Integration of AI, IoT and Big Data: The Intelligent Assistant

Five years ago, I wrote a post on this blog disparaging the state of the Internet of Things/home automation market as a “Tower of Proprietary Babble.” Vendors of many different home and industrial product offerings were literally speaking different languages, making their products inoperable with other complementary products from other vendors. The market was being constrained by its immaturity and a failure to grasp the importance of open standards. A 2017 Verizon report concluded that “an absence of industry-wide standards…represented greater than 50% of executives concerns about IoT. Today I can report that finally, the solutions and technologies are beginning to come together, albeit still slowly.

The Evolution of These Technologies Is Clearer

The IoT Tower of Proprietary Babble Is Slowly Crumbling

The Rise of the Intelligent Assistant

Five years ago, I wrote a post on this blog disparaging the state of the Internet of Things/home automation market as a “Tower of Proprietary Babble.” Vendors of many different home and industrial product offerings were literally speaking different languages, making their products inoperable with other complementary products from other vendors. The market was being constrained by its immaturity and a failure to grasp the importance of open standards. A 2017 Verizon report concluded that “an absence of industry-wide standards…represented greater than 50% of executives concerns about IoT.” Today I can report that finally, the solutions and technologies are beginning to come together, albeit still slowly.

One of the most important factors influencing these positive developments has been the recognition of the importance of this technology area by major corporate players and a large number of entrepreneurial companies funded by venture investment, as shown in the infographic above. Amazon, for example, announced in October 2018 that it has shipped over 100 Million Echo devices, which effectively combine an intelligent assistant, smart hub, and a large-scale database of information. This does not take into account the dozens of other companies which have launched their own entries. I like to point to Philips Hue as such an example of corporate strategic focus perhaps changing the future corporate prospects of Philips, based in Eindhoven in the Netherlands. I have visited Philips HQ, a company trying to evolve from the incandescent lighting market. Two years ago my wife bought me a Philips Hue WiFi controlled smart lighting starter kit. My initial reaction was disbelief that it would succeed. I am eating crow on that point, as I now control my lighting using Amazon’s Alexa and the Philips Hue smart hub. The rise of the “intelligent assistant” seems to have been a catalyst for growth and convergence.

The situation with proprietary silos of offerings that do not work well or at all with other offerings is still frustrating, but slowly evolving. Amazon Firestick’s browser is its own awkward “Silk” or alternatively Firefox, but excluding Google’s Chrome for alleged competitive advantage. When I set up my Firestick, I had to ditch Chromecast because I only have so many HDMI ports. Alexa works with Spotify but only in one room as dictated by Spotify. Alexa can play music from Amazon Music or Sirius/XM on all Echo devices without the Spotify limitation. Which brings me to another point of aggravation: alleged Smart TV’s. Not only are they not truly “smart,” they are proprietary silos of their own, so “intelligent assistant” smart hubs do not work with “smart” TV’s. Samsung, for example, has its own competing intelligent assistant, Bixby, so of course, only Bixby can control a Samsung TV. I watched one of those YouTube DIY videos on how you could make your TV work with Alexa using third-party software and remotes. Trust me, you do not want to go there. But cracks are beginning to appear that may lead to a flood of openness. Samsung just announced at CES that beginning in 2019 its Smart TV’s will work with Amazon Echo and Google Home, and that a later software update will likely enable older Samsung TV’s to work with Echo and Home. However, Bixby will still control the remote. Other TV’s from manufacturers like Sony and LG have worked with intelligent assistants for some time.

The rise of an Internet of Everything Everywhere, the recognition of the need for greater data communication bandwidth, and battery-free wireless IoT sensors are heating up R&D labs everywhere. Keep in mind that I am focusing on the consumer side, and have not even mentioned the rising demands from industrial applications. Intel has estimated that autonomous vehicles will transmit up to 4 Terabytes of data daily. AR and VR applications will require similar throughput. Existing wireless data communication technologies, including 5G LTE, cannot address this need. In addition, an exploding need for IoT sensors not connected to an electrical power source will require more work in the area of “energy harvesting.” Energy harvesting began with passive RFID, and by using kinetic, pizeo, and thermoelectric energy and converting it into a battery-free electrical power source for sensors. EnOcean, an entrepreneurial spinoff of Siemens in Munich has pioneered this technology but it is not sufficient for future market requirements.

Fortunately, work has already begun on both higher throughput wireless data communication using mmWave spectrum, and energy harvesting using radio backscatter, reminiscent of Nikola Tesla’s dream of wireless electrical power distribution. The successful demonstration of these technologies holds the potential to open the door to new IEEE data communication standards that could potentially play a role in ending the Tower of Babble and accelerating the integration of AI, IoT, and Big Data. Bottom line is that the market and the technology landscape are improving.

My IEEE Talk from 2013 foreshadows the development of current emerging trends in advanced technology, as they appeared at the time. I proposed that in fact, they represent one huge integrated convergence trend that has morphed into something even bigger, and is already having a major impact on the way we live, work, and think. The 2012 Obama campaign’s sophisticated “Dashboard” application is referenced, integrating Big Data, The Cloud, and Smart Mobile was perhaps the most significant example at that time of the combined power of these trends blending into one big thing.

READ MORE: Blog Post on IoT from July 20, 2013

The term “Internet of Things” (IoT) is being loosely tossed around in the media. But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so-called machine to machine or M2M communication. The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet-connected device.

