solar PV, EVs, customer-sited storage systems, and connected home devices. Oracle is not alone in providing tools for a deeper view of these customer energy resources, but the announcement does point to the demand the software vendor is seeing from utilities that recognize the shift taking place and the need to comprehensively manage the two-way data flow from grid-tied customer assets.
  • Demand-side solutions: Companies like Powerley and Tesla used the conference to demonstrate their solutions for enabling utility customers to better control their use of energy. Tesla, for instance, did not showcase its famous EVs, but rather its new Powerwall 2 residential battery system. The Powerwall 2 has 14 kWh of capacity, a significant increase from previous versions, and can enable a four-bedroom home to power lights, plugs, and a refrigerator for a whole day. Powerley’s solution helps utilities integrate the smart grid with smart home technologies, thus enabling residential customers to be more efficient energy users and save money.

Part of the transformation on display at D-Tech is being driven by regulators, which see the new technologies as helpful to a more efficient use of energy. But many of the new technologies on their own are driving the change, having been tested and proven to help solve utility business issues and demonstrate a positive ROI, either in real dollars or in softer benefits (such as increased customer satisfaction scores and greater engagement).

We at Navigant have seen this transformation coming for several years, as noted in our Energy Cloud report. Now those forces of change are closer to reality and catching some new air. The coming years should continue to move the industry forward, though some turbulence is to be expected.

 

Alexa Steals the Show at CES 2017

— January 16, 2017

CodeVoice activation took center stage at CES 2017, with Amazon and Alexa as the leading stars. I spent several days at the annual geek fest, and the device kept coming up in multiple conversations with industry players.

Alexa, formally called the Amazon Echo, is not new. The $180 device was first available exclusively to Amazon Prime members in November 2014. Since then, the device (along with its smaller clone, the Dot) and its cloud-based data service have been made available to anyone, steadily gaining a solid foothold in the smart home-Internet of Things (IoT) market. It has become a surprise hit, and vendors across the spectrum now clamor to include Alexa functionality in their devices. Companies like LG, Whirlpool, Samsung, Mattel, Lenovo, GE, and Ford have (or will soon have) products with Alexa voice technology.

From an energy standpoint, Alexa has already made inroads with smart thermostat makers to work directly with their products. For some months now, Alexa has enabled users to simply say a command, and a Wi-Fi-connected thermostat will alter the temperature to a new setting on a Nest, ecobee3, Honeywell Lyric, or Sensi product.

Waiting in the Wings

Even though Amazon’s Alexa is the clear leader of the voice activation trend, Alphabet’s Google Home device was waiting in the wings at CES to carve out its share of the market. The Home device has only been available to consumers since its launch in November 2016, but a number of vendors I spoke with already have products that can work with Home or are planning to add Home integration to their products in the near future.

While Amazon and now Alphabet are competing head-to-head for voice activation in the home, conspicuously absent in the space at CES were Apple and Microsoft—though that could soon change if rumors about Apple are true. Rumblings out of Cupertino indicate Apple is developing its own competitor to Alexa. Microsoft has its own voice-activated assistant engine called Cortana, but it is still unclear what the software giant’s strategy is in this part of the market and whether it wants to join a competitive hardware-cloud battle where it would likely start out as the number four player.

Other Connected Things: Mostly Incremental Gains

I saw mostly incremental advancements for smart thermostats, smart appliances, and numerous connected-smart lighting products on the show floor, which is not meant as a criticism. As manufacturers hone their skills, I would expect to see steady energy efficiency gains among these products as more sensors and data analytics combine to improve energy consumption. This kind of effort is difficult to achieve and takes time to develop.

Nonetheless, there was one notable product in terms of energy efficiency called LaDouche from French startup Solable. LaDouche is a residential water heater, and it was named as a CES 2017 Innovation Awards honoree for its heat exchange capability, which ostensibly can lower an electric hot-water bill by up to 80%. That is impressive (if it can be verified).

Voice Technology as Transformative

The 2017 CES was a showcase for voice technology as a transformative trend, and one that Navigant Research has pointed out as a key new input for the IoT and computing in general. This was CES’ 50th anniversary event, and the show remains one of the few places where transformative technology gets a megaphone and where one gets a glimpse of what potentially lies ahead in coming years—maybe even in the next 50. Flying cars—are you with me?

 

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