Navigant Research Blog

Utilities Embrace Innovation at EUW, but Struggle with Culture

— November 25, 2015

There was a palpable buzz at European Utility Week in early November centered around change, innovation, and outsiders. For instance, one of the crowded presentations I witnessed was Neil Pennington’s talk about smart thermostats. Dr. Pennington, the director of innovation for RWE npower in the United Kingdom, noted that smart thermostats are a logical first step, but utilities should consider going beyond these devices and offer products and services that are highly personalized, connected, and automated. Move outside the heating, ventilation, and air conditioning (HVAC) system, he says, and think about home security and customer lifestyles if you want to succeed as an innovator.

Pennington’s message was effective. It generated some enthusiastic questions, and people in the audience were hungry for insights into how to engage customers in new and effective ways.

Other vendors and presenters at this trade show, which set records for attendance (some 9,000 visitors from 77 countries), offered similar stories about innovation and change. Joris Jonker, one of the founders of residential energy management company Quby, told me his company’s offering was gaining traction as a dashboard for the home, and that Netherlands-based utility Eneco would be installing 1 million units over 2 years. Indeed, Eneco has embraced Quby’s solution so much that it acquired the firm just ahead of the trade show. Eneco’s move demonstrates it is no longer business as usual for some utilities.

Other discussions included the outsiders, or non-utility companies like Google (or Alphabet, Google’s parent company), and how these firms might alter the utility game. Might Google, or perhaps Apple, or an unknown startup move aggressively with a customer-centric and data-driven business model to disrupt the utility status quo? Possibly, but others were not so sure, saying it would be hard to disrupt the incumbents, especially for smaller players. Still, the question about potential disruption sparked debate.

Beyond these change and innovation issues, several other themes played out at the show. The smart cities concept is gaining wider attention (as my colleague Eric Woods so aptly demonstrated in sessions he moderated), with companies like Itron and Sensus touting their capabilities in this area. And, of course, the Internet of Things (IoT) concept seemed to be on just about everyone’s lips. In that vein, one company that stood out was Sigfox, a French firm promoting its unique cellular communications technology that is designed for low-throughput connectivity among IoT devices. Very buzzy.

But for all the talk about innovation and change, there was an interesting poll conducted among attendees that revealed an Achilles heel for the utility business: an ongoing lack of innovation. The poll asked “What is the biggest threat to the utilities?” The results of the unscientific survey among about 400 people were:

  • Falling/flat demand: 6%
  • Revenue loss/distributed solar: 12%
  • Challenge Renewable/Integration: 12%
  • Regulatory/Policy uncertainty: 23%
  • Lack of “innovation culture”: 46%

So a key takeaway for me from the Vienna conference was that while there is a welcome mat set out for change and plenty of talk, true innovation is still some ways off. And the staid utility culture in Europe is ripe for a shake-up, internally, externally, or from both perspectives.


The Future Workspace: Intelligent Building Platforms and Employee Engagement

— November 11, 2015

Boatbuilder_webThe proliferation of smart phones and the pervasive use of smart phone apps in the workplace have created new opportunities for occupant engagement. Beyond comfort, smart phones also generate economic and business benefits toward building operations.

Advanced sensors, wireless gateways and communications, and building energy management systems (BEMS) have already made the smart office a reality. These technologies give building owners and operators unprecedented insight into equipment performance, space utilization, and occupant feedback. Because of this, intelligent buildings can leverage ever growing data sets to become dynamic workspaces. Buildings are now more energy efficient and productive than traditional office buildings ever have been—and they are also more comfortable.

Smart Offices

Information technology platforms in intelligent buildings can fine-tune everything from heating, ventilation, and air conditioning (HVAC) to lighting to conference room scheduling. Technology innovations such as the Internet of Things (IoT) that enable these advances in operational performance leverage open systems that integrate automation hardware, software, and services. The IoT is an infrastructure for aggregating, transmitting, and analyzing data streams while ensuring cyber security and delivering domain-specific insights. The IoT is a potentially disruptive market force because the framework unifies data that has been historically isolated to generate comprehensive information about related systems.

