Internet of Things, renewables and storage – a perfect storm for utilities’ digital transformation

Without doubt it is a time of great turbulence in the electric utilities space.

In most regions globally, wind and solar are now our cheapest sources of electricity generation, even without subsidies.

As a consequence of this, wind has overtaken nuclear, hydro and coal to become the second largest source of electricity generation in EU in 2016 [PDF]. And at the same time in the US, the solar market is smashing records and grew 95% in 2016 alone.

Then there is storage. Costs here have been tumbling too. So much so that Morgan Stanley predicts the storage market to grow from the roughly $400m in 2016, to a market size of $2-4bn by 2020. This will have big implications for utilities’ ability to add more variable generators (renewables) to their mix without destabilising the grid.

Speaking of grid stabilisation, the refrain up until now has been that for every MW of renewables built, a MW of gas had to also be built as a backstop (for days with no wind, or overcast days, or nights). However, this too has changed. Last August First Solar ran a tests with CAISO (the California grid operator) to test a solar farm’s ability to smooth out grid fluctuations. The results of the test demonstrated that solar farms are able to meet, and sometimes exceed, the frequency regulation response usually provided by natural-gas-fired peaker plants.

Things are changing on the consumption side of the house too.

solarinstall2016

Source: GTM Research / SEIA U.S. Solar Market Insight report

As can be seen from the chart above, installations of residential PV are rising, as is home storage, and another form of potential consumption and storage (v2g), the electric car, saw sales rise by 37% in the US in 2016.

Then there is the whole digitisation of the grid. Now all new equipment is being built with inbuilt ‘smarts’ and connectivity, and even older infrastructure can be retrofitted, so with the advent of the smart grid, we will finally have the possibility of the Electricity 2.0 vision I was talking up back in 2008/09. This is a smart grid where appliances in the commercial or residential worlds can ‘listen’ for pricing signals from the grid, and adjust their behaviour accordingly, taking in electricity when it is plentiful, and switching to alternative sources/lowering consumption when electricity is in high demand.

With the cost of generation dropping, with no end in sight, the cost of storage similarly falling, as I have posited previously, there is a strong possibility that utilities will have to switch to broadband-like ‘all-you-can-eat’ business models with the utilities differentiating, and making their revenue on added services.

Everything is changing for the electric utility industry – and so, against that backdrop, and the fact that I will be presenting on IoT and Utilities at the upcoming International SAP for Utilities Conference in Lisbon, I decided to have a chat with IDC Research Director Marcus Torchia, about the implications for utilities of these huge changes.

We had a great discussion, and many of the themes we touched on, I will be talking about at the Utilities event in Lisbon.

You can check out our chat in the video above, play it in the audio below, or listen to it on the IoT Heroes podcast site.

IoT, and the transition to the digital services economy discussion with Constellation’s Andy Mulholland

Over on the IoT Heroes podcast I recently had a chat with Constellation Research analyst Andy Mulholland. Before coming out of retirement to head up IoT research for Constellation, Andy was Global CTO for Cap Gemini, and so he knows a thing or two about IT!

Andy publishes extremely insightful articles on the Internet of Things regularly over on his blog, so I was keen to have him come on the show.

In the podcast we had a wide-ranging discussion on the implications for (primarily) manufacturing organisations of the Internet of things, the transition to the as-a-service economy, and how people can get up-to-speed on happenings in the IoT space.

If you have any interest at all in the Internet of Things, and how it will effect our society, you should check out this episode of the show – you can subscribe to the RSS feed, subscribe on iTunes, or simply click Play on the player below to hear our discussion

 

Photo credit Toyota UK

SAP Announces: Leonardo, Jump-Start program, and Leonardo event to help organizations get started with IoT

…learn how to see. Realize that everything connects to everything else

Leonardo da Vinci

SAP made a big announcement today related to its Internet of Things (IoT) products. The announcement is in three parts:

