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Connected Devices On The Rise - Digitalization of behind-the-meter assets offers potential

The mood in Silicon Valley is decidedly gloomy these days. The unicorns have lost a lot of their stratospheric valuations and momentum while start-ups are not getting much attention nor funding as investors are distracted by the economic downturn. The same applies to technology hubs everywhere, be it Berlin, Beijing or Chennai. But as happened after the crash of the dot-coms bubble and the financial crisis, better times will follow. In the meantime, a lot of effort is going into

  • Remote monitoring of connected devices; and
  • Better management of energy consumption.

As the cost of digitalization, which encompasses digital sensors, connectivity and remote monitoring and control, continues to drop, more assets including behind-the-meter devices can be connected. That is the easy part. The difficult part is to figure out how to manage and optimize the connected assets, scale up, monetize and capture the value. Naturally, this has led to rising numbers of companies who are trying, and not necessarily just in the electricity sector.

Do you know which one is about to break down?

Photo Credit: Fereidoon Sioshansi May Newsletter

An example is mCloud Technologies Corp., a Vancouver-based provider of asset management solutions combining IoT, cloud computing, artificial intelligence (AI) and analytics. By end of 2019, it had connected over 41,000 assets in buildings, wind farms, and oil and gas facilities to its AssetCare platform, a 146% increase from 2018.

Why? With its subscription-based business model mCloud sees solid potential in getting more assets connected – and the assets can be anything that can benefit from remote sensing and monitoring. According to Russ McMeekin, mCloud’s CEO, “In response to the recent severe depression in oil prices, we expect our oil and gas customers to expedite their digital transformation efforts.” With low prices, there will be increased pressure to perform, or else.

It is a classic example of making lemonade from lemons. McMeekin points out that “… despite the impact (of) COVID-19, we remain confident we will continue to see at least 70,000 connected assets at year-end.” Adding, “… connecting buildings, remote wind farms, and the rapid uptick in demand we are seeing for remote connected workers.”

As far as McMeekin is concerned, the more devices that are connected, the merrier. “Connected assets include HVAC units, lighting, and refrigeration units in buildings, wind turbines, and process endpoints such as controllers, compressors, and valves at oil and gas facilities.”

How does mCloud generate revenues? Its subscription-based business collects and “sends data from connected assets into the cloud where AI and analytics are applied to reduce energy waste, maximize productivity, enable safer workplaces and reduce carbon footprints”, among other applications.

It is easy to see how all sorts of small and large businesses with distributed assets – say wind turbines, oil and gas pumps, motors, heaters, chillers, fans – would gain from knowing which one of their devices are operating properly and which ones need to be repaired or replaced in the field. At its website, mCloud describes its business as “curbing energy waste, maximize energy production and get the most out of critical energy infrastructure.” Not a bad business to be in especially when thing are tough as they currently are.

At the same time, better management of customer demand in all sectors of the economy, particularly in areas where very little has been achieved in the past – namely the residential and small commercial sectors is progressing. While large, energy intensive industry has always been receptive to opportunities to manage and/or shift its load to save on energy bills, the residential and small commercial customers have not been worth the bother – thus far. Since their typical monthly bills are modest and because they consume relatively little – and from many devices – the time, the cost and effort required to manage how much they use, and when, has not been cost effective, hence not a priority.

This means that a significant portion of total consumption in any network has not been studied or quantified, let alone managed. In many advanced economies, the residential and commercial sectors combined may make up 2/3rd of total consumption. That is a lot of load that has not been managed in any form or fashion. It is the proverbial low-hanging fruit if it can be commercially exploited – that is aggregated to scale and successfully monetized.

An example of entrepreneurs trying to capitalize in this field is Voltus. In late March 2020 it announced that it had reached an agreement with Cape Light Compact, a small utility serving customers in affluent Cape Cod and Martha’s Vineyard, to deliver demand response (DR).

Describing the agreement, Austin Brandt, Senior Power Supply Planner at Cape Light Compact, said, “Reducing peak demand benefits all electricity customers, and having Voltus as a partner will facilitate our ability to provide cost-effective demand savings while delivering value to both the businesses participating and all ratepayers.”

Voltus claims that its DR planning app, CashDash, offers customers some 150 options to choose from and says that participants can reap $500,000/MW-yr. in value by stacking the revenue streams of various schemes (visual), depending on their location and operational flexibility.

Stack up the revenue streams

Source: Voltus

The San Francisco based company says it can better manage energy through simple, risk-free programs, generating cash for participants who allow Voltus to maximize the value of their operational flexibility in energy markets. While short on specifics, the basic idea is simple: Customer signs up and allow Voltus to manage their energy consumption, both when and how much is used, and receives a bonus – a portion of the savings that Voltus can generate. There is no up-front costs to join, no risk and little or no discernible loss in service.

As with all DR service providers, Voltus focuses on reducing and/or shifting loads from the peak demand hours, which typically compromise a significant part of the bill for large commercial, industrial and institutional customers who face exorbitant demand charges. As noted at its website,

“The top 10% of grid-wide electricity demand lasts less than 1% of the hours of the year. Yet, these hours represent as much as 40% of your electricity bill. By reducing your demand from the grid during critical hours you can generate significant cash flow and savings. With the Voltus technology platform, we make it easy.”

It says typical savings could range from 5 to 30% of the annual electricity bill, depending on customer’s operational flexibility as well as prevailing tariffs and other variables. It notes that sophisticated customers can generate additional savings by taking advantage of ‘stackable’ DR programs. As illustrated in the visual, this particular customer is participating in 6 different DR schemes with distinct value streams allowing Voltus to maximize their total operational flexibility.

There are plenty of reasons to be optimistic that the time has finally arrived for better management of not only smallish customers’ loads through smart meters but perhaps individual devices behind-the-meter. n

https://www.mcloudcorp.com

https://www.voltus.co

This article originally appeared in the May 2020 issue of EEnergy Informer, a monthly newsletter edited by Fereidoon Sioshansi who may be reached at fpsioshansi@aol.com ​​​​​

Discussions

Matt Chester's picture
Matt Chester on May 1, 2020

“Reducing peak demand benefits all electricity customers, and having Voltus as a partner will facilitate our ability to provide cost-effective demand savings while delivering value to both the businesses participating and all ratepayers.”

Voltus claims that its DR planning app, CashDash, offers customers some 150 options to choose from and says that participants can reap $500,000/MW-yr. in value by stacking the revenue streams of various schemes (visual), depending on their location and operational flexibility.

The idea that DR really does benefit all customers, even those that don't partake, is important. And having all those options is a great way to ensure that most customers can, in fact, find ways to take advantage

Fereidoon P. Sioshansi, Ph.D.'s picture

Thank Fereidoon P. for the Post!

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