Another key concept is the promise of automated energy efficiency, with the introduction of “smart meters” with data communication capability, and also achieved in large commercial structures via the Leadership in Energy & Environmental Design program or LEED. Some may recall that when Bill Gates built his multi-million dollar mansion on Lake Washington in Seattle, he had “remote control” of his home built into it. Now, years later, Gates’ original home automation is obsolete. The dream of home automation has been around for years, with numerous Silicon Valley conferences, and failed startups over the years, and needless to say, home automation went nowhere. But it is this concept of effortless home automation that has been the Holy Grail.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.” The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess. In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.” I use this term to describe the inability of available technology to meet the market opportunity. Without convergence, there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

Also, as more Internet-connected devices emerged it became apparent that these devices and apps were a hacker’s paradise. The concept of IoT was being implemented in very naive and immature ways and lacking common industry standards on basic issues: the kinds of things that the IETF and IEEE are famous for. These vulnerabilities are only now very slowly being resolved, but still in a fragmented ad hoc manner. The central problem has not been addressed due to classic proprietary “not invented here” mindsets.

The problem that is currently the center of this hairball, and from all indications is not likely to be resolved anytime soon. It is the problem of multiple data communication protocols, many of them effectively proprietary, creating a huge incompatible Tower of Babbling Things. There is no meaningful industry and market wide consensus on how The Internet of Things should communicate with the rest of the Internet. Until this happens, there can be no fulfillment of the promise of The Internet of Things. I recently posted “Co-opetition: Open Standards Always Win,” which discusses the need for open standards in order for a market to scale up.

A recent ZDNet post explains that home automation currently requires that devices need to be able to connect with “multiple local- and wide-area connectivity options (ZigBee, Wi-Fi, Bluetooth, GSM/GPRS, RFID/NFC, GPS, Ethernet). Along with the ability to connect many different kinds of sensors, this allows devices to be configured for a range of vertical markets.” Huh? This is the problem in a nutshell. You do not need to be a data communication engineer to get the point. And this is not even close to a full discussion of the problem. There are also IoT vendors who believe that consumers should pay them for the ability to connect to their proprietary Cloud. So imagine paying a fee for every protocol or sensor we employ in our homes. That’s a non-starter.

The above laundry list of data communication protocols, does not include the Zigbee “smart meter” communications standards war. The Zigbee protocol has been around for years, and claims to be an open industry standard, but many do not agree. Zigbee still does not really work, and a new competing smart meter protocol has just entered the picture. The Bluetooth IEEE 802.15 standard now may be overtaken by a much more powerful 802.15 3a. Some are asking if 4G LTE, NFC or WiFi may eliminate Bluetooth altogether. A very cool new technology, energy harvesting, has begun to take off in the home automation market. The energy harvesting sensors (no batteries) can capture just enough kinetic, peizo or thermoelectric energy to transmit short data communication “telegrams” to an energy harvesting router or server. The EnOcean Alliance has been formed around a small German company spun off from Siemens, and has attracted many leading companies in building automation. But EnOcean itself has recently published an article in Electronic Design News, announcing that they have a created “middleware” (quote) “…to incorporate battery-less devices into networks based on several different communication standards such as Wi-Fi, GSM, Ethernet/IP, BACnet, LON, KNX or DALI.” (unquote). It is apparent that this space remains very confused, crowded and uncertain. A new Cambridge UK startup, Neul is proposing yet another new IoT approach using the radio spectrum known as “white space,” becoming available with the transition from analog to digital television. With this much contention on protocols, there will be nothing but market paralysis.

Is everyone following all of these acronyms and data comm protocols? There will be a short quiz at the end of this post. (smile)

The advent of IP version 6, strongly supported by Intel and Cisco Systems has created another area of confusion. The problem with IPv6 in the world of The IoT is “too much information” as we say. Cisco and Intel want to see IPv6 as the one global protocol for every Internet connected device. This is utterly incompatible with energy harvesting, as the tiny amount of harvested energy cannot transmit the very long IPv6 packets. Hence, EnOcean’s middleware, without which their market is essentially constrained.

Then there is the ongoing new standards and upgrade activity in the International Standards Organization (ISO), The Institute of Electrical and Electronics Engineers (IEEE), Special Interest Groups (SIG’s”), none of which seem to be moving toward any ultimate solution to the Tower of Babbling Things problem in The Internet of Things.

The Brave New World of Internet privacy issues relating to this tidal wave of Big Data are not even considered here, and deserve a separate post on the subject. A recent NBC Technology post has explored many of these issues, while some have suggested we simply need to get over it. We have no privacy.

