Call it what you will -- the "industrial internet," the "internet of things," or "machine-to-machine communications" (M2M) -- the seamless connectivity of devices is becoming one of the core drivers of the clean energy transition.
There are now 1.3 billion M2M devices in operation around the world. By 2020, there will be 12.5 billion in operation. That range of devices, which includes smart phones, advanced electricity meters, GPS devices, and sensors on equipment, has the potential to radically change how we consume and ship goods, operate machinery, and manage energy use.
And this isn't some techno-blogger fantasy about what the world could be someday. The connectivity revolution is well underway at Ford, UPS, General Electric and almost every other large industrial player looking to make their operations more efficient. Increasing data demands are also changing the telecom world, which is trying to keep up with network integration challenges as ever-more sophisticated devices come online.
As adoption grows, the savings are becoming clear. According to a new analysis from the Carbon War Room on the potential for M2M, these technologies offer nearly as much potential to reduce CO2 emissions as the renewable energy and green building sectors combined.
The applications of M2M technologies are endless: monitoring pipelines, managing HVAC equipment, optimizing shipping routes, tweaking airline flight paths, modifying public transport routes, and optimizing water use are some examples. These cumulatively add up to gigaton-scale reductions in greenhouse gas emissions.
But current deployment of M2M has only scratched the surface of what's possible. Technology adoption cycles in the built environment or in the energy sector are slow compared to the adoption cycles of the consumer IT world. The lack of standards for hardware, the fragmented nature of the supply chain and nascent data management techniques are barriers in front of adoption, according to the Carbon War Room analysis.
On Monday, April 22, we'll be holding a webinar with the report's authors and two companies in the field on how to unlock the potential in M2M. Here's a brief overview of some of the solutions that we'll be discussing.
Value chain integration
The M2M sector features a robust ecosystem of small and large companies bringing new technologies to market. That also makes it fragmented, with many companies unable to provide end-to-end services or find the right market channels for products. As the industry grows, M&A activity has increased and connectivity solutions have improved. However, because M2M technologies are extremely diverse and cover a wide range of solutions, the relationship between suppliers and customers can be complicated. Further consolidation will help simplify and streamline offerings.
Create cohesive standards
The communications and hardware standards for M2M technologies are just as diverse. As companies create new applications, they are also creating their own vertical product standards and making it difficult to integrate with other technologies. Not surprisingly, this can suppress innovation and ensure continued market fragmentation. Establishing cohesive communications and hardware standards will ensure true universal connectivity.
Better data measurement tools
As technology and service providers pitch their products, they need solid performance data to convince companies to buy. Because many of these technologies are so new, the data is sometimes incomplete -- or even nonexistent. Accumulating real-world data, comparing it to a company's baseline performance, and communicating that information in a compelling way is key to bringing in new customers. However, the methods to define project success are still very nascent. Lack of standards and industry fragmentation also contribute to the incomplete data picture in this sector.
The M2M sector represents a trillion-dollar opportunity to reduce carbon emissions and clean up our energy system. In next Monday's webinar, we'll talk about how companies are addressing these challenges to unlock that value.