How IoT will play a crucial role in slashing energy use

By Mario Campolargo (pictured)
Summer 2016

The main theme in this issue will focus on energy efficiency in industry. We want to highlight the importance of the Internet of Things' functions to help communities and industry in becoming smarter energy consumers.

Oil prices may have bottomed out, but energy use still remains one of the highest manufacturing costs. It is also one of the most tedious to track down: where do you start when you want to reduce your energy bill? Fortunately, new ICT technologies and especially advances through the Internet of Things (IoT) are now emerging that can make a difference.

The IoT is sometimes presented as a fashionable and fuzzy concept. The reality is however that it is starting to be implemented today and to make an impact across sectors. What do we mean by IoT? The IoT represents the next major economic and societal disruption enabled by the Internet: the physical and the virtual worlds will merge into a new smart environment, which will sense, analyse and adapt. In the IoT, objects and people are interconnected through communication networks, in and across private, public and industrial spaces, and report about their status and/or about the status of the surrounding environment.

They produce data that is collected and aggregated in some IoT platform connected to Internet. Through this IoT platform, resources and solutions can then be programmed so that the connected objects and applications can be activated and operate tasks and functions to deliver specific benefits (ex: start of a machine/process at a time that minimises the energy bill). The possibilities that IoT offer are exponential. Dynamic and responsive acquisition of data along with increasing computing power enable smart production systems to track energy consumption and optimise processes so that they adapt and operate with less resources, save energy and identify waste of energy. This offers tremendous opportunities for our economy and society.

The IoT can bring significant benefits for energy efficiency. At the level of the production of energy, smart grid sensors can improve utility operations and performance by better monitoring the energy network, so that resources are allocated more precisely and closer to the actual demand needs, avoiding energy waste. At the level of the consumption of energy, smart meters can provide a wealth of information that can help minimise energy costs, e.g. through fully automated billing based on time of use or network status, or enabling meter-to-appliance communications to help consumers change their behaviour to reduce their costs.

IoT will help industry to optimize the use of energy at all stages. It could reduce the consumption of electricity at peak hours by shutting down/reducing the use of equipment and/or production. Lighting/heating/cooling will be improved depending of the operational conditions, and/or the weather/time of the day. Taking advantage of advancements in device connectivity, manufacturers can now track energy consumption patterns at the device level. By tracking each piece of machinery on the floor, managers get granular visibility into energy consumption, as well as actionable insight about waste, available efficiencies and more. A great opportunity for the IoT can be found in some specific application areas too.

Smart Cities is one of the examples where by using IoT technology, the distinct pillars of the modern city (energy, mobility, buildings, water management, lighting, waste management, etc.) will become part of a structured, interconnected ecosystem. IoT technologies, by gathering information that in the past was either impossible or difficult to gather, will enable optimize public transport (realtime location, utilization), environmental data, noise, monitoring of waste bins, energy consumption in public buildings, lighting, etc. Barcelona’s Energy-Saving Smart Street lights¹ is a nice illustration: sensors are installed in streetlights, enabling automatic control of brightness by analysing the levels of noise, air pollution, and population density. Result: at least 30% energy savings per year.

IoT technologies in Smart Farming will bring Precision Agriculture and Precision Livestock Farming to another level: the use of water, fertilizer or heating in green houses, in correlation to the climate or the harvesting at optimum maturity will allow a more sustainable, productive and competitive EU farm sector.

The IoT is sometimes perceived as more closely linked to consumer markets, like to smart thermostats or fridges. However, less than 8% of the households have a smart device with energy-related functions. Such penetration is low, and it may be explained by a difficulty for users to understand the benefits of the IoT, or maybe worries about installing sensors in their house, for privacy and security issues. To unblock the market, the Commission has launched in 2016 a Focus Area on IoT under its Research and Innovation Programme, Horizon 2020. IoT Large Scale Pilots will be funded to test technology, business models and standards, and to test with real users how much they welcome the IoT solutions. Even though energy efficiency is not specifically targeted, it will be indirectly addressed we believe through one pilot dedicated to Smart Homes for Independent Living (with up to 20 Million euros funding) and another one on Smart Cities (with up to 15 Million euros of funding). The pilots will hopefully also give useful insights as to what barriers may exist towards a greater adoption of IoT solutions by consumers, which could eventually lead to policy proposals by the Commission.