Stakeholders in The Internet of Things seem not to have learned the repeated lesson of open standards and co-opetition, and are concentrating on proprietary advantage which ensures that this market will not effectively scale anytime in the foreseeable future. Intertwined with the Tower of Babbling Things are the problems of Internet privacy and consumer concerns about wireless communication health & safety issues. Taken together, this market is not ready for prime time.

https://www.slideshare.net/mayo615/ieee-talk-integrated-big-data-the-cloud-smart-mobile-big-deal-or-not/mayo615/ieee-talk-integrated-big-data-the-cloud-smart-mobile-big-deal-or-not

The Internet of Things: The Promise Versus the Tower of Hacked Babbling Things

The term “Internet of Things” (IoT) is being loosely tossed around in the media. But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so called machine to machine or M2M communication. The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet connected device.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.” The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess. In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.” I use this term to describe the inability of available technology to meet the market opportunity. Without convergence there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

Is everyone following all of these acronyms and data comm protocols? There will be a short quiz at the end of this post. (smile)

The internet of everything–annihilating time and space

Originally posted on Gigaom:
Which modern technology “enables us to send communications…with the quickness of thought, and to annihilate time as well as space”? If you answered “the internet,” you’re right. If you answered “the telephone,” “the television” or any other speed-of-light telecommunication technology, you’re also right. That quote is from an 1860 book by…

An excellent discussion of the deeper social implications of the Internet of Everything. Perhaps difficult for some to grasp, but consistent with many other futurists’ views. The current world of MOOC‘s in online education, for example, may only be a brief waypoint on the journey to anytime, everywhere education.

Reblogged from Gigaom

The internet of everything–annihilating time and space

by Liron Shapira, Quixey

SUMMARY:In the future everyone will be connected—everywhere, all the time—making space and time no longer an issue for physical devices, people and products.

Which modern technology “enables us to send communications…with the quickness of thought, and to annihilate time as well as space”? If you answered “the internet,” you’re right. If you answered “the telephone,” “the television” or any other speed-of-light telecommunication technology, you’re also right. That quote is from an 1860 book by George Bartlett Prescott, an American telegraph official.

In 1860, the fastest telecommunication link between California and New York was the Pony Express, which took at least 10 days to get a message to the other side of the continent. Then one day in 1861, the First Transcontinental Telegraph was completed and you could send the same message across the continent in 10 seconds. Two days later, the Pony Express officially ceased operations. Prescott was onto something.

The Ancient Greek word “tele” means “far away”. To telecommunicate is to communicate farther than you can shout. When you connect two points with a speed-of-light telecommunication channel, you annihilate the spacetime-distance between the points. You get a kind of wormhole.

The internet is a network of spacetime wormholes connecting every human being on the planet. If you want to chat with someone face to face, you just stare into your cell phone and they stare into theirs. You can’t tell if they’re a thousand miles away, or in the next room.

But when it comes to physical things, we’re still living under the tyranny of spacetime. Kevin Ashton, the inventor of the term “Internet of Things”, wrote in 1999: “We’re physical, and so is our environment … You can’t eat bits, burn them to stay warm or put them in your gas tank. Ideas and information are important, but things matter much more.” Just look around the room right now, at anything other than your cell phone. All the things you can see and touch depend on where you are in space, or on how much time you spend moving yourself to a new location.

That’s a problem, because at any given moment, most of the things you care about aren’t in your line of sight. Almost none of the food you’re going to eat that day is. Almost none of the appliances you’re going to use that night are. That’s the tyranny of spacetime, which the internet of things is now beginning to overthrow.

The internet of things has three major spacetime-annihilating functions:

Transportationmaking far away things come to you

Teleportation – instantly getting copies of far away things

Telepresence – interacting with far away people and things

Transportation

In the past, far away things had no way to know what you wanted from them or when you wanted it. The right things wouldn’t know how to find you. So you’d have to travel to where the things were — to a restaurant, to your house, to various stores.

If you shop on Amazon instead of going to the store, you’re on the internet of things. Last year, Amazon acquired robotic warehouse technology company Kiva systems. When you one-click on that toothbrush, Amazon’s robots move it from deep inside the warehouse onto the floor where employees pack it and ship it to you.

The internet of things transports things to you pretty fast, but not at the speed of light. It uses the internet’s fast-moving bits the way skydivers use a little pilot chute to pull out a bigger, heavier parachute.

Teleportation

Actually, sometimes the internet of things does make faraway things come you at the speed of light. The trick, called “teleportation”, is to convert things to bits and then back to things again.

The first teleporters were invented before the internet, but the far away “facsimiles” they brought you were just pieces of paper. Modern teleporters are a lot more versatile.

The MakerBot Digitizer can scan 3D objects and store their structure as a file of bits. The MakerBot Replicator can read a file of bits and print a 3D object. Put the Digitizer and Replicator at opposite ends of an internet connection and you get a teleporter.

Thousands of objects can already be teleported at the speed of light – silverware, vases, lamp frames, and even some weird-looking, but functional shoes. Soon the internet will be able to teleport physical objects into your lap as easily as it teleports web pages into your screen, and you’ll be able to surf the internet of things.

Telepresence

Sometimes you want to interact with far away things without having them transport or teleport to you. Then what you want is telepresence.

For example, you often move far away from your locked bike. Normally that means you can’t unlock your bike to let a friend borrow it, and you also don’t know when thieves are cutting your lock. LOCK8 is a smart bike lock that lets you unlock it from far away, and notifies you when a potential thief is tampering with it. No matter how far away you are from your bike lock, LOCK8 gives you all the benefits of being near your bike lock.

What if you’re far away from your office, but still want to attend meetings as if you weren’t? Virtual presence systems like Anybots and Suitable Technologies’ Beam let you remote control a walking, talking, seeing, hearing robot. You can travel halfway around the world, and still have a physical presence at your office.

The future: The internet of everything

Did you know you have two wireless modems in your head? Your eyes constantly receive radio signals in the visible spectrum, and your sense of vision connects your brain to nearby physical things, like a de facto Local Area Network. But your sensory LAN connection only extends as far as your line of sight. It’s nothing compared to a Wi-Fi internet connection.

