IoT is one of the technologies rapidly transforming several industries. For example, manufacturing and logistics are often cited as being at the forefront of IoT adoption. But how has the rise of IoT – bolstered by the strengths of private 5G and AI – affected the energy and utilities sectors?
9 technology trends in energy and utilities
- Digital innovation: Using IoT can stimulate wider digital innovation in organizations in the energy and utilities industries. It can help them maintain and modernize their aging infrastructure by making the most of the declining costs of technology, an increasing number of vendors and the ease of deployment of new use cases.
- Edge computing: The growth of IoT is driving utilities’ adoption of edge computing. They are installing a higher number of connected devices at the edge of a network, with most of the data processing happening right there instead of the data being transmitted in full across the network. This means they can monitor conditions in real time and act quickly should problems arise. For example, a water utility can detect leaks instantly or even get advance alerts of possible leaks when certain conditions are detected by the equipment.
- Digital twins and data analytics: This has become a top area of investment, driven by the need to optimize power generation and operational efficiency while reducing costs. A digital twin is an exact virtual duplicate of a system, based on data gathered from a high number of digitalized touchpoints. This makes it easier for an organization to use AI and machine learning to find patterns and correlations in the digital twin, which in turn leads to opportunities for improvement or risk reduction.
- Private 5G: This is another new but already integral technology being deployed by utilities because of its high reliability, security and support for low-latency applications. Utilities already rely on large numbers of smart meters and sensors. Connecting these devices with private 5G creates a speedy and efficient data ecosystem, helps utilities work around poor Wi-Fi connectivity in specific locations (such as remote corners in their plants) and gives them greater control over network deployment and data security.
- AI: Energy organizations have already begun to use AI to boost their operations in supply management, transmission, distribution and other areas. The technology has proved useful in monitoring power grids in real time, making more accurate predictions of power fluctuations and developing strategies to work with geothermal energy sources, among other uses. Predictive analytics, machine learning and other AI methods can identify trends in data, leading to augmented or automated decision-making, while natural language processing, conversational interfaces such as chatbots and other methods can improve customer service.
- The cloud: For utilities, the cloud is a key enabler of digital transformation, and the industry has displayed a keen interest in moving to hybrid cloud (a combination of on-premises and public-cloud infrastructure). The cloud makes it easier for them to scale their IT resources to match demand without the need for significant capital investments – and usually with day-to-day cost savings. It also lets teams collaborate more effectively and introduces more robust security measures. Furthermore, a managed cloud service is an efficient way for utilities to have uninterrupted access to expertise, support and innovation.
- Security: Utilities are more focused than ever on cybersecurity, given the increased risk of cyberattacks. Cloud computing can enhance security because cloud providers often offer more stringent security measures than utilities can afford to implement on their own.
- Mobile enablement: Utilities are re-evaluating their mobile workforce management to consolidate field apps and reduce complexity in field operations. This can prove particularly useful in an industry where many teams are on the ground daily to manage and maintain electricity and water infrastructure, for example.
- Enterprise asset management (EAM): Utilities have lagged in adopting cloud solutions for EAM, but trends such as decarbonization, decentralization and digitalization are pushing them to change their behavior. Some EAM vendors are also pushing utilities to go to the cloud or a software-as-a-service delivery model, but complex requirements such as integration with existing systems and customization remain a barrier.
What are the key investment areas?
According to a 2023 Infosys and HFS Research study, 94% of organizations in the energy and utilities sectors plan to increase their IT spending in the next year as they search for flexibility and more advanced management of renewable energy systems amid rising customer demand.
Much of this spending is likely to be channeled into areas including cybersecurity, cloud platform, analytics and IoT. Many of these organizations have already deployed AI and machine learning and migrated to distributed cloud, or expect to do so within the next year.
In a distributed-cloud architecture, several public clouds are used in multiple locations (such as an organization’s own cloud provider’s data centers or even third-party data centers) but managed centrally. This can make it simpler for organizations to meet compliance and performance requirements, for example, and it supports use cases such as real-time energy management.
IoT, a critical enabler of digital innovation, is fast becoming prevalent across the utility sector. It is driving the adoption of edge computing to process large amounts of data and improve operational efficiency in environments that rely on low latency and high bandwidth.
IoT shares some characteristics with existing remote sensing and control technologies, such as smart metering or supervisory control and data acquisition (Scada) applications that control industrial processes. However, the general-purpose nature of IoT creates additional opportunities, including in the following areas:
- Remote monitoring of equipment and predictive maintenance analytics
- Advanced metering infrastructure
- Distributed energy resource management systems
- Consumer technologies such as smart thermostats
- Efficiencies and cost control linked to processing data close to the edge (for example, through better automation and quality control)
Although many utilities already are leaders in IoT adoption compared with other industries, they still plan to invest even more in this area.
What is the business impact of IoT?
Implementing IoT in the energy and utilities sectors is already changing how these organizations operate on several levels that include:
Simply deploying IoT for asset monitoring, telemetry or other solutions will not make a difference for organizations in the energy and utilities sectors unless the deployment is also operationalized
Operational performance: IoT strengthens operational performance by providing access to insights across IT, engineering technology and operational technology (OT), based on the principles of sensing, communicating, analyzing and acting.
Grid transformation: Many digital grid-transformation initiatives use IoT to integrate process-orientated information from OT systems and consumer technology (CT) into business processes that can be automated by IT applications. This also highlights alignment opportunities for IT and OT (and increasingly CT) – across governance, security, privacy and standards, for example – and the need for a unified architecture.
New capabilities: The asset-intensive aspect of the industry requires asset and production processes to be monitored – including real-time volatility of energy flows and even visibility of customers’ own energy assets and devices.
Help is at hand
Simply deploying IoT for asset monitoring, telemetry or other solutions will not make a difference for organizations in the energy and utilities sectors unless the deployment is also operationalized. Not doing so risks creating several unintegrated pilot projects or solutions.
Organizations have to first understand the problem that needs to be solved. Then, based on this analysis, appropriate IoT components (sensors, network, edge computing, cloud and more) can be brought together to match the requirements and ensure a return on investment.
Not many organizations have the internal expertise to run through this process in depth, but NTT offers the full stack of IoT building blocks as a service, including Edge as a Service. This makes us the perfect partner on the road to greater operational efficiency, security and business growth.
WHAT TO DO NEXT
Read and download our 2022 Connected Industry Report to see how the evolution of Industry 4.0 is benefiting the energy industry.