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How IoT is Transforming Connected Utilities

Today, the energy sector is heavily influenced by government policy and the need to comply with regulations. It’s also driven by cost savings concerns. IoT connected utilities monitoring can assist with real-time compliance with regulations about feeding power into the grid while maximizing remote monitoring and control to allow pre-emptive maintenance.

Applications of Connected Utilities

Virtual power plants (VPPs) have been in existence for decades, but the new generation of connected utilities aims to manage interconnected energy devices through intelligent software tools and systems. VPPs help energy markets move away from centralized power plants, aggregating diverse and decentralized energy resources, remotely measuring the energy consumption of connected units and managing temporary shortfalls in energy [Machina Research, October 2014].

Smart metering applications also represent a huge market opportunity. Advanced metering technology can:

  • Provide automated meter reading, replacing physical on-site reading
  • Allow for dynamic pricing and enable consumers to make choices about when they use electricity, water, or gas based on changing prices
  • Integrate residential or commercial usage, enabling more control of power consumption and usage, reflecting demand levels

The key feature of these applications, of course, is connectivity.


Considering the need for power in IoT applications alone, it is not surprising that world demand for energy is growing. The U.S. Energy Information Administration predicts a global energy consumption increase of 56% between 2010 and 2040. Grid operators are looking to save on maintenance, distribution, and transmission while utilities offer new services to engage end users. A number of new energy sources such as biogas, industrial waste, liquid biofuels, solar photovoltaic, and wind contribute to filling the increasing demand.

The transformation of the energy market creates opportunities for new service offerings and business models. With connected energy resources enabling efficient flow of energy across the grids, VPPs are increasingly driven by software and services requests. This will facilitate needs for:

Data analytics and management: New VPPs will access and leverage abstracted data to identify patterns and optimize operations

System development agility: Market developments are constant, so VPPs need the flexibility to respond to the changing environment

User billing relations: Smart metering and energy traders demand more sophisticated management processes [Machina Research, October 2014]

Although Europe has historically taken the lead in renewable energy adoptions, the attention paid to renewables has grown globally over the past decade. In fact, the Asia-Pacific region is predicted to account for over a third of all new energy source IoT connections by 2025, driven largely by strong growth in China [Machina Research, October 2014].

With government funding and regulations pushing utilities to firm deployment targets, the connected utilities market is poised for continued growth. Emerging Asia-Pacific is forecast to be the largest market, with an estimated 1.9 billion connected smart metering applications by 2024 [Machina Research, January 8, 2016].

Wireless connections enabling grid monitoring and smart metering will drive smart energy modernizations. Smart grid investments could total $1.3 trillion (USD) over the next 15 years [CTIA, February 9, 2016].

Public enthusiasms for green initiatives along with concerns about rising fuel costs further stimulate the trend toward IoT innovation in the energy sector.


A lack of reliable infrastructure could hinder penetration of smart grid technology. Some emerging regions still don’t have ready access to utilities. Already functioning at low margins, utilities might also struggle to invest in the necessary upgrades when generating new capacity is a competing priority.

Additionally, there is a policy shift in the renewable energy sector away from subsidies rewarding capacity focused development, which could slow demand for new plants and dampen the need for remote monitoring solutions [Machina Research, October 2014].

Utilities, too, remain targets for criminal activity and remote sensor technology creates a security risk [Machina Research, January 8, 2016].

Still, while the utility use of IoT won’t be a major contributor to the overall market share, smart grids remain a strong opportunity. Deploying sensors throughout the network and on remote meters will help secure energy independence, boost energy sustainability and lower costs for providers and users.


  • CTIA. (2016, February 9). The Next Generation of Wireless: 5G Leadership in the U.S.
  • Machina Research. (2016, January 8). Smart Metering: 1.9 Billion Connected Meters by 2024.
  • Machina Research. (2014, October 15). A New Generation of Virtual Power Plants.
Case Study: IoT is redefining the customer experience. Nokia case study.

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