In the future of the internet of things, Wi-Fi is going to be everywhere, and the internet will connect you to every person and thing on the planet via transportation, teleportation and telepresence. A trillion wormholes will let you reach out from anywhere on earth and hug your loved ones, or try on a new pair of shoes, or unlock your bike.

In the future beyond the internet of things, all your senses will be wired directly into the internet’s wormholes, and you’ll be completely indifferent to the location of your physical body. When you look around you, you won’t be looking into a nearby region of space. You’ll be surfing an internet that annihilates all time and space – the internet of everything.

Liron Shapira is the co-founder and CTO of Quixey and is an advisor to the Machine Intelligence Research Institute (MIRI). Follow him on Twitter @liron

Gigaom

Which modern technology “enables us to send communications…with the quickness of thought, and to annihilate time as well as space”? If you answered “the internet,” you’re right. If you answered “the telephone,” “the television” or any other speed-of-light telecommunication technology, you’re also right. That quote is from an 1860 book by George Bartlett Prescott, an American telegraph official.

In 1860, the fastest telecommunication link between California and New York was the Pony Express, which took at least 10 days to get a message to the other side of the continent. Then one day in 1861, the First Transcontinental Telegraph was completed and you could send the same message across the continent in 10 seconds. Two days later, the Pony Express officially ceased operations. Prescott was onto something.

PowerLines

The Ancient Greek word “tele” means “far away”. To telecommunicate is to communicate farther than you can shout. When you connect two points…

View original post 955 more words

More on Utility Industry Myopia: Utilities are Dinosaurs Waiting to Die

As if to underscore my previous posts on the extraordinary rapidity of disruptive change for the utility industry, This is turning out to be potentially more significant than the smart mobile phone revolution. Issues here include the utility industry’s failure to recognize a strategic change caused by disruptive technological change, and to respond to it, and the rapid acceleration in Adizes’ corporate life cycle model. Citibank is now predicting severe consequences for utility companies if they do not grasp the massive changes confronting them.

Industry Analysis

Citibank: Utilities are dinosaurs waiting to die

As if to underscore my previous posts on the extraordinary rapidity of disruptive change for the utility industry, This is turning out to be potentially more significant than the smart mobile phone revolution. Issues here include the utility industry’s failure to recognize a strategic inflection point caused by disruptive technological change, and to respond to it, and the rapid acceleration of the Adizes’ corporate life cycle model, as is now occurring routinely in the high tech industry: Blackberry for example.

Citibank is now predicting severe consequences for utility companies if they do not grasp the massive changes confronting them. My fear, is that the traditional mindset of these companies is like that of the telecommunication companies in the face of the mobile and Internet onslaught. The telecom carriers reaction was dismissive and disdain. The current reactionary behavior of the energy utilities is foreshadowing the same sorry saga.

Tony Seba, MGMT 450 Guest Lecturer and Stanford University Lecturer on Entrepreneurship, will be discussing this topic tomorrow, Thursday, October 10th, at 2:30PM in EME 2181.

Smart Grid: Citibank: Utilities are dinosaurs waiting to die.

Quick Take: A new report authored by prominent Citibank analysts claims the global energy mix is shifting more rapidly than realized. If true – and these are some smart, smart people – it has major implications for generators, consumers, and most of all utilities. In fact, the study says utilities are most at risk because their business model is likely to change.

I’ve been arguing for years that utilities should either evolve to become “wires only” companies. Or else get busy offering additional services, such as rooftop solar and microgrids. For instance, in my “Electronomics” series, I explained why utilities MUST change their business model (and one way to get started).

This Citibank report suggests that the problem is even more urgent than we realized.

Today’s electric power utilities could lose half their addressable market to energy efficiency, solar and storage, and other distributed generation, according to “Energy Darwinism – the evolution of the energy industry,” a new report from the investment banking arm of Citibank.

“Consumers face economically viable choices and alternatives in the coming years which were not foreseen 5 years ago,” the analysts write. According to REneweconomy, the price fall of solar panels has exceeded all expectations, resulting in cost parity being achieved in certain areas much more quickly. “The key point about the future is that these fast ‘learning rates’ are likely to continue, meaning that the technology just keeps getting cheaper. At the same time, the alternatives of conventional fossil fuels are likely to gradually become more expensive.”

This is not a ‘tomorrow’ story. We are already seeing utilities altering investment plans, even in the shale-driven U.S., with examples of utilities switching plans for peak-shaving gas plants, and installing solar farms in their stead,” the report says.Even wind may cut into traditional approaches, despite its intermittency. Citi says that while wind’s intermittency is an issue, with more widespread national adoption it begins to exhibit more baseload characteristics (i.e. it runs more continuously on an aggregated basis). “Hence it becomes a viable option, without the risk of low utilisation rates in developed markets, commodity price risk or associated cost of carbon risks.”

Citi admits that storage is still a nascent industry, but so was solar 5 to 6 years ago. “The increasing levels of investment and the emergence of subsidy schemes which drive volumes could lead to similarly dramatic reductions in cost as those seen in solar, which would then drive the virtuous circle of improving economics and volume adoption.”

How fast will the changeover take place? Citi says history tells us that such changes are never gradual, citing the graph below as evidence.

