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Machine To Machine Connections - The Internet Of Things - And Energy

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Much has been written in recent years about the growth of Machine to Machine (M2M) connections; also known as ‘The Internet of Things.”  As with many concepts, it’s simple to conceptualize and much more difficult to put in place.  And, as with many other emerging concepts, the value may not always be where you think it is.

In an effort to better understand where this trend is going in the energy space, I recently interviewed executives from Axeda, Wipro , and AT&T about their efforts in this arena.  While there is huge progress being made in some areas, there is a great deal of work yet to be done.

Grossly simplified, the trio of Axeda, Wipro, and AT&T are working on this effort in the following way:

Axeda – a company located in Foxboro, MA, creates the software solutions in the cloud that product manufacturers use to collect data from their machines, analyze it, and integrate the data into their business systems.  The manufacturers can then utilize this machine data to understand usage and behavior, build models, and figure out new ways to drive value.  Dan Murphy, Axeda’s VP of marketing calls it “the digital umbilical cord providing connectivity from the end asset to the manufacturer or service provider.”  The goal of that is to “give the manufacturer 24 x 7 knowledge as to what is going on with that product.  The connected product is in an always-on relationship with respect to service delivery and data communication.”

AT&T needs no introduction, but you may not know how deeply involved it has been in the M2M movement over the past decade.  According to Mobeen Khan, Executive Director of M2M Solutions at AT&T, the company has the largest number of connected devices – at 15.2 million as of last count, and also close to 1500 devices certified to run on their networks (in such areas as meters and equipment on gas turbines, one needs specialized devices).  By providing connectivity to these machines, and through working with Axeda, Wipro and through enterprise cloud and analytic capabilities, AT&T is now also playing the role of a solutions integrator. Since the information must flow smoothly and seamlessly from machine to machine, the connectivity provided by AT&T is critical.

Wipro, for its part is an enormous multinational global IT, consulting, and outsourcing company engaged in numerous activities.  Among other areas, they focus on media & telecom, manufacturing, healthcare, and energy and utilities.  Together, AT&T, Axeda and Wipro provide end-to-end business solutions. Alan Atkins, Vice President and Global Head of M2M at Wipro characterizes the Axeda piece as “the best of breed enablement layer (not connectivity – that’s the role of telcos), but where you collect the data, connect objects, and enable different solutions."  Atkins is an expert in M2M and has also spent a good deal of time in energy.  At the end of the day, he notes, the value of M2M is being driven by “a need to know, a need to control, and a need to secure.”

OK, so now you have the key elements: Assets that talk (through AT&T’s connectivity layer) to a cloud-based platform (Axeda’s Machine Cloud™) that allows the user to intelligently query the machines and ask the “so what?” (those are the solutions provided by Wipro).

So What?  There are a lot of answers to that question, but let’s focus for a moment in the areas of power generation and consumption.  The power grid is a complicated beast, involving millions of interconnected parts: power plants, transmission lines, transformers, distribution lines, and literally millions of energy consuming assets, from printing presses and air compressors to refrigerators and electric toothbrushes.  Supply and demand must always be in balance (to avoid instability, including blackouts) and we currently don’t have cost-effective storage technologies for our electrons.  Thus, there is a constant need to ramp up or ramp down generating power plants in order to meet fluctuating demand.  This balancing act happens at regional or sub-regional levels, and electricity prices can vary tremendously based upon cost of energy supply, transmission constraints in getting electricity to areas of demand, as well as other factors.

On the energy supply side, M2M is already well ensconced in areas of high value.  For example, according to Axeda’s Murphy, in some areas GE sells ‘power by the hour,’ getting paid on a subscription basis for how many hours their engines are in use.  He notes that one GE division has up to 250 sensors in each of its 5000 turbines, bringing back data in real-time to a centralized monitoring facility where they are on the lookout for leading issues, such as temperature on the bearings, vibrations, exhaust and other areas that signal the health of the machine.  If the readings fall outside of a prescribed level, GE can do a pre-emptive fix.  Murphy comments that this service can have a very high level of value in pre-emptively avoiding costs: replacing a bearing and being out of service for a day is far better than failure which might take a generating unit offline for 6-8 weeks.  In volatile power markets, such an outage can be extremely costly.  GE notes that "for some customers just one hour of stoppage time can cost $2 million in electricity output."

On the energy demand side, integration of M2M will also have many uses.  Many power markets are characterized by hourly pricing, and that may be getting even more granular in the near future.  Wipro’s Atkins foresees a move in the Nordic countries to minute-by-minute billing.  “At any given moment, the customer can look at what they are being charged for electricity.  This will go with different price plans, and that means massive data handling.  Auto-generation will let customers (with on-site generation which could range from diesel to solar) sell back into the grid.  This will need to be monitored and controlled.”  Other power consuming assets will also be connected to grid prices and respond accordingly.  “SCADA has been very useful in control and measurement and delivery of power, but going forward we will need more knowledge and control, quickly packaged and formatted so that it can be used.”  For this, the deployment of the M2M internet of things will be critical.

Of course, Atkins notes, “security is very key, and will be increased and increased.  Encryption continues to get more complicated.  The systems today are far more easily hacked into than the ones will be in the future.  We look at very high levels of encryption in packaging data.  If you are just sending analog data and it’s not encrypted, you have problems.  But if it’s packaged and encrypted, you have a concrete block around the data, and the data cannot be read.”

AT&T’s Khan predicts “every single asset will have an embedded communications capability and some level of secure connectivity to the cloud.   We will be able to optimize across three dimensions.  In the short term, we will be able to look at current data and make diagnostic decisions – for example, do we shut something down, make a firmware upgrade, or pursue some other course?  In the medium term, we can capture certain data that will tell you whether to optimize a service or the product itself.  And in the long run, the data will contribute to making better products or delivering superior services.  For example, if you use a tractor in the field, the tractor will be sending you back data over a few years that allows you to design a better tractor.”

The same thing will likely occur with assets that both produce and consume power.  Devices that are 'market aware' and 'know' market prices and grid conditions are likely inevitable, since there is potentially so much value to be gained (or cost to be avoided).  Such a movement is already beginning to gain traction with various demand response providers and controls companies, and will likely pick up speed as the constituent M2M costs - connectivity, sensors, etc., continue to come down.

Khan notes “In the area of electricity, there is already lots of optimization going on.  We have smart metering and smart meter data management solutions, and outage, restoration, and notification management.” Axeda’s Dan Murphy acknowledges that much of the solution remains in a future state, but believe the transformation in the power industry has just started and will pick up speed quickly. “We think connectivity with the power grid is going to happen within five years.  We already work directly with 150 of the Fortune1000 to put intelligence in their machines.  Folks like Wipro will be the ones assembling the data for the end use customers.  I expect this market to progress very rapidly.”

I asked these observers to reflect on the biggest surprise with M2M to date.  AT&T’s Khan comments, “What we are finding with customers employing solutions is that they start with a specific business case.  They get access to data they didn’t know what to do with before and they start to build multiple business cases…they are using more data and getting more returns on investment than they initially anticipated.”

In summary, the M2M, Internet of Things world has received a good deal of hype, with some folks still asking “so what, when are these promises going to be realized?”  In energy and elsewhere, the tools are improving, the trend appears to be picking up speed, companies like GE are already reaping rewards in certain areas, and real gains at a very broad scale may be just around the corner.