  1. SAP is branding its IoT Innovation portfolio SAP Leonardo – naming it after the great visionary, inventor, and artist Leonardo da Vinci
  2. Then, following on from SAP’s announcement of the €2bn investment in IoT, SAP is a launching a Jump-Start program to help organisations get started on their IoT pilot programs quickly and reliably and
  3. SAP also announced plans for its first global SAP Leonardo event for SAP customers, partners and IoT experts in Frankfurt Jul 11-12

 

SAP Leonardo

Digging into the announcement a little bit, SAP has long needed strong branding to pull together its offerings in the IoT space. The choice of the Leonardo name is a particularly apt one given, da Vinci’s timeless association with breathtaking vision (Leonardo dreamt up helicopters, tanks, submarines, amongst other things long before the technologies existed to create them). But there is another, possibly less obvious reason, it is an appropriate choice of name – the Internet of Things crosses all verticals (this is one of the reasons I find it so interesting), and so too did da Vinci. He didn’t restrict himself to painting, or sculpture, as many other great artists did. In fact, the Wikipedia entry for Leonardo states

Leonardo was an Italian polymath whose areas of interest included invention, painting, sculpting, architecture, science, music, mathematics, engineering, literature, anatomy, geology, astronomy, botany, writing, history, and cartography. He has been variously called the father of palaeontology, ichnology, and architecture, and is widely considered one of the greatest painters of all time

Apt indeed.

The SAP Leonardo Portfolio has the following components:

  • Connected Products – Enable end-to-end visibility to product-centric operations and ability to optimize compliance visibility and service availability
  • Connected Assets – Connect production systems and assets with manufacturing and Maintenance business processes to reduce operational and maintenance cost and increase uptime of assets.
  • Connected Fleet -Track, monitor, analyze and maintain all moving assets, wherever they are in the network
  • Connected Infrastructure – Delivers new forms of digital operational intelligence to transform physical-infrastructure systems to improve service, drive economic growth, and allow for more efficient and cost-effective operations, infrastructure compliance and risk mitigation.
  • Connected Markets – Foster local markets, cities, urban and rural areas to optimize utilization of natural resources and assets, reduce emissions, congestion and energy usage and improve the environment.
  • Connected People – Strives to improve lives, work and health by connecting people and communities and providing better lifestyle experiences and opportunities for organizations to evolve into new business models

 

SAP Jump-Start program

Then under the new SAP Leonardo brand, and following on from the recent announcement of SAP’s €2bn investment in the Internet of Things, part two of the announcement talks about the new SAP Leonardo Jump Start program. This is, I believe, hugely important for any organisations looking to start an IoT pilot program in earnest.

The offering consists of an executive design thinking session to kick off the customer’s project and identify an area for innovation, a rapid prototyping workshop to develop a real prototype to validate the vision, and finally an implementation phase to convert the prototype into a live pilot project and define an IoT roadmap for further business processes.

To my mind, the most interesting aspect of the offer though is that it has a fixed price for the software and services to cover the pilot and first year of usage of SAP Leonardo solutions. I can see this proving very compelling for organisations looking to investigate seriously the IoT, but not wishing to encounter sticker shock.

The details of the offer are as follows:

  • Today there are offers for 4 solutions in Q1 – Connected Goods, Vehicle Insights, Predictive Maintenance, and Asset Intelligence Network
  • In Q2 SAP plans to further offer Global Track & Trace, Distributed Manufacturing
  • Jump-Start uses the standard solution in pilot and all are Cloud solutions
  • It is available in all regions
  • Industry Value Engineering is included to help generate the business case
  • The pilot includes services and a 1 year contract for the Cloud license for 1 solution. The pilot is a 3 month project.
  • Can be purchased by client through their sales representative or visit SAP.com.
  • And SAP are currently evaluating opportunities for 3rd party participation.

 

And finally there is the announcement of the first SAP Leonardo event this coming July.  This should provide an amazing opportunity for customers, partners, and SAP experts to discuss progress on the first six months of the SAP Leonardo announcement, and Jump-Start program.

Leonardo da Vinci once famously said:

…people of accomplishment rarely sat back and let things happen to them. They went out and happened to things

Leonardo da Vinci

With this announcement SAP are telling the market that now is the time for SAP to go out and happen to the Things.

