No longer a buzz word, the reality of IoT is demanding attention in 2015. It is predicted that businesses who embrace these opportunities will transform not only their business but also their industries along the way. The energy sector is not immune. How are companies in the energy sector currently deriving value from IoT and where might additional opportunities lie moving forward? 

Financial performance

A lot of early investment into IoT technology has been focused on finding new ways to reduce the bottom line.

Smart hardware has been installed to manage a broad range of assets and to facilitate a number of industrialised tasks. Equipment and vehicles have been retrofitted with sensors which can feed data to personnel who can assess and diagnose problems quickly and remotely. Sensors have also been able to harvest useful data in relation to the utilisation of particular equipment or vehicles including data relating to performance and breakdown, maintenance requirements and demand to allow better scheduling and use of workforce and resources.

However, the ability to harvest massive amounts of data also provides an opportunity to gain insight into the demand side of the equation and identify new ways to drive top-line revenue growth. This may be identifying opportunities to deploy IoT technologies in new ways, identifying opportunities to meet previously unmet needs and demand or identifying poor performing products, services or processes and refocusing investment into those which will derive more revenue growth moving forward.

Operating performance

Energy companies have been using IoT technologies for the purpose of incrementally optimising the performance of its assets and resources. Data analysis tools have been developed which generate real time data visualisation for smartphone and tablet applications. Adoption of this technology has resulted in meaningful increases in profitability as access to immediately available data creates greater opportunities to optimise processes, reduce downtime by addressing variances quickly before they lead to abnormal operations, shutdown and equipment damage and create safer environments through incident prevention.

The opportunities to drive better performance may well extend beyond incremental asset and resource productivity. By installing and connecting sensors, companies can now monitor how customers and stakeholders engage with products and services on a day to day basis and harvest that information to identify and drive improvements in performance, increase value to their customers and stakeholders and tackle issues that customers and stakeholders experience.

The smart grid market is a great example of IoT technologies being harnessed to drive better performing products and services. The network of sensors and connected technologies will enable power companies and nations to deliver more efficient and reliable power supplies all while reducing the environmental and cost impact of the energy system.

There has been much less attention on the potential benefits that may flow from systematic monitoring of performance over time. The performance related data collected over time may be able to be harnessed to drive more fundamental changes to the core business. By monitoring and analysing the overarching performance of the company, greater insights may be gained in relation to efficient and inefficient processes, environments and structures.


The possibilities created by IoT has captured the imagination of the energy sector. However, business leaders are faced with the task of balancing the adoption of new (and often disruptive) technologies and innovations with operational realities and the regulatory landscape.

Key issues facing companies seeking to embrace IoT, include:

  1. Cybersecurity: Connecting so many things and processes to the internet comes with a huge cybersecurity risk. Cybersecurity technologies, the right policies and carefully thought out contractual protections are all required to address this challenge.
  2. Privacy: Ensuring compliance with privacy and data protection laws is complex in connected environments where data is shared, analysed and accessed between business functions, machine to machine and by third party vendors.
  3. Liability: Greater reliance on technology and machine to machine processes creates complex questions regarding who is liable for system defects and failures, security breaches and unintended consequences.
  4. Dependency on technology and risk of failure: As organisations become more reliant on technology, it is vital that risks associated with dependency, including technology breakdown, technology incompatibility, vendor insolvency or vendor relationship breakdown, are appropriately mitigated against.
  5. Access to capital: With many parts of the energy sector facing shrinking capital markets, it is often difficult to find the resources to invest in adoption of IoT enabled technologies or create a strong business case for being a market leader in this space.
  6. Network coverage: Poor network coverage and access to bandwidth remains an issue in some remote and regional areas.