In the intelligent buildings context, the IoT provides a structure to generate and share actionable insights for system improvement, which may take the form of fine-tuned lighting or HVAC settings. IoT platforms are scalable and secure to support software analytics that identify potential improvements for energy savings, operational efficiencies, and increased occupant satisfaction. Using these IoT platforms, intelligent building decision-makers can access more unified and comprehensive information about the performance of their individual facilities or portfolios.

This platform approach has changed the paradigm for building operations and maintenance in intelligent buildings. Cost-effective sensing devices gather granular building data ranging from equipment settings and performance to temperature and humidity. Wireless networks and open protocols can then transfer this data into a cloud-based BEMS that runs the analytics to prioritize system improvements. In some cases, a BEMS can push automated adjustments to building systems.

Accessing data and providing actionable insight in real time enables advanced management strategies that include predictive maintenance, proactive capital planning, and rapid response to occupant feedback. These processes provide greater efficiency and reduction in peak demand charges, so building system performance can be optimized and yield economic benefits in the form of reduced energy bills.

Intelligent Building Innovations

The process of transforming a facility into an intelligent building is scalable and cost-effective—and a different business engagement from the traditional equipment overhaul or deep renovation. Developing an intelligent building means gaining insight into its existing systems, improving their performance, and leveraging IT-based, cost-effective solutions to supplement the existing infrastructure.

One pioneering concept in the intelligent building space is using people as sensors. An example is Comfy, designed by Building Robotics. Comfy connects existing HVAC systems in office buildings to the cloud through Intel-based intelligent gateways. The system utilizes feedback from individual occupants through a simple smart phone app that analyzes the comfort levels in an office and then refines HVAC settings to optimize the workplace environment. This new approach to occupant comfort is changing the intelligent building workplace.

For a deeper exploration of this topic, tune in on November 17 at 2:00 p.m. EST for Navigant Research’s webinar Smart Offices: How Intelligent Building Solutions Are Changing the Occupant Experience. Joining me will be Shuo Zhang, Business Development Manager at Intel, and Andrew Krioukov, CEO of Building Robotics, who will give insight into how intelligent gateways and smart phone apps are transforming the smart office.


Security Concerns Pose Risk to IoT Market Expansion

— October 26, 2015

If the Internet itself is not fully secure, then it stands to reason that the Internet of Things (IoT) cannot possibly be fully secure either. Whether it’s refrigerators, cars, thermostats, or even your food (the Guardian reported that even your steak may have come from a connected cow), the IoT is becoming a ubiquitous feature of modern life with inherent security risks. The addition of billions of devices that communicate through Internet-connected IT infrastructure while using various types of hardware is likely to create a challenging market to safeguard in the years to come.

While there are few risks to having data collected on cows, some IoT devices do raise some security concerns for human beings. Devices such as GPS-connected running shirts (that hackers can use to know when you’re not home) and face recognition smart locks (which can be tricked by being shown digital photographs) are particularly prone to hacking breaches.

The IoT in Smart Cities

Smart city technologies with IoT capability—such as smart parking systems, which use sensors to guide drivers to open parking spaces, or traffic management systems, which help government organizations synchronize traffic lights for optimal traffic flows—also exist simply to improve the quality of life for city residents (in this case reducing traffic congestion and pollution). However, there are some legitimate security concerns with these technologies that need to be addressed as well. Using traffic management systems as an example, security researchers at the University of Michigan were able to hack nearly 100 wireless networked traffic lights by using only a laptop and wireless card. If hackers can easily and quickly cause mass disarray through traffic light manipulation—by, say, changing all the lights in a particular intersection to be green—it’s not unreasonable to foresee public distrust of smart city IoT technology.

