These days, it seems like pretty much every information technology is sold as a service. Why not smart grid applications?
That’s the latest vision of Verizon’s Internet of Things division, which has become far more aggressive in the past several years when it comes to developing services focused on several industries, including energy and utility companies. Other focuses include transportation and manufacturing.
This morning, the telecommunication giant is rolling out its latest batch of applications, sold under the Grid Wide Utility Solutions brand name. They include options for demand response, smart metering, outage management, distribution monitoring and other applications that promise to improve grid efficiency.
The services are available initially in the United States, home to about 147 million electric meters. There’s plenty of upside. As of this spring, slightly less than 52 million were considered “smart,” endowed with communications features that allow them to be managed remotely. That reality will inspire a major increase in spending on smart grid technologies over the next nine years: By 2024, annual revenue for the software and services to make this happen could reach $17.1 billion, according to Navigant Research. That’s double what is being spent currently.
Verizon’s pitch: Utilities don’t need to own the computer servers and software themselves. Instead, they can pay a monthly fee, per meter, that enables them to modernize their operations more quickly. And they can keep adding new features depending on the needs of customers in their service areas.
“As a result, utilities don’t have to swap out their entire meter population; they can start to solve the problem areas right now on a per-month, per-meter cost basis,” said Jay Olearain, director of business development for energy & utilities, IOT Connected Solutions, for Verizon.
Verizon has the vast communications and security infrastructure to pull this off, including cloud data centers where it can run the services on behalf of customers, sensors that collect the relevant data, and its expansive wireless network for keeping tabs on grid conditions in near real time.
“[Utilities] don’t have to stand up the network. They don’t have to own and operate the infrastructure. They don’t have to manage the software running the applications. They don’t have to do any of that,” Olearain said.
Verizon’s Internet of Things technologies and services (PDF) generated about $165 million in its second quarter. That’s just a small percentage of its current revenue but Verizon is investing heavily in solutions that can pick up the slack as growth in mobile phone subscriptions slows. Rival AT&T is also emphasizing IoT innovation: its approach is to help customers build proof-of-concept applications for energy efficiency and other sustainable business initiatives in its IoT Foundry.
Verizon already manages “millions” of devices across several industries. In the energy and utilities sector, the number of connections that Verizon manages grew 49 percent last year. (It doesn’t reveal the exact number.)
Distributed renewables generation is one factor driving the uptick in better grid management solutions, Olearain acknowledged. Verizon predicts that by 2025, more than 10 percent of electricity will be “microgenerated by consumers” and connected to the smart grid.
In a recent analysis of its IoT initiatives, Verizon suggests sensors can help utilities add a layer of intelligence with minimal “in flight” changes to critical infrastructure. Here’s an excerpt from the report:
“Remote monitoring can spot problems more quickly while reducing the need to send engineers to inspect equipment at sites across the grid. IoT can also help cut energy theft by identifying potential discrepancies between supply and demand. And there’s cost avoidance, too. The company benefits from a more accurate view of capacity, demand, and supply so it can predict trends and invest more wisely.”
In the future, Verizon said it will extend similar sorts of services to water and natural gas utilities. “This is only the starting point,” Olearain said.
IoT initiatives across several sectors — including energy — could be responsible for driving up anywhere from $1 trillion to $11 trillion in economic value between now and 2020, according to research by organizations including Carbon War Room and the McKinsey Institute. Energy management and smart grid services such as the sort being rolled out by Verizon this week could eliminate up to 2 gigatons in carbon emissions, the data show.