IoT Heroes podcast

Back in the early days of podcasting (2005-08) I ran a popular podcast called PodLeaders where I regularly interviewed luminaries from the tech world such as Vint Cerf, Matt Mullenweg, Robert Scoble, and others.

I have always had a soft spot for podcasts. I love listening to them as I walk the dog every morning, and/or when I’m on planes, or when I’m driving. And so, with the recent upsurge in podcast popularity,  I recently decided to start up a new podcast focussing on the Internet of Things. I’m calling it IoT Heroes.

I will publish roughly one episode a week. Sometimes it will be a dedicated podcast, more often it will be a case of republishing the audio from one of the video interviews I carry out.

For example, I have just published as a podcast the recent video interview I did with Fybr CTO, Mrinal Wadhwa. Fybr do the full network stack for IoT devices which need to be in the field, reliably sending info back to base and using very little power so the battery life is in the order of 10 years. Typical use cases are parking meters for cities, soil moisture sensors for agriculture/horticulture, and sewage flow sensors for waste water organisations.

Apart from the interview with Mrinal, I’ve already published interviews with Industrial Internet Consortium Executive Director Richard Soley, with Eclipse’s VP Marketing Ian Skerrett, and with Labs Network Industry 4.0 Lead Anke Riechers.

If you want to subscribe to the podcast, the url is http://tomraftery.libsyn.com/rss, and if you want to add it to the blogs you follow, you can find it on IoTHeroes.com.

In the meantime, use the player below to enjoy the podcast with Mrinal:

New business models for utilities

Several months before joining SAP, I was asked if I would give a talk (and be on a related panel) at the European Utility Week conference in Barcelona this year on the topic of New Business Models for Utilities.

The event is the premier utilities event annually in Europe with 12,000 attendees, and 600 exhibitors. I was honoured to be asked, and of course accepted, without hesitation.

The talk wasn’t video’d but you can check out the slides I used above. In slides 3-29 I outline why utilities need to adopt new business models (revenues are falling due to factors like falling costs of generation, the rising popularity of renewables, climate change, etc.). In slides 33-40 I discuss some of the evolutionary business models open to utilities. While slides 41-60 outline some of the more revolutionary opportunities open to utilities – many being enabled by the Internet of Things, and utilities digital transformation.

With all the changes occurring, utilities need to disrupt, or they themselves will be disrupted.

Free, open online course about the Internet of Things

SAP have just announced Imagine IoT – a free course on openSAP, SAP’s Enterprise MOOC (Massive Open Online Courses) learning platform.

Why is this important?

The Internet of Things is an incredibly nascent area. Today. But it is going to explode. Slowly at first, and then all at once, such that some day soon everything will be smart and connected.

Think back to the state of the Internet in 1994. Almost no-one had a website, or their own domain even. Most companies didn’t even have a company email address, never mind one per employee. That’s where the Internet of Things is today. Most devices, are dumb and not connected, but soon all devices will be connected, the same way everybody has an email address, and when they all start talking to one another, it will transform the world as we know it even more than the Internet has to-date.

Now you see why the Internet of Things is important. It is globally transformative. Now, if you want to learn a little about the technologies underpinning the IoT, this course could well be for you.

The course is open to all comers and in the course

you will learn the fundamentals of the Internet of Things (e.g., sensors, the cloud, and more) and be introduced to new interaction paradigms (augmented reality, wearables, and more) that are changing how we interact with the world around us. You will also learn how to design and create your own IoT prototype

At the end of the course there is a “prototyping challenge” where you submit the prototype you have designed and completed during the course for feedback from your peers. The prototypes will be voted on and the winning prototypes will be showcased, and get to choose how SAP donates $50,000 to charity.

The course consists of 3 weeks of lectures commencing on September 28th, followed by four weeks of the prototyping phase.

The course curriculum looks like this:

  • Week 1: Get to Know the Internet of Things
  • Week 2: Go Deeper into IoT with SAP
  • Week 3: Create Your First IoT Prototype
  • Week 4: Submit Your IoT Prototype
  • Week 5: Evaluate IoT Prototypes of Your Peers
  • Week 6: View Results of Your IoT Prototype
  • Week 7: Winners Announced

And the course doesn’t require any previous knowledge of coding (though, it probably wouldn’t hurt!).

