IoT in the power sector: Opportunities in Asia and the Pacific

Internet of Things (IoT) is billed as the next industrial revolution, Industry 4.0. The concept of IoT can be encapsulated as the capability to sense the environment with multitude of sensors, process all the data, make intelligent decisions and act in real time. At a high level there are three use-cases of IoT in the power sector: a) operational optimization resulting in improved economics and reduced carbon emissions, b) asset performance management (APM) for higher reliability and lower cost of maintenance, and c) customer engagement with the objective of lowering cost, and supporting local production, storage and usage of electricity.

Thus far, it has been a paradigm of internet of people (IoP)—the internet has been primarily used by people to exchange information, and then to take action and make decisions. What if the internet were used by machines and devices to exchange information and then take action and make decisions, without direct supervision of people? This internet of things (IoT) paradigm promises to take network of machines and devices along with smart algorithms to create the next industrial revolution, akin to the business revolution that was created by IoP.

In its simplest form, IoT has three components: digitization of assets, collection of data about the assets, and computational algorithms to control the system formed by the interconnected assets. Although there is a lot of hype around IoT, the power sector has been the beneficiary of two recognizable early consumer-oriented applications of IoT: Smart meters and smart thermostats.

In Asia, several pilots of smart meters, smart buildings and smart city are ongoing. Smart thermostats and smart meters in conjunction with other IoT solutions have the potential to spur a variety of smart buildings and smart city applications.

More recently, IoT solutions are entering the domain of industrial operations. In the power sector, the most popular application in this category is APM—condition monitoring and predictive maintenance of a wide variety of assets. The IoT-based approach transitions from traditional reactive and periodic maintenance strategies to proactive strategies.

The applications are focused on the highest value assets in generation plants, and in the transmission and distribution grid. In this application, assets are continuously monitored with sensors, the collected data is sent to the cloud where a variety of machine learning and artificial intelligence algorithms are used to a) predict the health and impending failure of the assets, and b) determine the optimal time to perform maintenance. In Asia many grids are plagued with unreliable service. This is primarily because of aging equipment and poor maintenance. Investment in IoT for both existing and new equipment has the potential to significantly reduce unscheduled downtime by identifying problems before they occur, thereby improving reliability and reducing costs.

Another application of IoT is optimal use of generation assets to increase the efficiency of production. In new gas and coal power plants, GE claims its digital technologies can increase fuel efficiency by 3%, power output by 2%, and reduce unplanned downtime by 5%, O&M costs by 25% and fuel consumption during starts by 20%. In Asia, these strategies may be used to reduce cost and emissions.

A futuristic application of IoT is holistic optimization of the entire power network with the goal of decentralization and defossilization of the power sector. Currently system operations of power networks are a collection of batch processes—Unit commitment, economic dispatch, automated generation control (AGC), and others. What if a network of sensors can provide situational awareness of all the generation units, energy storage units, T&D network, loads, and demand response, and algorithms can provide forecast of load and renewable generation? In such an IoT platform, smart algorithms can optimize the entire network for lowest cost, highest use of renewables or any other objective, and communicate the decisions to all the generation units and demand response units using AGC.

From the standpoint of business adoption, IoT should not be treated as a technology initiative. The digital transformation of IoT should start with a roadmap that converts the highest level strategic business goals of the utility to short-, medium- and long-term initiatives for transformation. The initiatives should then drive the value proposition for specific IoT pilot projects. Without such an approach it is easy to be swayed by vendor driven projects or the “shiny thing,” which would squander investments in IoT projects.

IoT transformation is inevitable but the journey to realizing the potential in Asia and the Pacific is likely to be difficult initially due to lack of regulatory framework, financing and ICT (information and communications technology) skillset in the workforce. However, the results of this endeavor would lead to higher energy access for the poor, lower emissions, higher efficiency and reliability.