Capturing the Untapped Value of Edge Computing Investments for the Intelligent Grid
By Keshav Ahuja
Smart embedded devices and algorithmic decision making will transform services across many domains, including a smarter and intelligent grid.
Edge computing has gained momentum since the onset of 5G technology. And while 5G deployment for telecoms has been robust, investors have been wary of capitalizing edge computing technologies in the past, awaiting a lucrative operating model to be developed by an industry very much in its nascency. However, the emerging opportunities in the digital grid offer promise for power utilities in a global electrical infrastructure transition.
It is estimated that 75% of enterprise-generated data is expected to be processed outside a traditional centralized data center or cloud from around 10% in 2018. Consequently, several renowned investors in edge computing have quickly adopted mandates to commercialize solutions. Top-tier VC funds, such as Andreessen Horowitz, Softbank, GE Ventures, Saudi Aramco Energy Ventures, Berkshire Partners, Goldman Sachs, and Crown Castle, have invested in edge computing tech companies. The industry is also growing at a CAGR of 26.5% between 2019-2024 and is expected to reach $9 billion by 2024.
Edge computing has become an integral part to leverage data and enable IoT devices with smart sensors to become truly intelligent. For example, smart cameras fixed to assets or drones with machine learning capabilities can run remote inspections and leverage algorithms to analyze conditions. Since power utilities and energy players across the value chain require real-time decision making with assets distributed across geographical regions, edge computing can enhance production capabilities, improve processes, extend asset life and capture untapped value from ever-increasing sensor technology and machine data with the right edge computing architecture. This will accelerate the digital grid transformation.
The endless possibilities, like most IoT solutions available today, present an equal amount of challenges depending on the stakeholder. Utilities will have to consider the cost of digitization, while consumers demand equitable returns for use of their new generation and storage assets.
With data-driven technologies being adopted by most organizations, power companies that have strategic footprints in IoT verticals which can be integrated quickly with existing workflows, technologies, and processes, will stand ahead of competition. Harnessing a market leader position in the complex but converging power and IoT industries will require a long-term vision and tremendous collaboration between industry, government, and the emerging prosumer.
Most utilities are not known for their digital and service-focused solutions. Nevertheless, the race is on by OEMs and utilities to invest in edge computing to expand digital capabilities and enable a range of devices behind the meter and the grid’s edge. Thoughtful collaboration, partnerships, and leadership will be necessary to guide regulators into pragmatic policies and procedures. The US and the rest of the world have set aggressive mandates to decarbonize.
However, the grid is not intelligent yet, and utilities are at the nexus of the rapidly changing landscape of electric infrastructure and edge computing. Climate Impact Capital is here to be a change agent in this energy transformation.