Aug 08 2022
Data Analytics

How the Internet of Things Is Changing the Future of Energy Management

IoT adoption is widespread in the industry and is delivering cost savings and operational modernization.

By 2040, the world’s energy consumption is expected to rise by 48 percent, according to the U.S. Energy Information Administration — a looming demand increase that will require the energy and utility sector to adapt with operational and technological efficiency. The Internet of Things has become the predominant means for companies to do so.

“IoT convergence within operations is becoming more important,” says John Villali, a research director at IDC Energy Insights. Linking asset performance, distributed energy, and workforce management systems with smart devices and artificial intelligence offers the opportunity to change the future of the industry, he says: “Utilities are realizing this and moving forward in that direction.”

Indeed, 69 percent of utility companies surveyed by SAS believe that IoT will be critical to future success. Furthermore, according to Inmarsat research, 74 percent of oil and gas companies, as well as 80 percent of utilities, have implemented some form of IoT project, and many are already reaping the benefits.

Click the banner below to unlock exclusive cloud content when you become an Insider.

How IoT Is Transforming Energy and Utility Companies

Among IoT’s most notable benefits is that it helps companies overcome the siloed nature of the energy and utility sector, breaking down the walls between everything from equipment to human resources. “All these spread-out systems, talent and organizations can come together for one holistic view of operations,” says Villali. It’s the most efficient and cost-effective way to go about operations and utility.”

Accomplishing that requires five stages, he says. To start, organizations must digitize assets for connectivity, enable real-time monitoring of assets and be ready to diagnose data as it is monitored. “Where the industry is going, and where IoT can provide utilities the most benefit, is in the next two stages,” Villali says.

Companies must attain the ability to control assets remotely, and automate management using data analytics and artificial intelligence.

DIVE DEEPER: Find out how the IoT Cybersecurity Improvement Act affects the energy industry.

Predictive maintenance is the quintessential example of how these steps come together to deliver benefits to energy and utility companies.

Smart sensors can identify and address equipment maintenance issues before they escalate, allowing organizations to replace schedule-based maintenance with condition-based maintenance. Today, it’s common in the industry to bring down assets for routine maintenance during periods of low demand; instead, IoT devices can simply detect when a piece of equipment requires maintenance.

Distribution management can also be made more efficient. “It's all about less downtime and having your assets — whether it’s a power generator, transmission lines or distribution lines — produce as much as they can in terms of output,” says Villali. It’s why outage, meter data and energy efficiency management rank high among utility companies as key IoT programs.

DISCOVER: Learn about the latest tech trends in the energy and utilities industry.

What Utility Companies Should Consider Before Embracing IoT

The drive to IoT will yield greater efficiency for the sector, but there are some key things to consider.

Security is an important one. Critical infrastructure has become a pervasive target to hackers. In 2021, for example, one of the largest fuel pipeline companies in the United States was a victim of ransomware and eventually paid out $4.4 million in ransom. The removal of silos through IoT — and the interconnectedness that follows — make all entry points vulnerable. That’s why tools such as data encryption, next-generation firewalls and authentication technology will become even more essential than they already are.

Implementation of IoT also requires a thorough consideration of how it can be used to converge a company’s previously siloed IT and operational technology. “The IT organization has to start thinking about the operational add-on and about the business case. Then the OT organization has to be a little more tech savvy, in terms of collecting, understanding and using actionable intelligence to improve efficiency throughout the organization,” says Villali.

Because the truth is, while some companies may resist OT and IT convergence, those that want to prepare for the future would do well to embrace it. “If someone decides to keep them separated, it’s not that they can’t operate that way,” Villalli says. “But IT-OT convergence basically wins the battle.”

Oscar Wong/Getty Images

Learn from Your Peers

What can you glean about security from other IT pros? Check out new CDW research and insight from our experts.