I signed up for the course, and I’m looking forward to trying out some of the technologies that will be showcased.

Full disclosure – I work for SAP but I’d have blogged about a worthwhile initiative like this regardless given how important and pervasive the Internet of Things is going to become. Knowing how to work with IoT will be a hugely important skill.

Global Internet of Things Evangelist for SAP

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My SAP phone on my SAP laptop

I have been recruited into SAP in the role of Global Internet of Things Evangelist starting this month.

When I left RedMonk earlier this year, I mentioned that I was talking to a couple of people, but that there was still a window of opportunity for other companies to get in touch about my working for them. SAP, and a number of others, saw the post and got in touch.

It has been an exciting few months in the meantime. I’ve had fascinating discussions with lots of companies (including the CEO of a US electric car company who wanted me to move to Palo Alto to work for his organisation).

After weighing the various options though, I decided to accept SAP’s generous offer, for a number of reasons:

  • The Internet of Things is at its very inception – it is now where the Internet was in 1994 – back when organisations didn’t have websites or a company email address even. So there are going to be seismic changes in the workings of the IoT over the next few years. This ever changing landscape, and the incredible outcomes which will accrue, are what makes this topic fascinating for me.
    Also, when I worked on cleantech, it was an area which was very broad and cut across many verticals. IoT similarly crosses many verticals, so it maps very closely with what I’ve already been doing.
  • Then there is SAP – SAP is a large enterprise software company. SAP has in the region of 77k employees, and reported revenues in excess of €20bn in 2015. By any measure SAP is an enormous organisation. And I have only ever worked for very small companies, so why go for SAP?
    Well, that’s the point, isn’t it? Working for a small company it is very hard to make an impact, but when you are working for a company with hundreds of thousands of customers, if you make even a small difference, it can have really significant outcomes.
  • fullsizerender
    And then there’s the fact that we live in the city of Seville. It is a beautiful city, and my family and I love living here. SAP had no problem with me living in Seville and didn’t even think of asking me to move to Germany, to Palo Alto, or even require me to work out of the SAP Madrid office. This was a big factor inthe decision too.

So now that I have started, I am looking forward to getting to know all my SAP colleagues, helping craft SAP’s Internet of Things strategies, and showcasing all the seriously impressive IoT solutions that are possible with SAP’s software.

If you want to get in touch to know more, feel free to leave a comment here, DM me on Twitter, email me at tom.raftery at sap.com, or get me on my mobile +34 608 252 871

Technology is moving us to a world where energy is cheaper, smarter, and less carbon intensive

Screen Shot 2016-05-03 at 11.51.40

The graph above is a graph of electricity demand on the Spanish electricity grid taken from the demand page of the grid management company Red Electrica de España.

The data comes from April 26th this year through to Mar 3rd. The sever small graphs along the bottom are daily demand curves, going from Tuesday April 26th on the left, through to Monday May 3rd on the right. You can see that the demand curves for each day are virtually the same.

Saturday and Sunday are however, obvious due to the lower demand on those days, and if you are wondering why Monday the 3rd looks to be lower than the rest of the weekdays, it is because that Monday was a holiday in Spain.

The large graph on top is a zoomed-in look at the demand on one of those days – Friday April 29th. From that you can see that the demand starts to rise early in the morning with the peak occurring between 8-11am. Demand then falls off until late afternoon when people are cooking their evening meals, peaking around 9pm, and then falling until it starts again the following day.

The pattern varies slightly by day of the week, as well as by season, but overall while it is variable, it is also highly predictable.

Graph of predicted energy demand vs actual demand on Spanish grid on April 29th
Graph of predicted energy demand (Green) vs actual demand (yellow) on Spanish grid on April 29th this year – graph from REE

This can be problematic though when you have high penetrations of variable energy suppliers, such as wind and solar.

