Smart Utilities

What are Smart Utilities?

Smart utilities are companies in the electric, gas, and water sectors that employ connected sensors across their grids to deliver services more efficiently and analyze their operations. Even the highest-performing companies can boost their performance still further with the technology-driven opportunity that comes from data.

Most smart utilities are heavy users of Operational Technology (OT) and Information Technology (IT). They are also becoming large users of IoT (Internet of Things) with massive deployment of connected devices, sensors, and actuators. Moreover, based on the new data and other innovative solutions like Machine Learning and AI, these companies are finding new business models and operational improvements.

Customer expectations, market regulations, rapid urbanization, increasing water, energy, and power demand, electrification of transport, and the climate challenge are some of the things where digitalization will play a key role.

Rapidly growing demand drives the development

Humans consume more energy and freshwater every year, and utility companies are scrambling to meet the demand.

The International Energy Agency expects global energy demand to increase by 37% by 2040, which would likely strain energy supplies.

Water demand is expected to increase over the next 30 years. The OECD forecasts that if water demand continues to grow at a similar rate, it is likely that global water consumption will increase to almost six trillion cubic meters in 2050. It is unlikely that natural supplies will be sufficient to meet that demand in some parts.

But utility companies are finding solutions thanks to the Internet of Things. The IoT is making production and distribution more efficient, which should help relieve some of the stress on resources.

What are the benefits and challenges of Smart Utilities?

IoT provides revenue growth opportunities

There are many ways to grow business through the use of IoT and new data:

Beneficial electrification will increase the sale of electricity while simultaneously linking the electric utility business model to a clean energy future. As an example, Kraftringen installs EV chargers.
Utilities have an excellent opportunity to leverage existing marketing channels and provide new innovative Value-Added Services, like lighting control, HVAC power optimization, water leak monitoring, and similar.
Other utility companies build upon the network sites they already operate, installing, for instance, LoRaWAN gateways and move into the IoT operator business.
Digitalization changes the business landscape. Many of these opportunities requires new partnerships for rapid prototyping and a short Time To Market. Whoever takes the lead in this transformation stands a good chance at disrupting the whole Utilities business.

Smart metering is a common starting point

Smart metering is one of the most popular IoT implementations helping smart utilities optimize distribution and giving customers actionable insights to improve efficiency. For example, research shows that more than 60% of people said they would be encouraged to be more energy-efficient if they could understand how much their daily energy use was costing them.

Utility companies are expected to save $157 billion by 2035 by using smart meters. But the generated value for the individual utility company is heavily dependent on your ability to store, manage, process and extract useful information from the smart meter data.

Remote real-time monitoring reduces the need for staff on-site. For instance, long-life battery-powered metering enables detailed data gathering in many hard-to-reach installations.

Loss prevention

Optimizing distribution by early detection of leaks and thefts prevents loss. Globally, on average, 34% of pumped water ends up as NRW, or water pumped and then lost or unaccounted for, to a total cost to water utilities conservatively estimated at $14 billion per year.

In addition, the aging infrastructure is a significant problem. For instance, each year, an estimated 240,000 water main breaks occur in the U.S., according to the American Society of Civil Engineers.

Finally, theft and fraud of electricity cost the energy industry as much as $96 billion every year globally.

Manage assets and reducing operational costs

Infrastructure asset management can be highly optimized with IoT sensors, by, for instance, minimizing the need for manual inspections. Problems like vandalism or damp switching cabinets can cause injuries to people and disturb the distribution. Such things can easily be monitored and prevented with IoT sensors that send alerts at incidents.

For example, a Sensative customer has thousands of power cabinets manually inspected for vandalism and performance by technicians traveling on-site. At an average cost of $200 per inspection per cabinet, the company will see considerable cost savings while at the same time increasing security and reducing the risk of network failure by knowing the status of all cabinets in real-time, not by random inspections at prolonged intervals.

Efficient business planning and cost optimization

Access to comprehensive, up-to-date production information, together with a complete historical picture, will take the guesswork out of changes and improvement activities.

Real-time business intelligence supported by Machine Learning and AI improves operational efficiency and enables better, more timely business decisions.

Business planning utilizing new IoT data provides critical insights into customers’ utility usage patterns, enabling prediction of peak-demand periods to avoid short-and long-term distribution network failures.

The IoT also gives you full control over equipment, tools, and machinery using sensors, their performance, ware and tare, status, and fault detection for immediate action. This accumulated data over time enables you to predict and plan for investments and upgrades.

Managing the security requirements of critical infrastructure

The Utility sector is critical for society and strictly regulated to preserve the fundamental infrastructure and the supply, and as such, a prime target for malicious actors. For example, in 2019, 56 percent of utilities reported a cyberattack.

Also, increasingly, regulations require recording accurate data at regular intervals and that the data collected must be made available to all actors, government, producers, and consumers.

Utility companies have long worked with various IT and OT systems where distribution, billing, consumption, and overall account management were all done with separate tools. Smart utilities put new requirements on integrating these tools, which aids in efficiency and usability but requires exceptional increases in security.

Seamless integration of multiple technologies

The integration of OT and It technologies brings many challenges, some specific to the utility industries.

Utilities is a large-scale operation spread over vast areas, often in rural areas with poor radio coverage. The solutions will mix technologies, data formats, and carriers, depending on the most financially and technically optimal solution for each use case. These must co-exist and supply real-time data into a vendor-neutral unified management system to provide the expected efficiency gains.

You need a solution that allows you to manage your legacy and new architecture seamlessly and be flexible enough to quickly add/reduce things to your systems effortlessly in real-time to keep up with changing business needs.