Internet of Things in Power (2021) – Thematic Research

The global IoT revenue in the energy sector was valued at $34.0 billion in 2019 and is projected to grow at a CAGR of more than 9% during the forecast period 2020-2025. The growth of the IoT market in the energy sector is steady. However, as the sector recovers from pandemic hardships and losses, CAPEX and OPEX will remain focused on core business, and investment in innovative IoT technologies will remain minimal. The cost of sensor technology, which is embedded in connected devices, will continue to decline, prompting an uptake in IoT technologies within the energy sector.

Global IoT in the energy sector overview

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What are the market dynamics in the IoT in the power sector?

In 2021, the power sector has faced significant challenges across the entire value chain. These include spiking energy costs, transitioning to renewables, and safeguarding assets against extreme weather conditions. The Internet of Things (IoT), billed as a key part of the next industrial revolution or Industry 4.0, can significantly transform the power sector by optimizing operations, managing asset performance, and engaging customers to lower energy costs.

The power sector is already reaping benefits from early consumer-oriented IoT applications: smart meters and smart thermostats. Incorporating IoT technology is also made easier by the declining costs of IoT hardware, notably sensors. Electricity trading, smart grids, and asset management represent primary growth areas for IoT in power, with power generation, transmission, and distribution as the key areas of IoT implementation.

What is the value chain framework of IoT?

Device layer: In the device layer, we find the makers of connected things, including sensors, embedded chips, and their components. Connected things can include connected cars, smart thermostats, fitness bands, smart light bulbs, or a parcel in a delivery truck. The essential electronic components include microcontroller chips, AI chips, communications chips, and sensors. The difficulty in picking winners at this stage is that we are in the midst of a battle to determine the winning communications standard for IoT. Qualcomm, Arm, Intel, and Broadcom are some of the contenders.

Connectivity layer: In the connectivity layer, providers of network connections are the key players, including major telecom operators and networking equipment vendors. We also find in this category makers of edge devices (e.g., routers and gateways), which provide entry into the communications network. Cisco, Huawei, and Ericsson are the leaders here. Cloud and edge computing service providers such as Amazon, Microsoft, and Google also play an important role. IoT is likely to change the way they make money: today, most users of connected devices are humans; tomorrow, most users will be machines. So, the future of many operators in an IoT world may well depend on the business model they adopt to monetize M2M traffic.

Data layer: In the data layer, the information collected from connected things is stored, cleansed, integrated with other systems, and analyzed. Much of the analytics, security, and management is provided by companies offering infrastructure as a service (IaaS). Leaders in this space include Amazon, Microsoft, Google, and IBM. Various big data service providers such as SAP, Oracle, and Salesforce are also leaders in this segment.

App layer: In the app layer, we find the smart hubs that control and monitor connected things. This is where the long-term value resides. Apple and Google are leaders in consumer IoT, while GE, Honeywell, PTC, and Bosch are leaders in the Industrial Internet. This layer is also where start-ups are most active.

Services layer: In the services layer, we find the technology service providers who provide system integration, consulting, and other data services related to the development and maintenance of IoT ecosystems. IoT services have become a necessary addition to the IoT value chain over the last decade because many IoT adopters lack the design, technical, integration, or data analysis skills to be able to deliver a successful IoT implementation. Accenture, Deloitte, Cognizant, and IBM are some of the players in the IoT services market.

What are the challenges in the power sector?

The shift to IoT-based business models is inevitable. Smart home devices such as smart thermostats are familiar with IoT technology and are commonplace in the US and numerous European countries. Smart thermostats allow users to control their home’s heating settings from a smart device. This enables them to control when and for how long they have their heating on and at what temperature.

The number of households that have deployed smart thermostats has increased as more homeowners have started benefiting from reduced energy consumption. According to the UK Department for Business, Energy, and Industrial Standards, there were 26.4 million smart and advanced meters in homes and small businesses in the UK as of September 2021. Smart Energy Outlook GB found in their March 2020 annual survey that 69% of people with smart meters were more conscious of their energy use. Utility customers feel more empowered when using these IoT-connected smart meters. Through smart meters, consumers can more effectively mitigate the financial impact of rising energy costs by controlling their energy consumption.

For utility and power companies to effectively incorporate IoT-enabled smart devices into their infrastructure and daily operations, expertise must be on hand. This involves employing more skilled IoT staff, such as drone operators, data analysts, and software engineers. Interestingly, there has been a rise in IoT-related job filings in 2021, as pandemic woes ease and companies look ahead at how to implement digitalization.

Who are the key players operating in IoT in the power sector market?

Brooklyn Microgrid, Duke Energy, E.ON, Electricite de France (EDF), Enel, Engie, Exelon Generation, Fingrid, Iberdrola, Korea Electric Power (KEPCO), National Grid, RWE, Southern, State Grid Corporation of China (SGCC), and Xcel Energy are the companies operating with IoT in the power sector. 

Internet of Things (IoT) in power, by key players

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Market report scope

This report provides a comprehensive analysis of the IoT in the power sector. It provides:

• The report focuses on understanding the impact of the Internet of Things (IoT) and its potential applications in the power industry.
• Review of the recent technological advancements in IoT that could set the tone for its adoption across diverse industries.
• Assessment of the strategies and initiatives adopted by power companies to gain a competitive advantage in this theme.