Nevertheless, not all IoT devices are easily hackable, and some are providing invaluable security features to society. In fact, cameras and the IoT are helping to make life much safer for those who have encounters with the police or are near a crime scene. The introduction of body cameras on police in Rialto, California resulted in complaints against officers dropping by nearly 90% in 2012 compared to 2011, and use of force by officers dropped by 60%. Additionally, IoT-connected sensors in Denver, Colorado can pinpoint the location of gunshots by triangulating sound, allowing officers to be more quickly deployed to a crime scene.

Security Issues Need to Be Addressed

If the IoT market is going to expand as quickly as many analysts believe, the issues surrounding security need to be addressed early on—not after significant breaches that will likely result in a huge loss of public trust in IoT technology. Conducting privacy and security risk assessments, minimizing the type of data that is collected, and testing advanced security measures before rather than after product launch are all ways that companies and governments can ensure a high level of security for IoT devices while also respecting a reasonable level of privacy for citizens.


IoT Momentum Is Building—Even if Trend Is Overhyped

— October 12, 2015

Momentum keeps building for the Internet of Things (IoT) market—even if the concept is overhyped. Recent moves by market stakeholders point to significant investments and noteworthy strategies. In addition, there are important implications for the utility sector, particularly the residential segment.

Google’s strategy combines hardware and software elements for connecting things in the home. The company is expected to release Brillo, a slimmed-down version of the Android operating system designed for smart home applications, by year’s end. Brillo will be coupled with Weave, a protocol developed by Nest Labs, which is to be integrated into OnHub, a router that can control IoT devices. As part of Nest’s initiative with Weave, General Eletric (GE) and Procter & Gamble will be partners in the effort.

Comcast has made the IoT a key part of its strategy over the past year. Executives with the cable giant have said they want to become the conduit, or highway, that carries all the data back and forth among IoT devices. Also, the company’s Xfinity service is being positioned as a platform for IoT functionality, with the company having announced partnerships with Nest, August (locks), and Lutron for lighting.

Also, Intel is acquiring chipmaker Altera for nearly $17 billion with the aim of enabling new classes of products “that meet customer needs in the data center and Internet of Things (IoT) market segments,” according to a release. Altera is an attractive buy for Intel because its chips are used widely for networking and wireless applications. Similarly, United Kingdom-based Dialog Semiconductor, which supplies chips to Apple, announced in September its acquisition of Atmel for $4.6 billion in a deal to strengthen both companies’ efforts to compete in the IoT space.

Furthermore, the Smart Grid Interoperability Panel (SGIP) says it will expand its cooperation with the Industrial Internet Consortium (IIC) to focus on technologies and testing to promote the adoption of the IoT in the energy sector. The two organizations plan to identify ways members can take part in an array of new and established testing activities.

Among utilities, Commonwealth Edison (ComEd) in Illinois has a partnership with Comcast to leverage the interconnectedness of smart thermostats in a demand response program. The program, similar to other bring-your-own-thermostat (BYOT) setups, is a basic example of linking things, thermostats in this case, with as service that can increase energy efficiency.

With this kind of momentum, it seems clear the IoT trend has legs, but there are hurdles that could inhibit market adoption. First, there are many protocols in play, such as ZigBee, Z-Wave, Bluetooth, and Wi-Fi. These present interoperability issues. Second, many IoT devices are more costly than current alternatives, such as high-end smart thermostats. Third, some consumers have real concerns about potential loss of privacy or security breaches when so many devices are interconnected.

Despite these hurdles, the IoT market drivers seem strong, and important companies are placing big bets on it. Navigant Research expects global revenue attributed to residential IoT devices to grow from $7.3 billion in 2015 to $67.7 billion in 2025, based on our own focused definition on the built environment of things. For those interested in learning more about the IoT market, Navigant is hosting a webinar highlighting IoT trends on October 20 at 2:00 PM EST. My colleague Ben Freas, senior research analyst, will bring his building automation perspective, and we will be joined by Matt Smith, senior director of utility solutions at Silver Spring Networks, who will discuss the utility’s role in the connected IoT home.


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