Can IoT help stop the utility death spiral?

Electrical utilities who dive deep into the Internet of Things (IoT) can potentially leverage the emerging technology to build new, stronger relationships with their customer base. Notably, IoT will allow utilities to develop trusted advisory relationships with customers previously beyond the scope of traditional power delivery.

A new report from Navigant Research on the U.S. IoT market examined customer adoption trends, changing technology, the vendor landscape and utility rollouts out to 2025.

It concluded that IoT has the potential to open new avenues for utilities, particularly as the industry looks beyond its traditional strategies driven by demand-side management (DSM). Through IoT, utilities can develop “deeper and ongoing relationships with residential and commercial customers through devices, software, and services.”

“IoT can help utilities transition into new ongoing advisory and managed services relationships to gain better insight into customer loads and improve customer satisfaction,” said Navigant’s principal research analyst Casey Talon. “This new approach to customer engagement will direct behavior modification, load control, and conservation in concert to maximize reliability and resiliency of the grid.”

Utilities caught between a rock and a hard place

Utilities are currently caught between the twin pressures of new forms of energy being pushed by policy and client demand – like renewables that drive down energy prices while utility fixed costs remain higher – and lowering energy demand caused by increased energy efficiency efforts and the technologies enabling them.

German utility RWE’s CEO Peter Terium called this “the worst structural crisis in the history of energy supply.” Industry analysts call it the utility “death spiral” with grid maintenance costs going up and the cost of generating renewable energy going down, more customers will leave the grid to employ efficient technology and generate their own on-site energy.

But IoT deployments could slow this utility defection. By 2020, Navigant predicts 70,000 customers across the U.S. will be in pilot-scale utility IoT engagements, a market estimated at $500 million. The report predicts the drivers of IoT adoption among utility customers will be improved DSM program synergies, cost containment and the desire for consumer choice.

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