The Internet of Things (IoT) could be a $500 million opportunity for utilities by 2020, according to a new report from Navigant Research. Smart meters, submeters, advanced sensors, smart thermostats, and building energy management systems are likely to grow in popularity, generating much of this revenue.
However to participate in the IoT opportunity, the utility industry will need to rethink its business models. According to Navigant, that means utilities will need to look beyond the consumer IoT side of the business, which primarily encompasses letting consumers manage their energy independently, to developing an IoT services strategy. Utilities can do this by either partnering with other firms or developing their own platforms. The end goal should be to offer IoT-enabled managed services.
Navigant estimates that utility IoT products will reach about 1.6 million customers by 2020. In addition, the firm says that global revenue from residential and commercial IoT energy devices will grow to $123.8 billion in 2026 from $29.4 billion in 2016. And in North America, the IoT device market for utilities will grow to $40.2 billion in 2026 from $14 billion in 2016.
However, the analyst firm did identify some IoT challenges for utilities that are not unlike those facing all industries that are considering IoT solutions. Navigant says that the IoT industry is fraught with interoperability challenges and security concerns, which add uncertainty to many of the firm’s projected figures.
While Navigant’s numbers are solely focused on utilities, other research firms have painted a bullish picture of IoT. Strategy Analytics earlier this year predicted that IoT will be a $150 billion market this year, growing to $550 billion in 2025.