(This article first appeared in the 2017 Techonomy Magazine.)
When Elon Musk announced his lower-priced Tesla 3 electric car in the spring of 2016, he opened the press conference with rhetorical questions. “Why does Tesla exist? Why are we making electric cars?” The audience of car fanatics and techies didn’t expect the answer he gave, though a clue came from the fact that Musk was already working to fold his other company, SolarCity, into Tesla. He continued: “Because it’s very important to accelerate the transition to sustainable transport…for the future of the world.” Then Musk started talking about the world’s “record CO2 levels,” noting, “The chart looks like a vertical line, and it’s still climbing!” He sees Tesla as targeting climate change — the cars will connect to the solar systems and home storage batteries, so “every individual is their own utility,” and less carbon is emitted. Not what you’d expect from a car company.
Musk seldom uses the phrase, but what he was talking about was the Internet of Things — putting computing intelligence into the objects and systems that surround us, connecting them to the network, and stitching it all into a digital ecosystem. Tesla’s cars, solar collectors and batteries all are connected, communicating via the internet. While the concept of IoT has been batted around the tech industry for a decade, with companies including Cisco and Intel placing hefty bets on its success, only now — suddenly — is it starting to make sense.
IoT’s “killer app” — what’s going to make it indispensable to society — will be combatting climate change. As much as the steam engine reconfigured Western economies at the start of the industrial revolution, IoT may shift how our energy system works as the world focuses on its climate crisis.
What is primarily causing the climate to warm, and weather to go wild, is the way humankind is flooding the atmosphere with carbon dioxide. We generate CO2 when we burn fuels like coal, petroleum, or natural gas. We thus need both to become radically more energy-efficient and to drive carbon out of the electricity generating system, even as we use electricity in more ways (like powering vehicles). But the electricity must be produced using sustainable sources like solar and wind that don’t create CO2.
Up until recently this equation really didn’t add up — in part because wind and solar could only be relied upon some of the time. As Robert Gaudette, a top executive at giant utility NRG, puts it, “The wind doesn’t always blow and the sun doesn’t always shine, so you end up with these intermittent resources in your grid.”
Historically, electricity always had to be consumed exactly when it was generated. The minute someone wanted more supply, a utility had to generate it into the grid. But there was no way to adjust demand.
IoT enables the creation of a smart electric system in which there can be flexibility in both supply and demand. It makes possible, for the first time, a responsive energy network in which both production and usage can be quantified in real time, and correlated. Power will no longer need to be produced only when it is consumed, because we will have new ways of predicting demand, adjusting usage, and storing energy.
For one thing, periods of peak demand will begin to be accommodated as much by conservation of electricity as by additional production. “Once your lightbulbs and your air conditioners become connected and part of the Internet of Things, you can aggregate your resources,” says NRG’s Gaudette. Once all those appliances are stitched into the network, they can be selectively turned down, or turned off.
Commercial power users like factories and offices, in addition to residential customers, can benefit from this ecosystem. Businesses as well as homes increasingly will have “smart meters” that enable a utility to gather information and, with the user’s consent, modify usage. Utilities gain the ability to adjust a user’s electric load, and reward customers for using less power at peak times. Such a system might automatically turn off appliances like water heaters, or temporarily adjust thermostats when energy demand is up. This allows customers to become suppliers rather than just consumers of power. What’s more, at the end of the month, many customers will get a rebate on their electricity bill.
Conservation is not the only way users can help the energy grid adapt to periods of high demand. The giant batteries in electric vehicles can serve as a source of supply to the smart connected grid when they are parked and plugged in. If the grid needs to find an extra megawatt of power to satisfy demand, it doesn’t matter to it whether that electricity comes from a power plant or from somewhere else, be it an idle battery or conservation elsewhere.
All these connected systems will make it possible to rely much more on variable sources of power like wind and solar. Many experts originally thought such sustainable sources couldn’t comprise more than 10% of total energy production, at best, because of how intermittent they were. But as the potential of the IoT has become clearer, it now appears that as much as 80% of the world’s total energy production could eventually come from renewables. NRG, the giant commercial utility where Gaudette works, is so confident of such a transition that it has a firm goal of reducing its overall carbon emissions 50% by 2030, even as the company expects to continue growing. And by 2050 it promises to cut CO2 an impressive 90%, using 2014 emissions as a baseline.
The move toward connected electric vehicles is a major part of this transition. There are already more than two million plug-in vehicles in operation worldwide. A recent study by McKinsey & Co. and Bloomberg New Energy Finance estimated that plug-ins could account for as many as 60% of all vehicles in high-density developed cities by 2030. Affluent Norway has a national target that only electric cars are to be sold there after 2025. Germany is moving in the same direction. And California’s Pacific Gas & Electric is already conducting an experiment with BMW using electric vehicles as sources of supply when they are plugged in and not in use.
The nations of the world committed in the Paris Agreement to work towards limiting the warming of the earth’s atmosphere to no more than two degrees Celsius above pre-industrial levels, beyond which scientists consider extremely dangerous. To achieve that, the world must reduce carbon dioxide emissions by roughly 80% below 2005 levels by 2050. It’s a daunting task, but estimates by communications equipment giant Ericsson and environmental group Carbon War Room both say advances in machine-to-machine communications, or IoT, can get us a good part of the way there, contributing to as much as an 18% reduction by 2030. Ericsson is a major developer of the next phase in wireless communications, 5G, which will be critical for the widespread IoT systems necessary.
Connected devices will offer plenty of additional ways to make society and its energy use more efficient, and reduce carbon production. For example, a relatively simple recent project in Los Angeles synchronized traffic lights to enable traffic to flow more smoothly, not only conserving drivers’ time but saving more than 35 million gallons of gasoline annually. Drivers sitting in traffic just in the United States burn an estimated three billion extra gallons of gas each year, contributing over 25 million tons of unnecessary CO2 emissions. Even something as basic as smart trash cans can play a role. Since they announce when they are full, garbage trucks don’t drive to empty them as often. Some regions have reduced pickups by 80%.
One of the biggest challenges for a lower-carbon future is that regulation and business models are lagging behind technology. We need to reward entrepreneurs who use IoT to drive down pollution. We need business models that incorporate and respond to the reality that electricity is more valuable at some times than at others. As the grid becomes more complex, it’s essential to add more information–about when renewables are available, where electricity can be stored or drawn from, and when demand can be delayed.
It’s clear that IoT will not change our lives by automatically reordering food for our refrigerators, as a longstanding technology cliché would have it. Summarizes Arun Majumdar, director of Stanford’s Precourt Center for Energy: “The Internet of Things can help decarbonize our energy system, provide modern energy systems to every human being, manage our infrastructure, and allow us to adapt to and address climate change.”
Diane Regas is Executive Director of the Environmental Defense Fund. David Kirkpatrick is Techonomy’s CEO.