Navigant Research Blog

Cities and Businesses Care about Smart Buildings: Part 1

— November 9, 2017

In September, Amazon announced plans to open a second headquarters in North America called HQ2. The company expects to invest more than $5 billion to build the facility and create as many as 50,000 high paying jobs. In its request for proposal, Amazon listed preferences to help find the perfect location for its new campus. It is looking for a city of more than 1 million people with an international airport, mass transit, quality higher education, an educated workforce, and a solid business climate. 238 proposals have been submitted by cities and regional governments. While Amazon will look at the most obvious incentives from governments such as donated land, tax breaks and subsidies, it will also need to consider which cities will attract best talent.

Attracting Top Talent from a Business Perspective

By supporting more agile ways of working and enhancing the work environment, smart buildings can play a key role in attracting and retaining employees amid increasing competition for top talent in business sectors. Smart buildings use internet-enabled technology to gather data and bring operating systems and services under central control in order to create a better workplace.

Smart buildings can not only reduce operational and energy costs, but can also create an enhanced in-building experience to help increase productivity and promote corporate brand values. They achieve this by analyzing data on occupancy, movement, and resources in real time and by adapting systems to optimize the performance of both the building and the people within it. This way, smart buildings provide opportunities to address the challenges of productivity and comfort that are at the heart of contemporary debates about workplace environment. Cities trying to entice Amazon to their streets should take a closer look at smart buildings—which can help Amazon recruit top talent.

Relevant technologies are already available, including building energy management systems, location-aware sensors and services, and mobile phone applications. In fact, Navigant Research is bullish on continued adoption of these technologies. In a recent report, IoT for Intelligent Buildings, Navigant Research projects the market to grow from $6.3 billion in 2017 to $22.2 billion in 2026 at a compound annual growth rate (CAGR) of 15.0%. The office segment is expected to grow at a 15.7% CAGR.

Attracting Businesses from a City’s Perspective

The evolution of smart buildings parallels the digital transformation in cities. Cities can now collect large volumes of high quality data from public infrastructure, such as government buildings and street light poles, that can transform a number of city service areas. For example, digital technologies are becoming an important element in traffic and transit management, public safety, social care, street lighting, and waste services. From sensors collecting data to developers building thousands of smart city apps, the Internet of Things movement is helping cities become truly smart.

Digital transformation of city services is certainly attractive to businesses, but cities can go the extra mile to enhance its competitive advantage. For cities to lure Amazon, the business environment that complements and drives investment in smart buildings should be enhanced. Smart technologies will further innovation, inclusion, and investment within a city. My next blog will explain what cities can do to spur investment in the smart buildings sector.

 

What Is a Smart Home and How Will It Play a Role in the Energy Cloud?

— November 3, 2017

The concept of a smart home has the potential to revolutionize the way people interact with their homes. Homes that act intuitively and intelligently through smart home systems can enrich consumers’ lives by fostering increased comfort, awareness, convenience, and cost and energy savings. This concept also extends to the role that the home can play in transitioning the grid from traditional centralized generation to the Energy Cloud.

How Do We Define a Smart Home?

However, there is no set definition of a smart home. The industry often uses the terms smart, connected, and automated interchangeably when referring to the Internet of Things (IoT) in the home, though these terms refer to different (albeit related) ideas. Navigant Research believes the concept of a smart home goes beyond the individual devices of a connected home and involves integrated platforms where an ecosystem of interoperable devices is supported by software and services. A truly smart home should be able to act intuitively and automatically, anticipating and responding to the needs of consumers based on learned lifestyle patterns and real-time interaction.

Navigant Research’s View

Navigant Research believes the comprehensiveness and integration of such solutions are the keys to the success of the smart home, as homes that are embedded with smart technologies at their core are more suitable for playing a role in the Energy Cloud. Homes are expected to transform into dynamic assets that balance home energy production and consumption with distributed energy resources, shed load demand through the optimization of more energy efficient products, respond to signals that shift demand to times when the grid is less strained, and generally support a more reliable grid infrastructure.

Market Focus

Currently, the market is focused on the proliferation of connected devices, which are supporting more digitally enabled, connected homes. Consumers are increasingly aware of smart home technologies, with platforms like the Amazon Echo, Google Home, and Apple HomeKit spurring excitement about controlling devices in the home through voice activation and slowly but surely turning the smart home into a reality. These devices are demonstrating value, whether it be for entertainment, health, convenience, security, or energy. The figure below demonstrates the connected hardware in the home that establishes the backbone for comprehensive integrated platforms that support the development of smarter homes.

Connected Hardware in the Home

(Source: Navigant Research)

A Promising Future

There are many obstacles for the smart home market to overcome, such as interoperability, data privacy and security, a lack of embedded technologies in the home, advanced functionality, and connection between smart technologies and the grid. Yet, this market is gaining traction, and smart home solutions are becoming the future of the home and its role in the digital grid. To learn more about the smart home market, check out the recent Navigant Research report, The Smart Home.

