How The Use Of IOT Can Save Energy

How The Use Of IOT Can Save Energy

Smart appliances that interact with each other and share information using IoT and other building automation solutions have been around for years. But their high cost has traditionally been difficult to justify for many commercial, industrial, and institutional facilities. Now, more affordable technologies and Internet of Things (IoT) architecture are being used to lower costs, add new capabilities and change the market dynamics for building management. Smart building technologies typically pay for themselves within one or two years by saving energy, furthering maintenance efficiencies & improving reliability.

IoT has been topping the list of revolutionary technologies for some years, and is definitely one of the most talked about tech innovations around. With sensors getting cheaper by the day, more and more physical objects are becoming part of a network of things, changing the way we live and work. This year, we will see 4.9 Bn connected things and some predict that, by 2020, the number of Internet-connected things will reach or even exceed 50 Bn. Machine-to-machine (M2M) connections will grow from 5 Bn at the beginning of this year to 27 Bn by 2024, worldwide.

In the near future, IoT will lead to huge cost cuts as businesses will get to know what is going on where – the visibility of the grid’s performance, visibility of where we lose energy, and where the savings potential really lie. Smart grids allow energy distribution to be managed in real time based on immediate data rather than historic patterns of power usage. Together with smart metrics, they could noticeably reduce a business’s energy costs and improve their sustainability credentials. According to estimations by the McKinsey Global Institute, IoT will have a total economic impact of up to $11 Tn by 2025.

We know that for MSMEs, the cost on energy is a significant proportion of their operational expenses; hence any product or service that can help reduce their energy costs will be valued. Organisations can lower their energy needs by switching off lights or adjusting heating and ventilation systems. By lowering their energy use at peak hours, entities like supermarkets, hotels, offices, campuses, hospitals and factories can help the National Grid manage peak loads, and receive dividends for doing so. Regulatory norms need to be eased up a bit so that the smart grid market can progress upwardly.

The key to the efficiency-enhancing power of IoT lies in peak usage periods. Electricity is much more expensive in the hours when everyone is using a lot of it. For example, if it’s 3 pm on a hot day, the cost of electricity can be 3 times what it is at 2 pm on another day, but in India, dynamic pricing model is seldom practiced. Homes and offices still get charged solely on how much power they consume on a monthly basis.

Large energy consumers like stadiums, factories etc, are sometimes charged for their energy on a dynamic pricing model, which reflects the varying costs of power, but residences still mostly get charged solely on how much power they use. This baked-in inefficiency costs both the utilities and the average consumer, but there is little momentum to change. The consumer is guarded from the spikes of peak usage periods, and the utility companies generally don’t mind absorbing the extra costs to avoid the inevitable protests when energy bills rise up the roof during the hottest part of the year.

IoT’s larger promise comes from an integrated system in which smart products are in regular conversation with dynamic utilities and a smart energy grid. Having a connected kitchen could save the food and beverage industry as much as 15% annually. Cisco believes the IoT could generate $4.6 Tn over the next ten years for the public sector, and $14.4 Tn for the private sector.

With the expansion of IoT, everything from thermostats to cameras to cars will plug into the Internet. And it will require machines that can handle those connections. The information travelling to and from all those thermostats, cameras, and cars, must flow through the data centres operated by tech giants. However, powering all this extra hardware will require exponentially larger amounts of electricity and space. But in hindsight, efficiencies brought out by devices such as Internet-connected thermostats, lighting systems, and self-driving cars will balance out the extra power needed to drive computing centres.

IoT is indeed taking huge strides in all walks of life. By 2020, a quarter of a billion vehicles will be connected to the Internet, giving us completely new possibilities for in-vehicle services and automated driving. In fact, we already have cars that can drive on their own – Google’s self-driving cars currently average about 10,000 autonomous miles per week.

Moreover, the global market for wearable devices has grown 223% in 2015, with Fitbit shipping 4.4 Mn devices and Apple selling 3.6 Mn Apple Watches. Also, Internet-connected clothing is arriving fast. Estimates predict that 10.2 Mn units of smart clothing will ship in by 2020, compared to a meagre 140K units in 2013. Today, the market for Radio Frequency Identification (RFID) tags, used for transmitting data to identify and track objects, is worth $11.1 Bn. This is predicted to rise to $21.9 Bn in 2020. According to GE, the “Industrial Internet” (their term for IoT) will add $10 to $15 Tn to global GDP in the next 20 years.

The IoT will connect many of the devices we have in our homes, from smart thermostats to smart fridges. Companies like Google and Samsung understand this. Google bought smart thermostat maker Nest Labs for $3.2 Bn, and Samsung purchased connected home company SmartThings for $200 Mn.

The IoT today is like the Internet itself, as it was in its infancy about 2 decades ago, full of promise and potential but still a conceptual leap for many individuals. Nevertheless, it is becoming more and more practical by the day, keeping in mind the rise in demand and cost of electricity. When consumer products and services can engage meaningfully with broad socio-economic concerns, energy use can be lowered to a great extent and corporations and individuals will slowly and silently adopt IOT as they experience compounding benefits.


Gaurav Burman

Gaurav Burman works with 75F as the VP & Country President, India. He was recently recognized as one of the 50 Most Talented CMOs in India in 2013 & one of the 100 Most Talented CMOs in the World by the US-based CMO Council.

Upcoming Events