The Internet of Things in the energy market was valued at USD 168.57 billion in 2020 and expected to reach USD 298.26 billion by 2026 and grow at a CAGR of 10% over the forecast period (2021-2026). According to the International Energy Agency, as a critical enabler of modern life, the energy sector despite being significantly affected by the COVID-19 pandemic, is also essential for global and national response and recovery efforts.
- The Internet of Things (IoT) is expected to make a significant impact on the energy sector. From monitoring the temperature of a room using sensors to complex applications that are used to control the energy use of an entire building, IoT helps in cost-cutting.
- The decreasing natural resources that produce energy and the increasing wastage of energy have drawn the attention of various nations across the world, to innovate in solutions that reduce energy wastage and adopt solutions that offer high efficiency.
- A predictive analytics network monitors the data collected from sensors and embedded in power grids. Thus, machinery can reduce energy transmission and distribution losses to make energy consumption highly efficient and cost-effective across the world.
- Companies, such as Nixus Solutions, offer connected solutions to monitor and reduce energy consumption in buildings. Aquicore is also developing an analytics platform that connects to energy meters that have already been installed. This is enabling organizations to make decisions that improve staff productivity and reduce energy wastage.
- However, integrating new sustainable distributed energy resources (DER) into the existing grid is designed to distribute centrally generated energy, which is quite challenging.
Key Market Trends
Smart Meters Expected to Hold Significant Share
- Smart meters are among the most adopted IoT devices by utility companies in the last few years. These devices interconnect buildings with the smart energy grid, which allows these companies to manage energy flow more effectively. Smart cities are also leveraging smart meters.
- With IoT-ready smart meters, companies can access rich, real-time data to provide better service while reducing costs and boosting profits. Moreover, these help in effective balancing of electric loads and reducing power outages, streamlining energy distribution through more accurate forecasting, and enabling dynamic pricing by raising or lowering costs based on real-time demand.
- By upgrading to smart meters and grids, many governments are also trying to utilize IoT to facilitate localized green energy production growth. For instance, the US Department of Energy is presently pursuing a smart grid that can help boost the use of green energy while driving down costs in mass. These factors are also forcing energy companies to invest in IoT technology to keep up with everyone around them.
- With smart meter technology, utilities can also empower their customers to make smarter decisions about their energy usage by providing helpful and detailed feedback on energy consumption using precise, real-time data from their smart meter, improving transparency on monthly energy bills, accurate pricing based on usage, etc. These advantages are boosting the market growth.
North America Region to Witness the Highest Growth
- North America is expected to be a prominent market, owing to IoT's growing role in the sector, driven by smart energy projects' deployment. Additionally, rapid digitalization across industry verticals and technological advancements has further fueled IoT growth in this region.
- The United States and Canada are the early adopters of technologies, such as Big Data, IoT, and mobility, and this creates significant growth opportunities for the IoT market. These countries have established economies, which empower them to invest in R&D activities strongly. Moreover, the start-up culture in the region is growing more rapidly in comparison to the other regions.
- Moreover, the region has a strong foothold of IoT vendors, which contributes to the market's growth. Some of them include IBM Corporation, Microsoft Corporation, Intel Corporation, Cisco Systems Inc., and Google Inc., among others.
- Canadian manufacturers depend on innovation and investment in technologies to be competitive. In an environment of increasing input, labor cost, and competition from the large global manufacturers, companies here are expected to invest in technologies, such as IoT, to remain competitive and maintain their operating margins. US lawmakers have introduced the "IoT Readiness Act" for massive IoT growth with 5G networks' arrival.
- Canadian companies, in comparison to the United States, have been slower to adopt advanced technologies, as per the 2020 Advanced Manufacturing survey of SMEs in North America. The Canadian energy sector alternatively has been procuring internet-connected sensors to monitor a range of activities across generating plants, distribution networks, and home smart meters.
The internet of things in the energy market is fragmented. The increasing awareness of energy waste control and cost-effectiveness provides lucrative opportunities in the industrial robot market. Overall, the competitive rivalry among existing competitors is high. Moving forward, acquisitions and collaboration of large companies with startups are expected, which are focused on innovation. Some of the key developments in the area are:
- March 2020 -Microsoft Corporation and Cisco Systems announced a partnership to enable seamless data orchestration from Cisco IoT Edge to Azure IoT Cloud. One of the outcomes of this collaboration would be to provide customers a pre-integrated IoT edge-to-cloud application solution.
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