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Evolving Role of IoT in the Energy Efficiency Industry

Evolving Role of Internet of Things (IoT) in the Energy Efficiency Industry

Divyanshu Kamboj for Zondits, September 3, 2014

The term “Internet of Things” (IoT) refers to the use of sensors, actuators, and data communications technology built into physical objects that enable those objects to be monitored and/or controlled across a network. IoT has become more popular over recent years. We have witnessed the adoption of IoT solutions primarily so that organizations can better manage their assets, optimize operational performance and logistical efficiencies, and create new business models. Regardless of the end applications for the connected devices, which we have indeed seen grow into thriving business models, the common goal is to provide visibility for these remote assets (“things”) that would otherwise be unreachable.

In the energy efficiency industry, we refer to some of these capabilities as Building/Energy Management Systems (BMS/EMS). But with today’s ubiquitous mobile data networks, the availability of low-cost sensors, and advancements in computing capabilities, a perfect disruptive environment is being brewed to allow businesses to leverage the aforementioned tools, which were once difficult to implement either due to high cost or lack of technology agnosticism. The energy efficiency industry is slowly but steadily waking up to this disruption, and policy makers and utilities are exploring ways to utilize and incentivize the use of such technologies. So far, they have been successful in demonstrating these advances’ relevance in the form of smart grid and smart energy products, which have gained traction in the marketplace to some extent. Still, the question many are asking is “How do I leverage IoT technology to support business objectives?

The last two words of this question – business objectives ‒ probably hold more meaning than the technology capabilities we have access to in the present day. The mass consumerization of information technology is now driving business strategy, rather than the other way around. If all of this holds true, the role for IoT in the energy efficiency industry would not be limited to just facility-owned BMS/EMS. That may as well be labeled as a low-hanging fruit, as there is certainly much more room for monetization for IoT technology solutions than we can currently conceptualize.

A major (but silent) indicator of increasing relevance of IoT in the energy efficiency space is the need for better assessment and evaluation of energy efficiency improvements implemented across industrial, commercial, and residential sectors. Until recently, the success of energy efficiency projects has typically been determined based on an aggregated analysis of a facility’s pre- and post-upgrade energy usage using billing data as the empirical source. The analysis cycle using this method has primarily served summary statistics for a facility’s energy usage, and to some extent it has provided prescriptive recommendations for energy reduction. To further facilitate this analysis method, conventional data logging techniques have been used to conduct load research processing. Such conventional measurement and verification (M&V) techniques have primarily lacked in three ways – data granularity, availability, and accessibility, and not allowing the end user to perform preventive maintenance on their energy equipment or modify their energy usage behavior sooner than later. Therefore, the direct impact of IoT or enhanced M&V in the energy efficiency space is a dynamic evaluation of the installed energy efficiency measures, where the readily available energy data creates instant value for the end customer in the form of a real-time energy report card.

The less intuitive, but equally valuable, benefit of IoT implementation in the energy efficiency space is the use of this real-time energy data to enhance utility- and state-sponsored energy efficiency programs. The reliability of energy models that claim to predict site’s post-upgrade energy savings has long been debated in the industry. The introduction of enhanced M&V techniques facilitates better calibration of modeled energy usage associated with a specific end use, particularly in the pre-upgrade scenario, where the basis of the baseline energy usage is the actual empirical data retrieved from the end equipment receiving the efficiency upgrade. In other words, more granular and readily available energy data results in improved calibration of the energy models, and ultimately helps derive more accurate predictions of site’s energy usage through more robust and informed adjustments to the baseline energy usage. As a consequence, leveraging IoT technologies for enhanced M&V provides continuous feedback of the effectiveness of energy efficiency programs by diminishing the analysis uncertainties associated with factors like weather normalizations in aggregated billing analysis, regression techniques, and deemed energy savings.

The implication of enhanced M&V using the IoT platform is showing signs of increasing relevance from the policy perspective as well. The EPA is now considering a legal framework to limit carbon dioxide emissions under Section 111(d) of the Clean Air Act, where performance-driven energy efficiency would serve as a compliance mechanism. Until now, due to the lack of robust energy monitoring tools to accurately quantify energy savings, the policy makers have not been particularly motivated to give utilities credit for promoting carbon dioxide reduction goals, using energy efficiency as an enabler. However, the advent of IoT solutions in the energy efficiency space, coupled with a well-timed policy support, could very well deliver a long-awaited and much needed change to the way we approach energy efficiency.