Internet of Things finds niche in energy efficiency

March 22, 2016

As recently as two decades ago, the internet was still in its infancy. Like a toy car poised to take off down its track, the fledgling network was a bundle of potential energy — however, it was difficult for most to imagine just how and where that track would end up. Would consumers be able to grasp the concept of a worldwide web? What would they eventually use it for? Despite it being nearly ubiquitous today, these questions were significant obstacles in the early days of the internet

Now, as a new network of connected devices arises, known as the Internet of Things (IoT), it should come as no surprise that the same questions are once again clouding the rapid adoption of the technology. While it seems doubtless that having even the most simple pieces of hardware capable of collecting and transmitting data will help make systems "smarter," the all-important consumer demand necessary to drive the market has lagged. 

Recently, however, the IoT has taken a foothold in a sector that could finally prove the network's value to individual consumers and their cities as a whole: energy efficiency.

Equipped with internet-connected, or "smart," hardware, cities will become more dynamic, able to respond in real-time to energy demands and sudden energy spikes, optimizing energy usage for city-wide systems and consumers alike. 

The key is for meters to be able to adapt during peak usage periods, says Lucas Davis, an associate professor at Haas School of Business at UC Berkeley. "For a long time we've had these really dumb meters," says Davis, "so that customers got charged for total consumption during the month. That's really crude, because the value of electricity varies massively. If it's 3pm on a hot day, the cost of electricity can be four times what it is at 2am on a Tuesday."

Energy companies end up building more power plants to meet peak demands  some of which are only used a few days a year.

While large energy consumers, such as factories, malls and sports stadiums are typically charged for their energy on a dynamic model, according to, energy costs for U.S. homes typically do not change, no matter the current demand on the grid. As a result, consumers are insulated from the costs of this demand, effectively reducing any incentive they might have to reduce it. The costs, however, often reach far beyond homeowners' wallets. Davis notes that energy companies end up building more power plants to meet peak demands— some of which are only used a few days a year. 

As part of a connected Internet of Things, household appliances would know to reduce their usage at these critical moments, keeping power companies from having to build these extra facilities altogether. While these small-scale adjustments alone would have a significant impact on the grid, Zach Supalla of Spark, a company that creates hardware and software to support IoT products, says the benefits reach an even greater scale when individual components can work together as part of an integrated system to communicate with dynamic utilities and smart grids. 

"It's not about making sure your toaster is unplugged when you're at work," Supalla told GovTech. "There are a lot more systematic, infrastructure level opportunities that come from getting better data about how the system is working, and being able to use that to improve efficiency."

For example, a connected home system could inform a utility company when there has been no activity in a home for some time, suggesting that the water heater could be turned off without the occupant knowing or caring. This way, not only would the Internet of Things help people live more comfortably with less effort (a necessity if IoT is seeking backing in the consumer market), but would also deliver obvious, measurable value by helping them reduce their energy bills.