Here is the energy supplied to the system by wind, for example on April 29th

Energy supplied by wind on the Spanish grid on April 29th this year
Wind energy on the 29th of April on the Spanish grid

As you can see, it doesn’t map well with the demand, and this is challenging for grid management companies, especially with increasing pressure on them to decarbonise.

That can lead to circumstances where wind power ends up supplying 140% of your demand, as happened in the Netherlands last summer. Fortunately, the Netherlands has good interconnects, and so was able to sell this excess energy to its neighbouring countries. This won’t always be the case though, and will become a more common issue as the penetration of wind and solar increases globally.

 

Obviously, if you can’t manage the supply side of the grid, what about managing the demand – how achievable is that?

Interestingly, this is now becoming a real possibility. Already there are companies who aggregate the demand of large organisations with facilities for reducing demand, if required, and sell that reduced demand to utility companies. This can save the utility from having to build new generation sources to meet the increased demand at times of peak load.

Demand flexibility graph
Demand flexibility

What if this were more widespread?

Looking at the chart above, if we could shift the yellow demand line up during its overnight dip, and then reduce the yellow demand line during the morning and evening, this would make the grid more stable, and allow for the introduction of more variable generators (solar and wind) onto the system, as well as reducing the requirement for expensive ‘peaker plants’.

Sounds great Tom, how to do that?

Well price is always a great motivator. In Germany last week where there was an excess of energy on the system, so pricing went negative, meaning large customers were being paid to use it.

Negative pricing on the German energy market
Graph of negative pricing on the German electricity market

Reduced, or negative pricing is a better option than wind farm curtailment because curtailment lowers the income for the wind farms, making them a less attractive investment for renewables developers, while reduced pricing moves the demand to a more suitable time.

Now, with the advent of the Internet of Things, everything starts to be smart and connected. If our electricity devices can listen for realtime electricity signals from the grid, they can adjust their consumption accordingly.

Of course, not all loads in the home are movable  – not many people will decide to cook their evening meal at 3am just because the wind is blowing and energy is cheap.

However, many loads are eminently movable. Pool pumps, are a good example. And also many loads that have a heating or cooling component associated with them, such as an electric hot water heater. When it is well insulated it doesn’t matter when it heats the water. Similarly for fridges, freezers, ice bank air conditioning, and so on. These are straightforward and affordable forms of energy storage.

Dish washers, washing machines, clothes dryers can also be made to listen to electricity pricing, and adjust their behaviour accordingly. Often, when you put the dish washer on in the evening, you don’t care when it comes on, as long as the dishes are clean and dry when you get up the following morning.

As more of our appliances become connected and smart, this will become the norm. Obviously, for widespread adoption, this kind of behaviour has to be totally automated. If the device owner has to think about it, it won’t happen.

Smart grid appliance

And then there are the real storage options, using batteries. This can be in the form of batteries in electric vehicles using vehicle-to-grid technologies, in-home batteries such as the ones Tesla, and others sell, or reconditioned electric vehicle batteries – a market that is just starting to get going.

So, good news, technology is moving us inexorably to a world where energy is getting cheaper, smarter, and less carbon intensive.

I have joined The Futures Agency

TheFutureIsSoBrightIGottaWearShades

Those of you who are connected to, or are following me on LinkedIn may have noticed an update to my profile there the other day. I have joined The Futures Agency.

What is The Futures Agency?
The Futures Agency is like a speaker’s bureau except that it specialises in futurists – people who are looking at trends in technology and society and who attempt to predict from that where we are headed.

Is this a full time gig?
No, this is a non-exclusive arrangement – The Futures Agency prefers to call us Members, so I can continue to work with other organisations, as before.

How did this come about?
TomAtCEPISI was invited to be one of two keynote speakers to address the 56th CEPIS Council Meeting in Athens recently. The other keynote speaker was Gerd Leonhard, Futurist, and CEO of The Futures Agency.

Gerd and I got to talking over lunch and he was interested in some of the things I had to say.

After lunch Gerd gave his keynote first, and I presented my keynote (The Future of IT should be Green), immediately after.

Gerd was seemingly impressed by the talk, and so he invited me to join his agency. And I was honoured to accept.

