Navigant Research Blog

The IoT Makes Inroads Around the Globe

— July 25, 2016

AnalyticsThe Internet of Things (IoT) trend continues to make inroads among companies around the globe, according to new data from telecom giant Vodafone. Its latest survey on the topic finds more than a quarter (28%) of responding companies are already using IoT in their operations, and three quarters (76%) say the IoT will be critical for the future success of any organization in their sector.

While this trend continues to be transformative for many businesses, one of the remaining barriers to IoT adoption is security, or the lack thereof. Nearly one in five (18%) survey respondents say the concern about security breaches is a potential barrier to wider IoT adoption within their companies. From an energy industry perspective, robust security is still key, of course, given the critical nature of the infrastructure and data. The survey indicates some positive moves in this regard, with nearly six in ten (59%) energy and utility companies working on IoT security guidelines and roughly half (52%) working with a specialist security provider. I choose to see this glass as half full, but the emphasis on the security piece could use some improvement.

Wireless Networks in Europe

Elsewhere, there is further evidence of the expanding IoT trend. In the Netherlands, telecom provider KPN has recently announced the completion of its nationwide wireless IoT network. The company also notes it has signed contracts to connect 1.5 million devices so far, and that potential customers include governments seeking to link sensors on critical infrastructure, companies that specialize in lighting and traffic control, and consumers with fobs on bicycles for monitoring location. In addition to KPN, French startup Sigfox is building a similar IoT network and is currently deploying its service in 20 countries.

One other clear sign of the growing IoT trend was the recent huge deal by Japan’s SoftBank, which is acquiring British chip designer ARM Holdings for $32 billion. The deal is the largest acquisition by a Japanese firm in Europe. The big bet by SoftBank is that ARM can become a leader in the design of chips that power IoT devices, similar to how ARM’s designs are key to the success of smartphones and tablets.

A Rising Tide

For utilities and other energy-related firms, it is hard to ignore this rising global IoT tide. The emerging technology is altering business processes, and stakeholders need to pay attention and make strategic plans. This is something my colleague Casey Talon and I point out in our Navigant Research report titled IoT Enabled Managed Services. By seizing on the opportunities of an array of IoT devices and combining the data with analytics and bundling services, utilities can improve their own operations and increase customer satisfaction. It’s a trend worthy of investment.

 

Are We Approaching the Energy Singularity? Counter Point

— June 27, 2016

Cloud ComputingThe energy singularity sounds awesome, but bring your doubts. Who doesn’t appreciate the thought and effort it takes to make scientific breakthroughs? Exploring possibilities, creating new scenarios, and imagining the unimaginable. Ray Kurzweil’s singularity idea is one such notion, proposing “an era in which our intelligence will become increasingly non-biological and trillions of times more powerful than it is today—the dawning of a new civilization that will enable us to transcend our biological limitations and amplify our creativity.” Artificial intelligence (AI) taking over at an explosive rate—it sounds amazing. My colleague Mackinnon Lawrence suggests this breakthrough is possible for the energy sector within the next couple decades. Maybe.

A Different Grid of Tomorrow

To be sure, the future grid will differ from today’s grid. It might not even be a grid as we know it in 2045, the estimated year of Kurzweil’s singularity vision. Furthermore, changes are already taking place quickly, with the decline of coal-powered plants, the rise of solar power, and the promise of affordable storage technologies, to name a few. Navigant’s Energy Cloud vision already foresees an energy world full of profound changes and decentralized structures, a system more dynamic and responsive than today’s.

It is tantalizing to imagine the future power grid (or ecosystem) with blazing efficiency, unparalleled reliability, and widespread availability. My colleague cites the rapid advancements around self-driving cars and Google processing billions of search queries a day to enable deeper understanding of human thought as examples of the pace of change from machine learning. Machines are getting smarter, but there are also setbacks, particularly where grid assets, old and new, have failed, including:

  • The Fukushima Daiichi nuclear disaster in 2011
  • The San Bruno pipeline explosion in 2010
  • The Ivanpah solar power facility fire in May of this year

Even Google’s vaunted driverless car has collided with a bus. These negative events do not mean the problems can’t be overcome with powerful machines. Perhaps future super-intelligent systems will prevent or reduce the chances of such calamities. But these events do illustrate the downside of technology and the limits of machines.

In the energy sector, there is also the human constraint of regulation and business models. Even if technology breakthroughs take place, will regulators and politicians hold to the past and not allow transformations to emerge? Some are open to change. In California and New York, regulators and politicians have shown a willingness to embrace new ways of thinking about energy and new models. But others are likely to be more stubborn. Nevada regulators approved a price hike for solar customers, and SolarCity and Sunrun promptly pulled their operations from the state. In Montana and Wyoming, coal is still a powerful force for economic and political reasons.

Skepticism Abound

Among leading technology thinkers, respected names have trouble accepting Kurzweil’s future vision. Gordon Moore, cofounder of Intel and namesake of Moore’s Law, says the singularity is not likely to happen, at least not for a long time. Jeff Hawkins, cofounder of Numenta, a company developing a computer memory system based on the human neocortex and founder of Palm and Handspring, expects we will build machines that are more intelligent than humans, but there will be no singularity or runaway growth in intelligence. And Microsoft cofounder Paul Allen, who has devoted resources to his Allen Institute of Brain Science, has expressed serious doubts about the singularity occurring.

