Three ways the energy sector is transforming with the Internet of Things

The Internet of Things (IoT) has brought digital connectivity to the physical world, disrupting both industrial business practices and the ways in which consumers interact with these organisations.

In particular, the utilities sector is in the midst of undergoing massive transformation as it grapples with new sources of energy, intelligent assets and an imbalance between supply and demand, says Walter Walejeski, utilities industry solution principal, Meridium

Gartner even predicts utilities will lead manufacturing and government in IoT connectivity, totaling 1.7 billion IoT units installed by 2020. As the utility sector migrates its aging infrastructure to advanced, connected machinery, organisations will need to maintain existing assets for reliable operations, while also adapting to demands of a new generation of consumers, empowered with smarter devices and more control over consumption.

The IoT has brought three primary issues to the forefront for utility organisations, including cybersecurity, asset performance management (APM) and storage. For the energy sector, adopting technology and best practices in these three areas will determine how prepared and successful these organisations will be in the future.

  • Cybersecurity: In 2015, the average annual cost of cyber crime for energy and utility companies was $12.8 million, but the majority of utility organisations lack the security infrastructure necessary to protect industrial control systems against targeted attacks. This was evident when 230,000 residents in Ukraine were left in the dark after a cyber attack on a power grid caused a massive outage this past December. With increased connectivity comes increased risks, and organisations must have security built into every system.

This requires monitoring networks and educating employees, as well as ensuring suppliers are aware of industry standards and provide solutions that fit customers’ needs and expectations. For example, any new equipment or APM system should have the highest security mechanisms implemented and simultaneously be able to integrate into the existing security framework. It’s important for vendors to provide various levels and flexibility of security and application mechanisms to merge and match the enterprise’s security infrastructure.

  • Asset Performance Management: Today’s utility organisations are merging older assets with newer machines that come well instrumented with sensors for real-time data and health reports. The integration of various data sources from assets such as pumps, fans turbines or transformers and circuit breakers, with existing enterprise asset management (EAM) tools poses a challenge for reliability engineers, who are trying to maintain safe and efficient operations, while also providing insights for management on optimal maintenance practices.

APM systems collect and organise data from all available sources and provide advanced analytics that support strategies to improve asset reliability, availability and performance. As efficiency and minimising risk become central to the utility sector in the age of the Smart Grid, APM remains a critical tool for establishing optimal performance within utility organisations.

  • Storage: According to analysis by SNL Energy capacity additions in the United States slowed last year, but renewable generation made up more than half of the 14,468 MW completed in 2015. Wind accounted for 47% of new generation capacity and solar 14%. New and distributed forms of generation create big challenges for the transmission and distribution arm of utilities. Running towers and wires to remote locations for wind and solar is costly and complex.

Further, juggling power needs when renewable energy sources aren’t available supports the need for power storage capabilities. Battery and other forms of power storage are getting a lot more attention to support both distribution and emergency power needs. As the demand for energy becomes more tailored to consumer needs, power storage will play an integral role.

Increased connectivity is driving change across the utility sector and organisations must make strategic investments now to prepare for the future energy market. Energy organisations need to understand how their assets are performing, identify risks and be prepared to meet energy needs. Capturing data is a relatively easy task today, but collecting, integrating and using it are very different disciplines. By 2020, only about 37% of data is expected to be useful. To minimise costs in an optimised manner and integrate new technologies, utilities must have an effective APM program that organises and analyses big data to provide a holistic view of operations and areas for improvement.

Organisations must also have necessary security protocols and practices in place to embrace the benefits of the IoT to minimise the risks. Further, as organisations compete with new sources of power and embrace connected customers, storage will help balance demand needs efficiently. The energy sector is rapidly changing, and while the IoT brings challenges, it also brings new opportunities in a connected future.

The author of this blog is Walter Walejeski, Utilities Industry Solution principal, Meridium

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