You’re a Futurist, what are next week’s winning lottery numbers?
Good question – that will take a little time to think about. How about you leave that one with me, and I’ll have an answer for you, oh I don’t know, say… next week? 😉

If anyone has any more questions for me, feel free to leave them here in the comments, to email me, or hit me up on Facebook, Twitter, LinkedIn, or whatever is your preferred chat app.

Elon Musk has two more Secret Master Plans

In August 2006 Elon Musk first published his Secret Master Plan for Tesla:

Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options

And with the launch (for pre-order) of the Tesla Model 3 last month, the Secret Master Plan is now well under way (if a little behind schedule!).

However, I’ve long suspected that Elon Musk has even greater ambitions than moving the world to electric transportation. I think he has two more Secret Master Plans, and I’m going to lay them out below. See if you agree with me.

The first is the more obvious of the two – to disrupt Uber, public transportation, and other ride sharing operators, by allowing owners of fully autonomous Tesla vehicles to participate in a Tesla operated ride sharing scheme.

How would it work – well, when I drive to work in the morning in my Tesla. I park the my car, and engage the Ride Share mode. The car then broadcasts its location and availability to the network, which assigns it rides as and when they are needed. At the end of my work day, my car knows to meet me back at my place of work to take me home, and I can choose once more to set it to Ride Share mode, or have it charge (or both if I have the Tesla robotic charging arm).

DrivingATeslaThe trips would be undertaken on a revenue sharing basis, so money made could well be put towards the car loan/lease costs. In this way, the car could go a long way towards paying for itself, while also reducing traffic congestion, reducing global emissions, and making the roads safer.

And in case you think this is just the voices in my head (!), Elon Musk himself strongly hinted that he was planning something along these very lines last week.

The second Secret Master Plan is less obvious – it involves disrupting the utility industry. How?

By using the batteries in the electric vehicles to buy and sell energy. I know this may sound totally outlandish, but bear with me.

Most home energy storage systems store somewhere between 4-8kWh of electricity (with Tesla’s PowerWall coming in at 6.4kWh). But if you own a Tesla car, your battery is 70-90kWh (for the Model S, it may be as low as 50kWh for the Model 3). That’s still a lot more than a home energy system.

Now consider, Elon Musk’s stated aim is to sell 500,000 cars a year by 2020. That may sound very ambitious given Tesla are currently selling a little over 50,000 cars per annum. However, Elon Musk is nothing, if not ambitious, and orders for the new Model 3 are approaching 400,000 according to Tesla Vice-President of Business Development, Diarmuid O’Connell.

But let’s be conservative and say that Tesla manages to deliver 200,000 cars in 2020 with an average battery of 60kWh. A quick bit of maths tells us

60KWh x 200,000 = 12,000,000KWh

12,000,000kWh = 12,000MWh

12,000MWh = 12GWh

12GWh is a lot of storage. For context, that’s the ability to store an hour’s output from 12 typical modern nuclear reactors.

Indian Point nuclear power plant
Indian Point nuclear power plant – Photo Tony Fischer

Now, add to this the fact that every Tesla sold has an always-on data connection.

Suddenly you realise Tesla has the ability to control dozens of virtual nuclear power plants worth of storage, and Tesla will be selling at least 12 more nuclear power plants worth of storage, every year. Conservatively.

So the business case – Tesla can sell usage of this distributed storage to utility companies to use as backup, or for frequency regulation, to help smooth the demand curve on the grid, and remove the instability introduced by the addition of variable generators (wind and solar). If utilities can buy energy from Tesla at times of peak demand, it can mean they avoid having to build a power plant (or 12), which is a huge cost saving for them, and also reduces their emissions because peaker plants are invariably powered by burning fossil fuels.

For Tesla car owners, they get paid on a revenue share basis for use of the battery in their car, and the increased grid stability allows for more variable generators (wind and solar) to be added to the grid, making the world a better place for everyone. And that sounds just like something Elon Musk would want.

After all, Musk is the guy who said, when he published his Master Plan back in 2006:

the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution

So what do you think, will Tesla be the next ride-sharing platform, while also becoming the Uber of electricity?