Count me among these skeptics. Predictions about breakthroughs often don’t pan out, or take way longer than expected. We were supposed to be commuting in flying cars, living in underwater cities, and colonizing other planets by now. We can imagine such things, but the future is difficult to see clearly. Some of what is imagined for the grid and energy is quite possible—I’m all for the wonderful magic, positive advancements, and geeky possibilities. Kurzweil is someone I respect. But the future also holds potential darkness, shadows, and unintended consequences. Man has a propensity to screw things up (wars), and his machines break down (think Space Shuttle Challenger or Chernobyl). Perhaps I’m stuck in a 2016 mindset, but my bet is the singularity moment is a long way off, if even possible. Moreover, the Kurzweil idea is too Panglossian. Machines will definitely grow smarter and the energy sector will benefit. But the process will be bumpy, unpredictable, and we will see a singular failure, or two, or three.

 

ZNE Gets a Boost on Two Fronts

— June 24, 2016

Home Energy ManagementThe zero net energy (ZNE) movement has taken steps forward recently in an effort to drive wider adoption of the related technologies. A ZNE building combines energy efficiency and onsite renewable power generation to produce roughly as much energy as it uses during a year. The focal point for much of the ZNE activity in the United States is California, where state regulations call for all new homes to be built as ZNE by 2020 and the same for all new commercial buildings by 2030. It comes as no surprise, then, that the latest ZNE efforts are in the Golden State.

Public Awareness

One step forward to wider adoption was taken by Pacific Gas and Electric (PG&E). The utility has opened a full-sized ZNE display home at its new regional office in Stockton, California. Visitors can see in detail how such a home can work in an effort to drive greater public awareness. The displays have many interactive components, such as an iPad-based augmented reality virtual tour using iBeacon technology that automatically presents relevant content in each room. Interactive components also include a 7-foot, high-resolution touchscreen that compares ZNE conservation methods with those of a typical home built in 2005 and an integrated content management and hardware system that drives the experience.

Virtual Tour of a ZNE Display Home in Stockton, California

ZNE Gets a Boost on Two Fronts_NS Blog

(Sources: Leviathan, Pacific Gas and Electric) 

Industrial Education

Another step to drive greater adoption was the dedication of the United States’ largest net zero plus commercial building retrofit in the Los Angeles area. The 144,000-square-foot Net Zero Plus Electric Training Institute (NZP-ETI) facility serves as a showcase for how commercial ZNE buildings can be designed, constructed, and operated. One of its unique features is its ability to go beyond net zero, generating about 1.25 times more energy than it consumes in a typical year. The excess energy, which is generated from an onsite solar PV array, can be stored in onsite batteries or discharged back to the electric grid. During a grid outage, the stored excess energy can allow the facility to maintain operations for up to 72 hours. The facility also plays an educational role as the training hub for some 1,500 electrical apprentices, journeymen, and contractors who want to stay at the forefront of the electrical industry’s latest technologies.

These incremental yet important steps by PG&E and NZP-ETI represent the cutting edge of the ZNE trend, which was highlighted for the residential market in the recent Navigant Research report, Market Data: Zero Net Energy Homes. These are baby steps toward a time when ZNE buildings become more commonplace. While these are laudable efforts, it will require many more similar moves in other regions before ZNE goes from oddity to ordinary.

 

Which Voice to Rule Them All? New Google Device Enters Virtual Home Assistant Fray

— June 3, 2016

Computer and TabletWith Google’s recent announcement of its Home product, a voice-activated virtual assistant for your home to control devices, provide information, and manage energy might be closer than you think. The device will compete directly with Amazon’s popular Echo, and consumers are likely winners.

Home won’t be available until later this year, and its cost has not been revealed, though it’s expect to sell for around $180 to match the Echo’s price point. If the Echo’s history is a guide, I anticipate Home will be a hit with consumers, gaining relatively wide and quick adoption. Amazon has sold an estimated 3 million Echo units since its launch in November 2014.

Home will answer questions and hold two-way conversations in addition to executing tasks like playing music or controlling connected smart home devices, such as a Nest thermostat or LED lights. Essentially, it will do what Amazon’s Echo does.

A Step Forward for Voice Activation

So why is this a big deal? Because Home represents another step toward mass adoption of voice-activated interfaces in homes. Instead of pulling out a smartphone or a tablet, firing up an app and using fingers on a touchscreen to control something in a home, using one’s voice is a more natural and simple process. For instance, while cooking in a kitchen with your hands occupied, calling out to Home or Echo to set a timer is quite convenient, as is commanding a TV to mute itself from across the room as you answer a call. Seemingly small applications like these are the future.

From a utility company perspective, the Home device and other smart home (i.e., Internet of Things [IoT]) products represent a small revolution. Nearly half of utility industry executives say the smart home will revolutionize the industry, according to a survey by public relations firm Antenna. The PR firm does note a separate study about current barriers to adoption among consumers, namely the cost to purchase the equipment and the complexity of installing and configuring smart home systems. Those barriers, however, are likely to fall in the near- to mid-term as production volumes build (thus driving down costs) and competing manufacturers reduce the installation complexities. (For a detailed forecast of residential IoT device shipments and revenue, see Navigant Research’s latest report, Market Data: IoT for Residential Energy Customers.)

No Shortage of Competitors

And don’t count out other prominent companies still on the sidelines in this regard. One is Apple; the masterminds from Cupertino are not to be underestimated, as a former colleague says. “Underestimating Apple in this space or even Siri in this space would be fundamentally wrong,” says Michael Gartenberg, an analyst with iMore.com and a former Apple marketing director. I concur. The other is Microsoft, which has yet to launch a virtual assistant product specifically for the home, but could easily do so with Cortana. There is no shortage of competitors in the space.

Given its influence, Google’s entry into this particular market is likely to be significant, going head-to-head with Amazon. For consumers, the competition should drive prices lower, and a flurry of new applications for both product platforms should be just over the horizon. Voice, it seems, is the new touchscreen for homes.

 

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