 

Smart Home Expanding at European Utility Week

— October 12, 2017

European Utility Week (EUW) is Europe’s flagship energy event of the year. It brings together over 10,000 delegates covering the entire smart energy value chain. I had a chance to attend this landmark event last week and was intrigued by the transition occurring in the energy industry. This event’s roots clearly lie in network operations and grid infrastructure, though it also displays cutting-edge technology and innovations transforming the energy ecosystem, as my colleague Stuart Ravens explains. Wandering between booths and networking with energy stakeholders, I noticed the energy industry becoming smarter through data analytics, services, and the smart home.

Data Analytics

Data analytics was a major theme at EUW this year. The energy industry is no different from other industries that are starting to realize the value in big data and the advanced applications it can enable. From Schneider Electric’s display of its EcoStruxture platform to a demo of REstore demand-side management software, it is clear that companies are investing in data analytics to optimize grid operations. A few of the main data-based applications that I noticed at EUW included:

  • Asset performance management, which analyzes data from sensors deployed throughout the grid to monitor assets and help utilities reduce unscheduled downtime, prevent equipment failures, reduce maintenance costs, extend equipment life, and identify underperforming assets.
  • Demand response platforms, which crunch data to determine the available capacity of residential and commercial and industrial assets that can be aggregated to participate in capacity markets.
  • Meter management software, which can be used to power customer billing tools or monitor the health of a meter.

Though many utilities are still easing into data analytics and few are actually using such advanced applications, these types of data-based solutions demonstrate the future of the energy industry.

Services

Services are emerging as a natural progression to hardware and software offerings. As much as I saw industrial-looking, complex grid hardware on display, I also saw vendors peddling software as a service (SaaS) and cloud services. One example of a vendor pursuing the services market is GE, whose booth featured its Predix Cloud service for asset performance management, grid monitoring and diagnostics, and utility field operations. Another company, Aclara, revealed during a briefing that the company is trying to become and end-to-end solution provider by not only supplying utility companies with grid infrastructure, but also offering a SaaS platform that uses data from their infrastructure to power software modules. Vendors in this space recognize the need to expand outside of hardware sales and use the infrastructure they have deployed to offer services that help make utility operations more efficient and provide new and recurring revenue.

The Smart Home

The utility/consumer relationship is becoming more important in the changing energy landscape, which was made obvious by the number of smart home booths at EUW. As traditional utility business models are challenged by distributed energy resources and more efficient energy technologies, utilities must look for other options to maintain revenue. This often involves engaging end users, which requires utilities to differentiate themselves and increase customer satisfaction. Companies like Bidgely and Smappee are helping utilities achieve this vision with device disaggregation and personalized energy consumption software. Other companies like geo recognize the need to create more active homes that can become flexible grid assets, and their booths demonstrated these values. Whether the smart home solutions on display were focused on connected energy devices, customer engagement software, or comprehensive whole home solutions, it was clear that utilities are recognizing the importance end users are playing in the energy transition.

 

As Security Threats to IoT Grow, So Do New Solutions and Regulations

— October 10, 2017

Good reasons abound for concerns about the vulnerability of the electric grid to cyber attacks. Likewise, enterprises must confront serious security risks as a growing number of firms adopt industrial IoT (IIoT) technologies. Consumers risk potential hacks as they install IoT gadgets such as smart thermostats or voice-activated devices like Amazon’s Echo in their homes.

Scary Stories

Recent stories paint a dark picture of these risks. A story about Industroyer—a modular malware likened to the notorious Stuxnet worm—sends a sobering message. The story’s author, Robert Lipovsky, says, “Industroyer poses a big threat to industrial systems because it doesn’t exploit any vulnerabilities,” and that its four payload components “are designed to gain direct control of switches and circuit breakers at an electricity distribution substation.” Also, the malware can be reconfigured to attack other energy infrastructures and other industries like manufacturing or transportation.

In the broader realm of well-known Bluetooth technology, the story is much the same. An IoT security firm called Armis has uncovered critical flaws in Bluetooth implementations that could affect up to 5.3 billion devices. The Armis researchers have named this threat vector BlueBorne. So far, nothing untoward has been reported in terms of hacks, and Armis is working with Apple, Microsoft, Google, and Linux developers to quietly coordinate the release of patches to stop potential attacks. But left unchecked, attackers could theoretically take over Bluetooth devices or commandeer their Internet traffic.

Products to Protect against Threats

Despite these ominous stories, technology vendors have new products aimed at reducing security threats. Intel, for example, has a new process called Secure Device Onboarding to ensure a more secure deployment of connected devices for enterprises. The idea is to help industrial customers safely and quickly install IoT devices, such as lighting, sensors, and gateways. The company is working across the ecosystem to help push this new level of security and boost IoT adoption.

Similarly, Cisco is touting enhanced routers for utility customers with security at their core. Executives from Cisco report that security is top of mind for utility and other enterprise customers in the face of the latest cyber threats, and the company is responding to this this demand.

Policy Adaptation

Elected officials in the United States also see the threat to IoT devices, and are pushing new legislation. A bipartisan group of senators has proposed a new IoT Cybersecurity Improvement Act of 2017, which is still working its way toward approval. The law, if enacted, could be one more key driver toward a safer IoT and IIoT world.

In the face of potential IoT-related threats, it might be easy to see only the dark side. To be sure, connected devices are more vulnerable than non-connected ones. Nonetheless, leading IoT vendors, their customers, and even legislators are taking real steps to hinder harmful attacks. This means that the situation has a bright side, too.

 

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