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Leonard Hyman & William Tilles

Leonard Hyman & William Tilles

Leonard S. Hyman is an economist and financial analyst specializing in the energy sector. He headed utility equity research at a major brokerage house and…

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Powering The Internet Of Things

Internet of Things

Years ago, at an electric utility conference, we listened to an optimistic presentation about a significant new addition to electricity demand, the personal computer. (You can imagine how long ago this was.) But some of us were both puzzled and piqued. On closer inspection, the so-called expert's data showed no indication that personal computers had any significantly positive impact on demand for electricity. We subsequently discovered "the expert" had plugged in incorrect numbers for electricity consumption per computer.

Nevertheless, his data-deficient prophecy proved prescient. Eventually the internet and personal computing devices did add to electricity demand (accounting for possibly 10 percent of total U.S. electricity usage by some accounts--although we suspect this includes the enormous demands on air conditioning required to remove the heat generated by larger machines). Nevertheless, energy savings elsewhere (lighting, appliances) offset those increases in demand for electricity.

Lately the internet and its exponential growth has again been touted as the savior of electricity demand. This time it's with regard to the internet of things (IoT)--a panoply of devices, basically sensors, which empower consumers to better control their electricity consumption.

What has delayed the introduction of the sensors that would make the IoT a reality? Three researchers at IBM Watson Research Center, Richard Haight, Wilfred Haensch and Daniel Friedman have suggested an answer. The problem, they believe, is that a proliferation of sensors requires electricity to operate. And this assumes a connection to local power sources. In other words, somebody has to attach wires to all of the sensors and make sure the "juice" is flowing. In a way this seems somewhat similar to the promise versus the reality of fiber to the home.

But IBM's researchers have suggested an answer: take all of these sensors and related devices off the electric grid entirely. They believe it would be preferable to power them with solar and other renewables. Their idea is to employ ultra-low power chips and thin film solar devices with batteries already incorporated in them. These "unwired" devices would rely exclusively on available, renewable, "distributed" energy sources rather than conventional utility sources or battery power. But the IBM team has moved the concept of "distributed" beyond the energy realm to include that of the data itself as well. The sensors they envision communicate exclusively with each other, reducing the information delivered to central data processing centers. A micro-grid for data? Related: Pioneer’s $2 Operating Costs: Fact Or Fiction?

Large commercial and industrial energy users have begun to take the IoT seriously. It's intuitively obvious. As the biggest energy users, they always have the most to gain by adopting energy saving devices. Widespread adoption of these "smart" energy saving devices is clearly not a positive development for existing electric companies that see themselves primarily as undifferentiated commodity providers as opposed to perhaps energy services companies.

But who will actually provide this new energy information service to utility customers and coordinate a new generation of sensors? The thermostat firm, the retail energy seller, the cell phone company, a social media provider, the computer firm? Thus far, no clear entity has emerged. We can view this either as just another in a growing list of competitive challenges to the electric utility franchise or as a potential new revenue source.

But there is another related issue here. The research to make the IoT a reality is likely to produce spinoffs. Just imagine how many "apps" will emerge to help consumers save energy and trade power amongst themselves. We readily share car rides, music, photos and personal information of all sorts. Is it reasonable to think electricity will be treated that much differently?

By Leonard Hyman and William Tilles for Oilprice.com

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  • nonplused on August 07 2016 said:
    There is another reason all of this energy efficiency doesn't work, at least in northern climates. Because the house needs heat. So they have basically banned incandescent light bulbs because they only have about 1% efficiency for making light and the other 99% goes of as heat. A very valid concern if the majority of what you do for climate control is air-conditioning. But it means very much less if what you mostly do is heat and can also use ventilation when it's hot instead of air conditioning.

    In cold climates, like where I live, there are really only 2 or 3 months a year when all these expensive "high efficiency" bulbs make sense, June, July and August. And we don't have the lights on all that often in those months. The rest of the time, if the incandescent bulb isn't on and dissipating heat, the furnace has to run more, so the real energy saving is just the difference between the heat efficiency of the bulb versus the furnace. If you have a gas furnace you have a good energy saving probably 50%. If you have electric heat you do not save 1 penny using an LED bulb over an incandescent bulb in the winter.

    Now down in Texas or Florida or Nevada, where the concern is year round air-conditioning. yes these low heat bulbs make sense.

    To fully understand how all these new regulations will actually save money you have to follow the energy along for everything it does. For example, it was predicted that computers would overwhelm the power grid. Why did they not? Because all the electricity that goes into them eventually comes out as heat, and in a well insulated house in a cold climate not a drop is wasted. It's either run the computer or run the furnace more.

    So my point is, where air conditioning is required, so is energy efficiency. In a cold climate only insulation can really make a big difference. In a cold climate, all energy efficiency does is transfer the heat output from the devices to the furnace. The furnace might be more efficient, but only if it runs on natural gas.

    So next time you go to Costco, buy some of those LED light bulbs and then also an electric fire place. Guess what you've done? Made things worse and now you have less light.

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