But we find that the biggest opportunities are rather in the industrial adoption of the IoT, including for industrial machines, factories and buildings. According to a study from IDC², Smart Manufacturing is projected to be the largest potential opportunity in terms of IoT spending. Consumers are already using (cool) devices like activity trackers, smart thermostat, drones, but the industrial IoT requires far many conditions to be fulfilled before it can widely use IoT tools: reliability is one of them. A connectivity failure between a smart thermostat and a boiler at home or between process control sensors in the steel industry do not have the same consequences. Others issues like secure authentication, standardisation, interoperability, liability need to be properly addressed. Data ownership, data location, data protection will also require action at EU level. The Commission is putting forward a set of ideas and proposals to guide this implementation forward, through notably a Staff Working Document on Advancing the Internet of Things in Europe.

One of the key challenges is to make sure that IoT can be developed on a pan-European basis. IoT requires breaking silos and avoiding fragmentation between industrial application areas, between standards, between regions, which prevents the full IoT vision to be realised as a new cross-cutting business reality. An IoT policy has to address specific policy challenges linked to a harmonised digital single market, notably to interoperability, ubiquity, end-to-end security and trust.

Actions at EU level already identified and mapped the most promising clusters across Europe, where IoT is developing: the Commission will launch in 2016 large scale pilots with the aim to create ecosystems and to overcome the fragmentation of vertically-oriented closed systems.

One example of an open service platform is FIWARE, supported through the Future Internet Public Private Partnership. The recently launched open FIWARE Foundation further develops FIWARE components in the context of digitising industries, starting with three business sectors domains: Smart City, Industry 4.0 and Smart Agriculture. We have therefore an opportunity to smartly build on existing open service platforms, such as FIWARE, for accelerating the industrial use of open digital platforms and reinforcing innovation ecosystems.

The Commission also launched the Alliance for Internet of Things Innovation (AIOTI): it offers a series of opportunities for stakeholders from various origins to establish links towards horizontal platforms, standards and ecosystems and to collaborate in experimenting new IoT solutions. This will help the development of a thriving IoT innovation ecosystem in Europe.

In conclusion, it is fair to say that everyone should wake up to the potential of the Internet of Things to transform our lives and improve the way we use resources, including energy. We cannot miss the opportunity of making Europe the world leading market for the IoT and this means significant opportunities for the energy sector too.

1. More details at:
2. IDC and TXT Solutions (2014), SMART 2013/0037 Cloud and IoT combination, study for the European Commission.


Mário Campolargo is Director for “Net Futures” department of European Commission, DG CONNECT, dealing with policy development and research supporting the Digital Single Market from the angles of 5G networks, IoT, cloud and data flows and conceptualising new and innovative approaches towards service platforms and next generation internet.

Previously he has been Director for “Emerging Technologies and Infrastructures” in DG INFSO in charge of Future and Emerging Technologies, ICT based infrastructures for science and ICT trust and security, experimental facilities and experimentally driven research for Future Internet.

Before joining the European Commission in 1990, he worked for 12 years in the R&D Centre of Portugal Telecom as a researcher and manager. He holds a Degree in Electrical Engineering from University of Coimbra, a Master of Science in Computing Science from Imperial College London, a Post graduate in Management from Solvay Business School Brussels and a European Studies Diploma from Université Catholique de Louvain-la-Neuve.

Disclaimer: This paper expresses the personal views of the author and in no way constitutes a formal/official position of the European Commission

The full version of a Staff Working Document on IoT is available here