Industry Market Trends

Could the 'Industrial Internet' be the Key to Renewable Energy and GHG Reductions?

Mar 11, 2013

The Virtual Power Plant. Courtesy of Siemens. The Virtual Power Plant. Credit: Siemens.

The Industrial Internet, or the Internet of Things, promises to save energy and reduce industry's environmental impacts through machine-to-machine (M2M) communication, says an AT&T-sponsored report by Carbon War Room, a research organization focused on the climate challenge. The report says that by 2020, M2M and information and communication technologies (ICT) could reduce greenhouse gas (GHG) emissions by 9.1 gigatons (Gt) carbon dioxide equivalent (CO2e) annually. That's an impressive figure, equal to 18.6 percent of global GHG emissions for 2011.

The vision of an Internet of Things appeals to Jeffrey Immelt, CEO and Chairman of General Electric, who writes at GigaOM that he expects to see in the near future "an open, global fabric of highly intelligent machines that connect, communicate and cooperate with us." He believes this "Industrial Internet" is "about combining the world's best technologies to solve our biggest challenges," developing "economically and environmentally sustainable energy, curing the incurable diseases, and preparing our infrastructure and cities for the next 100 years."

12.5 Billion Devices by 2020

M2M communication device. Credit: Netbiter, CC BY-SA 2.0. M2M communication device. Credit: Netbiter, CC BY-SA 2.0.

Carbon War Room predicts that 12.5 billion M2M devices will be operating worldwide by 2020, up from only 1.3 billion today. The M2M industry is growing at an impressive 23 percent per year, meaning it could mushroom from a $121 billion business today to $948 billion by 2020. China is leading the world in incorporation of M2M into national infrastructure.

M2M technologies allow companies to improve efficiency in energy and use of resources and to reduce waste. The Carbon War Room report focuses on the potential for the Industrial Internet to reduce GHG emissions in the key sectors of energy, transportation, the built environment, and agriculture. The group believes that these technologies could save over 2.0 Gt of CO2e by 2020 in the energy sector by facilitating the operation of smart grid, smart meter, and demand-response systems, by improving efficiency in energy production and transmission, and by expediting the switch to renewable energy.

M2M communication is made possible by embedding sensors and microprocessors in machines and other objects; the sensors generate data about a machine and how it is functioning. Those data are sent out over (usually wireless) networks to central computers and back-end IT infrastructure that analyze and act on those communications, sending instructions back to the machine to alter and optimize its behavior. "The core capabilities of M2M," says the report, "are to reduce human error, save time, increase efficiency, conserve resources, and generally optimize the performance of a physical system -- all of which also save money."

Integrating Renewables

Elbow Creek Wind Project, Texas. Courtesy of Siemens. Elbow Creek Wind Project, Texas. Credit: Siemens.

M2M has important implications for the integration of renewable energy into electric grids. As an example, Jürgen Hase, who leads the international M2M business for Deutsche Telekom, points out that "When there is a steady, strong wind, many local wind farms generate more electricity than is needed in the locality." The problem here is that "if too much electricity is fed into the grid, it threatens to collapse." The solution, he says is to "let M2M modules on the transformers in the substations measure constantly how much electricity is fed into the grids. If it is too much, the modules simply cut off the overproduction."

A report from the Boston Consulting Group (BCG) in partnership with the Global e-Sustainability Initiative (GeSI) outlines some important ways that the Internet of Things can help reduce GHG emissions in the power sector and to create a better environment for integrated renewable energy into the power supply. The BCG report discusses the GHG abatement potential of information technologies in the complex areas of smart grid, demand management, time-of-day pricing, power-load balancing, power grid optimization, virtual power plants (VPP), and the integration of renewables on-grid and off-grid, as well as energy storage.

The VPP concept requires the kind of real-time automation that will only be achievable with M2M networks. BCG defines the virtual power plant as "an emerging technology that combines a cluster of distributed generation installations (such as rooftop solar, microCHP, micro-wind, small scale storage, etc.), typically at the neighborhood/local level, and runs them collectively." A VPP is an highly complex system, and communications technologies make it manageable.

Some of the most advanced work in VPPs is being done in Germany, where the government plans to switch to 80 percent renewable generation by 2050. According to German technology giant Siemens, this will require the harnessing of "millions of solar, wind, biomass, and small-scale combined heat and power plants [CHP]" to "form a diverse energy network" linking together those disparate sources into unified and coordinated systems.

Siemens offers a Decentralized Energy Management System (DEMS), a Windows-based platform for intelligent control of decentralized energy systems operated by power companies, industrial firms, building operators, municipal authorities and other entities. DEMS provides forecasting and planning, integration of resources and real-time optimization of components. Multiple smaller generating units can be integrated under a smart grid and operated as a single virtual power plant.

According to Siemens, M2M embedded systems have become increasingly important to the company, as "these virtually invisible mini-computers are built into almost all the products sold by the company," including wind turbines. Siemens says that now "entire wind farms can strike up a machine-to-machine conversation." In one farm, "rather than maximizing each turbine's output, Siemens software allows turbines to trade data with a view to maximizing the farm's total yield and minimizing wear and tear on a range of components."

Munich's hydro plant on the Isar River. Courtesy of Stadtwerke München. Munich's hydro plant on the Isar River. Credit: Stadtwerke München.

RWE, an electric utility based in Essen, Germany, uses DEMS to operate a 150 MW VPP with power sold on the European Energy Exchange (EEX) in Leipzig. Siemens says the RWE VPP pools power mostly from wind generation, but also from photovoltaic (PV) and biogas plants. DEMS is also used for a smaller 20 MW VPP operated by the municipality of Munich, tying together the city's hydroelectric plant on the Isar River with five CHP plants, a wind plant, a PV plant and a number of standby diesel generators.

These initial VPP efforts are exploratory and are serving as testing grounds to determine how the concept can work at larger scale. For the Munich project, the priority for the time being is "to gain experience in the coordination of as many different types of energy source as possible and in the day-to-day management of the organizational and operational processes," according to Siemens.

A Fragmented Value Chain

The Internet of Things does face some challenges, admits Carbon War Room. While mobile network operators (MNOs) are key to the success of M2M technologies, the value chain is fragmented -- none of them offers a turnkey solution, meaning implementation requires cobbling together an alliance of providers. The lack of standards means it's difficult to integrate components and data systems and to write applications. These fragmented systems mean performance data are hard to come by, so customers are limited in their ability to predict, monitor, and report on results.

The report's authors thinks these barriers can be overcome through better partnerships and merger-and-acquisition (M&A) activity to consolidate industry players; industry cooperation to develop standards; development of better data collection and analytics systems; and improved models for product management, sales and marketing in the industry.