You might also be interested in …

Utility death knell? Investors grow wary of utility stocks

Businessweek declares death of the grid

Industry Analysis: Utilities Dig In Against Distributed Rooftop Solar

This is another of my Industry Analysis discussions for UBC students. This time it is perhaps as big an industry issue and clash of competing values as big as the smart mobile phone market, which I call the Mega Market War of Titans. It is about the intersection between two industries, which has recently morphed into a contentious clash. This is about disruptive new technology and strategic inflection points. So what has happened?

Reblogged from the GRIST

By David Roberts

The conflict between electric utilities and distributed energy— mainly rooftop solar panels — is heating up. It’s heating up so much that people are writing about electric utility regulation, the most tedious, inscrutable subject this side of corporate tax law. The popular scrutiny is long overdue. So buckle up. We’re getting into it.

I wrote about the fight a while back — “solar panels could destroy U.S. utilities, according to U.S. utilities ” — but it’s worth taking a closer look at what’s under dispute. Some bits are unavoidably wonky and technical, but it’s important to understand exactly what’s happening. This is a pivotal issue, a trial run for many such struggles to come.

There’s a short-term problem and a long-term problem. The former is about how electricity rates are structured, specifically how utilities compensate (or don’t) customers who generate power with rooftop solar PV panels. The latter is about developing an entirely new business model for utilities, one that aligns their financial interests with the spread of distributed energy. The danger is that fighting over the former could delay solving the latter.

(now featuring cute animals!) — (Now featuring cute animals!)

Today, let’s dig into the fight at hand. It’s about utility rates, specifically “net metering,” yet another nerdy green term no one understands. I will endeavor to make clear what it is and why the fight over it is so damn interesting and exciting. Exciting, I tell you! Wake up!

The utility perspective

First, note that I’m focusing here mostly on investor-owned utilities (IOUs), which serve about 70 percent of America’s customers. These are the old-school, for-profit, regulated-monopoly utilities, with a captive customer base and profits guaranteed by law. IOUs are the main (though not exclusive) force pushing back against distributed solar.

Here’s how IOUs make money: 1) they estimate how much power their customers will need; 2) they estimate the investments they’ll need to make in power plants, fuel, transmission lines, etc. in order to meet that demand; 3) they estimate what rate they need to charge customers to cover those investments and offer a reasonable “rate of return” to their investors; 4) they go to the state public utility commission (PUC) to make a “rate case” justifying the rate; 5) if the PUC signs off, the IOU charges that rate until time to make their next rate case.

The free market in action! [cough]

Anyway, that’s the rate residential customers pay: the PUC-approved “retail rate.” Typically, the retail rate bundles all the utility’s costs into a single package, not just the “variable costs” of fuel and electricity but also the “fixed costs” of investment in transmission lines, transformers, power plants, and the like.

That’s all background. Now. Into this milieu comes “net metering,” a policy in place in just over 40 states (though the details differ substantially from state to state). Under net metering, a residential customer with solar on her roof is credited the retail rate for the electricity she produces. If she produces as much electricity as she consumes, her bill nets out to zero. That means she’s not paying for electricity, but it also means she’s not paying anything toward the utility’s fixed costs. As more customers zero out their bill through net metering, fixed costs will be transferred to a smaller group of ratepayers, thus raising their rates (and their unholy ire).

According to utilities, this is not fair, since solar customers are still making use of the grid and the services that utilities provide. In fact, they say, the complexity of managing thousands of distributed solar panels makes grid management more difficult and costly. Through net metering, the customers who can’t afford solar end up subsidizing grid services for those who can.

That’s why utilities view net metering as unsustainable. That’s why they’re going after it in California, Texas, and elsewhere.

The immediate solutions favored by utilities are well-captured in the first two recommendations from that now-infamous Edison Electric Institute paper (the one where the utility trade group predicted a solar-induced death spiral). The first is that utilities institute a “monthly customer service charge to all tariffs in all states in order to recover fixed costs.” This “fixed charge” is something all homeowners would have to pay, whether or not they’d created a net surplus of electricity.

The second is to “develop a tariff structure to reflect the cost of service and value provided to [distributed energy] customers,” said service and value consisting in “off-peak service, back-up interruptible service, and the pathway to sell [distributed] resources to the utility or other energy supply providers.” To my ears, this sounds like a recommendation to pay rooftop solar producers wholesale rather than retail rates.

David Rubin of Pacific Gas & Electric sums up:

We need to set the stage for continued growth in solar in what we believe will be a sustainable way which is to not have solar customers that are being subsidised by the rest of our customers and producing unsustainable rates for those customers.

The solar perspective

Solar installers, customers, and advocates are not impressed by these arguments. In fact they are up in arms. Some of the country’s biggest solar installers have formed a group call the Alliance for Solar Choice to defend net metering. (This is happening in Australia too, where a campaign called Solar Citizens was just started for the same reason.)

They say: Gimme a break. Utilities don’t care when rates rise. That’s how utilities make their money.

Imagine if Walmart had a monopoly on retail sales. It could charge whatever it wanted for its goods, as long as the charges were approved by a PRC (public retail commission). In fact, the more Walmart bought, the more warehouses and stores it built, the bigger its truck fleet, the more it could justify charging customers. It was guaranteed a healthy rate of return on its investments, whether or not those investments were wise, whether or not customers end up needing them.

Would monopoly Walmart have any reason to object to rising retail prices? Of course not. Would it have any incentive to reduce costs? Of course not. As long as it’s got a captive customer base, it has no incentive to innovate or take chances.

