Smart grids attract smart money: 'With the IoT it's the energy use cases that are attracting investors', says AutoGrid

With the IoT the hype has largely gone ahead of the reality, not so with 'Internet of Energy'

New developments in the generation, distribution and consumption of electricity have made the energy sector a hotbed of innovation in what has become known as the Internet of Energy.

"With the IoT more generally, the marketing hype has largely gone ahead of the reality," says Raj Pai, global head products and marketing at energy analytics firm AutoGrid. "But where people are spending is in the energy use cases. These are the ones that are getting funded."

There are a couple of key reasons for this in addition to the size and centrality of the energy sector itself. One is because energy is going through its own version of tech's bring-your-own revolution (it uses the same terminology). The market for smart devices is increasingly driven by consumer demand. Whereas utilities companies used to supply a standard thermostat - then later a choice of thermostats - now there are a large number on the market and people purchase them from retail sources. What's more, around half the thermostats sold are now "smart", says Pai, who sees this trend widening.

"What used to be 'bring your own thermostat' is now expanded to 'bring your own things'," he says.

These "things" can all be programmed to become part of a wider network - an energy IoT. As part of such a smart grid electricity can flow from the devices as well as to them. They include photovoltaics (PV) controllers, smart-home gateways and electric vehicle (EV) chargers, and they will soon be joined by many more appliances, Pai predicts, as people start to appreciate being able to control devices remotely over the internet.

"It's just a matter of time before so-called dumb devices go the same way, with customers saying ‘I used to buy a dumb device but now the value of that device being connected is so tremendous I will buy a smart one instead'."

Another driver, especially in Europe, is the emerging "imbalance market" for electricity generators.

"Europe has a connected grid and you get hit by imbalance costs if you're not in the range in which you had forecast. That's the case for both utilities and the retailers," Pai explains.

"So if you can trade that risk and trade that flexibility you can make money on it. There's a lot of space in Europe for that."

AutoGrid's customers include energy generators such as E.ON, which has invested in the company. It needs to manage demand and response as new and often intermittent sources of power, such as renewables, come on stream.

"All of these distributed resources like solar, wind, storage, demand response, EVs they've all been bubbling up from different places," says product marketing director John McLean. "What we've seen happening - slowly but accelerating - is that convergence of those resources."

McLean continues: "Instead of doing all of these as disparate programmes, utilities are viewing the connected devices as a larger set of distributed energy resources that they want to forecast and work with and embed into the market."

AutoGrid's analytics software mines the data generated by this grid of connected devices and energy assets and analyses thousands of variables to ascertain consumption patterns and energy flows. It runs on a Hadoop back-end and can be based in public or private clouds. It also makes user of Apache Spark streaming analytics software. This is so that streaming data can be analysed to provide a real-time picture of what's happening on the grid and to allow supply and demand to be optimised. The company has built interfaces to many smart devices including Google Nest and Schneider Wiser thermostats and smart-home gateways, and popular EV charging systems and PV controllers.

Pai sees the next big development, at least in the US, as being the consumerisation of storage, such as the batteries that Tesla is working on for domestic use.

"In the energy industry the traditional thinking has been that electrons flow only one direction. Now electrons are going in both directions and you have the capacity to store excess PV energy. That's happening very quickly. We see some really interesting use cases around that."

Meanwhile, McLean sees a virtuous circle, as consumers become generators of power, manufacturers cash in on the demand for smart devices, and utilities find new ways to create efficiencies.

"We're looking at how do you balance the needs of all the stakeholders in this new energy ecosystem and make it a win-win-win," he says.