Will IoT reduce energy consumption?

In recent decades, electricity has become a key commodity for modern societies. At the same time, it had a destructive impact on the environment because of increasing energy generation from the fossil fuels rather on improving its efficiency.

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To change that situation, Europe has declared to reduce till 2020 total emissions by at least 20% compared with 1990 levels according to The Smart Cities Report (October 2016). The report says that Europe with its regulations aims to drive down fossil fuel emissions by achieving 20% increase in energy efficiency — the equivalent to turning off 400 power plants.

A major requirement for improving energy infrastructure in European cities is a two-way flow of electricity and information to create an automated and distributed energy delivery network. Internet of Things is a core element of this concept that enables data gathering with a help of smart meters and real-time processing. This approach is also defined as a Smart Grid concept.

Currently, the European Commission is actively working on implementation of Smart Grids, metering, and street lighting solutions. It’s estimated, according to the European Commission report Benchmarking smart metering deployment in the EU-27 with a focus on electricity (2014), that

72% of consumers in the EU will have smart electricity meters installed in their homes by 2020 and that it will require the investment of around €45 billion for the installation of close to 200 million smart meters.

The EU’s 2020 targets have pushed governments, power companies and utility providers to implement IoT initiatives that reduce energy consumption, leading to the adoption of new technologies throughout Europe. Such approaches will allow providers to increase energy efficiently through a connected Smart Grid and encourage customers to monitor and reduce their own usage.

In the report Intelligent Assets: Unlocking the circular economy potential by the Ellen MacArthur Foundation, we may find some practical use cases on how intelligent assets improve efficiency in energy consumption:

Cisco uses an IoT-enabled system called Cisco Energy Management (CEM) to accurately measure and manage energy use (and CO2 emissions) at their manufacturing facility in Malaysia, with a goal of reducing energy consumption by 20%.
Philips provides ‘lighting-as-a-service’ to their customers, continuously optimizing power consumption as they have live and reliable data on the use patterns of their customers, and can therefore enhance the light installations.
GE recently announced its ‘energy-as-a-service’ platform, aiming to take 10–20% off customers’ energy bills as well as enable better distribution for utilities.
Silicon Valley-based Enlighted provides an IoT based energy service system, claiming it saves their clients 60–70% on lighting and 20–30% on heating/cooling, while the IoT infrastructure additionally enables further smart solutions.

Intelligent monitoring systems can also be used to create energy saving IoT solutions for homes. The Ukrainian-founded startup EcoisMe, backed by Deutsche Telekom, offers a smart home energy monitoring device that detects every home appliance.

It uses machine-learning algorithms to trigger configurable notifications about the status of home appliances and reduce energy bills. This type of precise data with behavioral feedback could have interesting applications, e.g., for municipalities to motivate citizens reducing energy consumption, or to upgrade more utility infrastructure effectively.

Smart Grid solutions are expected to have a significant effect on modern society and will deliver $18.8 billion in cost savings in 2021 according to Juniper Research 2016. However, to realize its capabilities, IoT solutions must connect large numbers of smart devices and software integration to build effective information exchange system and optimize energy efficiency.

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