That’s why utility customers are getting shafted all over the country. Utilities overestimate demand, underestimate efficiency, and contract for gigantic central-generation power plants that customers pay for whether or not they need the power. Why just elsewhere in California, Southern California Edison customers have been paying on the order of $68 million a month for a “refurbished” San Onofre nuclear plant that crapped out over a year ago and hasn’t produced a watt since. In Mississippi, rates are rising to pay for the new Kemper County coal-fired power plant. We Energies in Wisconsin is trying its damnedest to raise rates on its customers to pay for the ill-fated Oak Creek coal plant. And so on.

So no, utilities are not upset that solar is (allegedly) increasing some customers’ rates; they’re upset that solar is reducing their revenue. Rooftop solar panels are investments upon which utility shareholders receive no return. It’s competition they don’t like, the potential loss of their captive customers.

That, say solar advocates, is the core utility incentive, so anything from utilities about what they “need” to cope with solar should be taken with a large teaspoon of salt.

Relatedly, the notion that onsite solar generation and consumption is a “cost” to utilities is somewhat Kafka-esque. A home creating its own power basically unplugs itself from the grid. If you unplugged an old freezer or TV, would that be a “cost” to the utility? After all, the electricity that’s generated onsite on a solar home is used by that home or its immediate neighbors. It barely touches the utility’s transmission and distribution system. It is effectively delivered energy, which is why it gets the retail rate: It saves the utility on transmission and distribution costs. It also reduces line losses and the cost of meeting state renewable energy targets.

Nonetheless, last year, California Assemblyman Steven Bradford (D) — chair of the Committee on Utilities and Commerce and, ahem, a former Southern California Edison executive — managed to pass AB2514, which mandated that California PUCs consider onsite solar a cost. That’s how California utilities are trying to justify new fixed charges.

Tom Beach of energy research firm Crossborder Energy took those benefits into account when he analyzed the costs and benefits of net metering in California and (in a separate study) Arizona. He found that net metering will create a small net benefit for all customers: $92 million a year for customers in California and $34 million a year in Arizona, both by 2015. (Both these numbers are small beans relative to total utility revenue, by the way.)

This is from a Vote Solar infographic [PDF] on the California study:

Vote Solar

Click to embiggen.

And finally, solar advocates argue that utilities are ignoring the load-reducing benefits of distributed energy (and energy efficiency) in their resource and infrastructure planning. Distributed energy and efficiency reduce the utilities’ fixed costs by reducing the need for new power plants and transmission lines, but utilities don’t take that into account. They end up planning for — and justifying rates for — a level of infrastructure they won’t actually need. So those rising rates they’re squawking about are in part due to their own poor planning. Nick Chaset, energy advisor to California Gov. Jerry Brown (D), put it this way earlier this year:

… there is a bit of a disconnect in utility planning. … Typically, the investor-owned utilities do not fully account for the expected deployments of distributed resources in their distribution infrastructure planning. … [As a result,] we do some degree of double-paying. We are paying for the rooftop solar and a distribution system that is accounting for expected load growth that might be offset by that rooftop solar.

If utilities would plan around distributed resources better, solar advocates say, maybe they wouldn’t need to raise rates so much.

It’s not simple

My sense, looking on this battle from the outside, is that solar advocates have the stronger case, but that they’ve been a little too quick to go to Defcon 1 and tar all utilities as evil. Some utilities, at least, seem to be grappling with this issue in good faith.

Here’s a kind of parable. CPS Energy in San Antonio, a municipal (notinvestor-owned) utility generally considered a friend of solar, last month announced that it would scrap its net metering program and replace it with a “solar credit” worth about half as much. Solar advocates went ballistic. Among other things, they compared CPS unfavorably to Austin Energy, which offered a solar credit that was roughly twice as large.

Well, since then, CPS Energy has agreed to delay its move for a year, giving it time to work with solar advocates and installers to find a solution acceptable to everyone. Meanwhile, Austin Energy reduced its rebate for new solar installations.

This is not to say either utility is in the right, just that even the “good guy” utilities are struggling with the question of how to appropriately compensate for distributed solar. The fact is, as long as utilities operate under their current business model, rooftop solar really does hurt them.

What’s ultimately needed is not this kludgy, rate-jiggling solution, which will have utilities and solar advocates forever squabbling over pennies on the margins, but a deeper rethinking of the utility model, particular the investor-owned utility model.

More On The Tower of Babbling Things: Honeywell Smart Thermostat

This article from Gigaom serves to further underscore The Tower of Babbling Things….Competitors battling each other over control of The Internet of Things over the means, methods and, most importantly, the dozens of competing data communication protocols. Honeywell has now entered the battle, realizing the a number of small, entrepreneurial startups are eroding their market for traditional thermostats. Previous to this development, Intel and others had promoted the concept of home tabletop display consoles for energy efficiency management. The display console concept is now officially dead, as reported in the Gigaom post. Recently, Gigaom also showcased three competing home automation systems, all of which were “closed” proprietary systems.

This article from Gigaom serves to further underscore The Tower of Babbling Things….Competitors battling each other over control of The Internet of Things over the means, methods and, most importantly, the dozens of competing data communication protocols. Honeywell has now entered the battle, realizing the a number of small, entrepreneurial startups are eroding their market for traditional thermostats. The glaring problem with Honeywell’s entry is the $250 price point. Previous to this development, Intel and others had promoted the concept of home tabletop display consoles for energy efficiency management. The display console concept is now officially dead, as reported in the Gigaom post. Recently, Gigaom also showcased three competing home automation systems, all of which were “closed” proprietary systems.

Read more: The Tower of Babbling Things

Reblogged from Gigaom

The battle over the smart connected thermostat rages on

by Ucilia Wang

August 2, 2013

SUMMARY: In the face of growing competition from startups, Honeywell has launched a Wi-Fi-connected, smart thermostat, and the device may one day control more than just the heating and cooling systems.

The battle to control how people heat and cool their homes is heating up in a way that is reminiscent of the fight over which company gets to lord over the home’s media and entertainment systems.

Honeywell recently launched a fancy $249 Wi-Fi thermostat and an online energysavings calculator that aim to re-invent the company’s long-standing product line, and compete with younger, nimble upstarts like Nest and Radio Thermostat Company of America. Some of these startups are moving aggressively — despite only launching the learning thermostat in 2011, Nest has gotten it into big retail chains such as Lowe’s and Apple’s online store.

But temperature control isn’t what makes the technology development of these so-called smart thermostats interesting to watch. With more built-in sensors, software and wireless communications, these devices could become the brains of home energy networks, which will include not only the heating and cooling systems but also appliances and other energy consuming gizmos.

The assumption here is that consumers will want greater control and automation of their energy use in order to keep utility bills in check. But how much time they are willing to spend tinkering with various settings and monitoring their energy use is still a big question.

We know that high-end energy dashboards were essentially flops. Doling out the same advice when consumers are paying their utility bills, on the other hand, seems to work better because you are getting their attention when they are about to fork over part of their earnings to keep their homes lit and comfortable.

But thermostats are no longer the only devices that are vying for control. With the emergence of rooftop solar panels and batteries to store home-grown energy, we are seeing control systems emerge that are designed to manage all of the energy created and consumed for the home.

The space for home energy control could be a tremendous market and has no dominant players so far. It’s like the early days when consumer electronics makers were trying to figure out whether it’d be the game console, TV, set-top box, computer or some other stand-alone devices that will the hub to connect the living room and deliver entertainment and other content throughout the house. After all these years, that fight remains unsettled.

Honeywell’s Wi-Fi thermostat play

Honeywell introduced the Wi-Fi Smart Thermostat just over a year after suing Nestover patent infringement in February 2011. The lawsuit remains in place, though it’son hold at Nest’s request.

Honeywell is using technology it previously engineered for industrial-grade thermostats for the new model, said Mike Hoppe, senior product marketing manager. The Wi-Fi thermostat lets homeowners key in daily temperature preferences and program their heating and cooling settings remotely by smart phones.

The device shows indoor and outdoor temperatures and alerts its owner when the home becomes too hot or cold and a new temperature setting might be needed. It also notifies the homeowner when the thermostat’s Wi-Fi connection is broken or when the home loses power.

The core technology that Honeywell is proud of lies in the sensors and software that accurately reads the room temperature and communicates it promptly to the heater or air conditioning system, Hoppe said. The company says the accuracy margin is plus or minus 1 degree, unlike competing thermostats that could err as much as 4 degrees.

The company is sticking with the traditional rectangular look rather than the round shape that has defined Nest’s thermostat even if Nest wasn’t the first to make it round. But since style is now an important feature, Honeywell’s take on that is to build in a palette of background colors for the thermostat’s touch screen — you can change it to match the color of the wall or your mood.

The thermostat comes with a “utility mode” in which a homeowner would key in utility rates and other data. The device crunches those numbers to display a range of temperature choices, which let the homeowner decide whether to stick with the temperature she wants or to forego comfort in varying degrees in order to save money.

There is a fair amount of data input in the initial set up. The thermostat asks you when you get up in the morning, when you go to sleep, what time you leave and return to your home and what temperatures would you want for all these blocks of time each day. There is also a vacation mode.

Honeywell makes it clear that its new offering is not a “learning thermostat” like Nest’s, which has a motion sensor and algorithms that are supposed to figure out a homeowner’s heating and cooling patterns and recommend changes to save energy.

Honeywell contracted with GreenOhm to create the online energy savings calculator as a sales tool. With your zip code, information about your heating and cooling systems and your daily temperature preferences, the calculator can spit out an estimated annual monetary savings for using the new thermostat. You can also find out local utility rebates and other incentives for installing more intelligent thermostats.

The Wi-Fi thermostat is designed to provide a much finer control of your home’s comfort. But it also requires more work to get it set up and put it to work. While it’s interesting to see manufacturers put some thought and fashion into the long-neglected device, the thermostat may just remain as a tool to create a comfortable home. People may not care much more about it beyond that.

The Internet of Things: The Promise Versus the Tower of Babbling Things

The term “Internet of Things” is being loosely tossed around in the media. But what does it mean? It means simply that data communication like the Internet, but not necessarily Internet Protocol packets is emerging for all manner of “things” in the home: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so called machine to machine or M2M. The data communication can also terminate in a home compute server where the information can be made available to the homeowner to intervene remotely from their smart mobile phone or any other remote Internet connected device.

The term “Internet of Things” (IoT) is being loosely tossed around in the media. But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so called machine to machine or M2M communication. The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet connected device.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.” The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess. In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.” I use this term to describe the inability of available technology to meet the market opportunity. Without convergence there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

The other problem is currently the center of this hairball, and from all indications is not likely to be resolved anytime soon. It is the problem of multiple data communication protocols, many of them effectively proprietary, creating a huge incompatible Tower of Babbling Things. There is no meaningful industry and market wide consensus on how The Internet of Things should communicate with the rest of the Internet. Until this happens, there can be no fulfillment of the promise of The Internet of Things. I recently posted “Co-opetition: Open Standards Always Win,” which discusses the need for open standards in order for a market to scale up.

Is everyone following all of these acronyms and data comm protocols? There will be a short quiz at the end of this post. (smile)

The Humble Thermostat: Another Strategic Web Battle

The Ecobee Smart Thermostat, fully Internet capable

For years thermostats have been ugly and downright stupid devices that sit neglected on our walls. But over the past 18 months the connected thermostat has morphed into a gadget that has been drawing the attention of some of the most cutting-edge software startups, which are looking to use it to connect with utilities and consumers.

Unbeknownst to many, a Canadian company in Ontario, Ecobee, has been at the forefront of the smart thermostat market for quite awhile. The Ecobee device is fully integrated with the Internet, and does all of the things you might expect an Internet connected thermostat to do, using your smart phone while away in Zanzibar to monitor your home. I quite like Ecobee. But it would be another Canadian innovation tragedy if Ecobee got run over in this growing global battle, as has happened with so many Canadian companies. I would be happier to see Ecobee begin acting like the global market player it is, attracting major capital and Big Dog strategic partners.

But the market has been heating up for some time and many major technology players and lots of big Silicon Valley money are now in the fray. A BC Hydro trial of advanced Smart Grid, solar heating, and Smart Meter (called Advanced Meter Initiative or AMI in BC) technologies has been going on quietly for some time on Vancouver Island. Another FortisBC trial is due to begin in the Okanagan sometime in the near future. Home energy management networks are set to grow from being in 2 percent of U.S. households in 2011 to 13 percent, or about 16.2 million households, by 2015.

Intel Intelligent Home Management Console, a reference design for OEM’s

Cisco Systems, General Electric, Google, Honeywell, Microsoft and Intel, along with a host of other companies are now focused on this home energy management market, developing new products and technologies that will be in our homes shortly. Siemens spin-off startup, EnOcean, and the EnOcean Alliance are also part of this complex market mix. EnOcean is the current leader in a related technology, “energy harvesting”, which will likely be one of the future major drivers in energy efficiency. Many home appliances are already “Internet ready.” This is obviously an area of major global corporate competition.

So take another look at that ugly thermostat on your wall. Things are about to change.

For the record, I am not impressed with all of the Luddite hype opposed to smart meters. One of BC’s environmental celebrities (not David Suzuki) is an opponent of wireless smart meters, citing anecdotal research on the health dangers of radio waves generally, but not on smart meters specifically. On the one hand, this person decries climate change deniers who refuse to accept science, while he simultaneously denies science on radio signal propagation. I follow this area of research fairly closely and have yet to see any convincing study that points to health problems with the radio signal propagation of smart meters. I am a follower of Nikola Tesla, the recently resurrected “father of electrical energy generation and distribution”, who endeavored to dispel superstitions about electricity. Unfortunately, many of those superstitions persist.

A Khosla Ventures-backed energy analytics startup called Bidgely is the latest to go after the next-gen smart thermostat, and it has told us that it has an agreement with thermostat maker Emerson to commercialize a thermostat in the coming months that syncs with Bidgely’s energy software. Bidgely’s algorithms can take home energy data and section out which appliances in the home are consuming what amount of power, without having extra hardware or sensors on each plug or appliance.

Consumers that can get that type of data can see, for example, if their pool pump is consuming too much energy in the winter time, or if their air conditioning unit is sucking down much more power than the average (see itemized bill). Utilities could offer such a smart thermostat to customers in their areas that want to be included in energy efficiency programs. Emerson’s thermostat wirelessly connects to smart meters or a home router with a Zigbee connection.

The deal between Emerson and Bidgely isn’t all that unique in the rapidly growing energy software sector. Emerson is also working with other software startups like EcoFactor, EnergyHub, and Calico Energy to have its thermostat sync with their software, too.

Next week at a major utility conference called Distributech, all of the energy software startups and large energy giants will be touting their smart, connected thermostats; including both new thermostat models and new services. The thermostat is a unique device. It’s an object that can provide demand response services for utilities, or the collective turning down of utility customers’ energy use during peak times (like a hot summer day in Texas). Software startups like EcoFactor can create algorithms that can do this, without making the climate of a home uncomfortable for the inhabitant.

The thermostat is also the latest device to become part of the growing world of the Internet of Things. In this always-on connected ecosystem, everything gets a connection, all devices are made smarter with software and data and these devices can make human lives easier, more interesting or more efficient.

Nest is one of the few that’s aggressively targeting consumers. Most of the energy startups are aiming for the utility market. One of the better known collaborations around a thermostat maker and an energy software company is between Opower and Honeywell. Honeywell is the giant in the thermostat maker market, and Opower is the leading energy software player.

Make sure to watch the buzz around smart thermostats and the entire market area defined by energy efficiency monitoring and management, in both commercial and home applications.

The Evolution of These Technologies Is Clearer

The IoT Tower of Proprietary Babble Is Slowly Crumbling

The Rise of the Intelligent Assistant

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