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By Robert Rapier on Apr 2, 2014 with 11 responses

How We Can Industrialize the Internet of Things


For today’s column, I bring you a guest post from Kevin Klustner. Kevin is the CEO of Powerit Solutions, an international energy management technology company.

How We Can Industrialize the Internet of Things

By Kevin Klustner

A number of thoughtful people – including Cisco CEO John Chambers – believe that the Smart Grid will ultimately be bigger than the Internet, by a magnitude of 100 or 1,000.

That’s a fairly audacious prophecy.

And, if you asked a wide range of industrial companies with energy-intensive facilities right now, they might not necessarily agree with this prediction.

But their skepticism is understandable – and it’s also based on current reality.

Indeed, many energy-intensive businesses today aren’t able to interact fully with Smart Grid signaling and pricing for the highest cost efficiency because of a lack of real-time knowledge and a lack of technology integration with their automation systems.

Put another way, we can’t help manufacturing facilities optimize their energy use in terms of savings and sustainability unless we successfully and seamlessly link industrial automation systems with the Smart Grid.

So, to take full advantage of the Smart Grid, we have to drive intelligence into the production and consumption of energy at the factory level. That means developing smarter plants, smarter equipment and smarter assembly lines with cloud-based technologies and then building the industrial equivalent of the Internet of Things (IoT).

Right now, the Internet of Things is primarily consumer-focused, with millions of devices – smart phones, smart TVs, tablets, laptops, and kitchen and home appliances, for example – connected. But a number of analysts and executives believe that an industrialized IoT could represent a multi-trillion-dollar market within a number of years.

When it comes to energy usage, how do we industrialize the IoT?

First and foremost, we have to install demand management software in factories so we can slow the growth of peak energy demand and take advantage of demand-side flexibility to reduce the need for new supply without compromising product quality or output. Peak-demand charges often represent up to 30 percent of an energy-intensive’s industrial facility’s energy bill, and automated demand management can reduce these charges by up to 30 percent.

The key here is to focus on how much energy is consumed, as well as when it’s consumed. And, by giving factories the ability to respond to fluctuations in energy supply and auto-balance their usage, we will help industrial companies capitalize on the strengths of the Smart Grid.

Second, we need to take a continuous flow of data from our smart plants, smart equipment and smart assembly lines and put it in the hands of executives at energy-intensive companies, so they can make informed and real-time financial decisions about energy use for their businesses.

This can’t take place in an effective or intelligent way, however, unless we have a common or standardized information model. And we also need an application that can transparently meld and integrate cost and supply / demand data.

Third, we need an energy-pricing stream for industrial companies that will allow energy-intensive plants and facilities to reliably plan their usage in advance, based on accurate and predictive cost modeling.

Fourth, we need an application that will help the industrial sector’s factories integrate storage and other sources of energy – such as solar and wind – into the data management mix. Right now, it’s all about electricity consumption. We must broaden our horizons to reflect changing 21st century energy portfolios.

Fifth, true industrial automation means that we need an application that can integrate all of a facility’s operations with energy data. This will enable plant managers to better understand and assess the total cost of production, as well as operator and equipment efficiency and practices.

The industrial Internet of Things is already taking shape in factories on several continents. These plants are home to legions of sensors and actuators that are embedded in equipment and assembly lines and linked through wired and wireless networks – often using the same Internet Protocol that connects the Internet. The result is an ongoing churn of real-time data that provides a treasure trove of business intelligence, which leads to greater efficiency, productivity, resource allocation and profitability.

And, just as significantly, this sensor-driven transformation is helping industrial companies alter and refine complex business processes, often without human intervention.

A recent report from McKinsey, for example, discussed how the chemical industry is benefiting from the emerging industrial Internet of Things. As McKinsey explains it, sensors in plants feed data to computers, which then send signals to actuators to adjust processes – whether it’s by modifying ingredient mixtures, temperatures or pressures. In the end, there are major reductions in waste, energy costs and human engagement – all critical bottom-line benefits.

Looking forward, we still have work to do on the technology front to make the industrial Internet of Things a smoothly running global network that is affordable and accessible for virtually every factory and facility seeking to continuously improve performance and financials.

But that’s the challenge and opportunity before us – and it represents one of the most powerful and profound conversions since the first Industrial Revolution began almost 250 years ago.


Powerit Solutions is an international energy management technology company based in Seattle that strives to make the smart grid real, profitable and effortless for utilities and energy-intensive businesses worldwide.

Link to Original Article: How We Can Industrialize the Internet of Things

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  1. By GreenEngineer on April 2, 2014 at 9:25 pm

    Hmmm… I made a comment here and it showed up. Now it’s gone. Any chance that it can be recovered?

    • By Robert Rapier on April 2, 2014 at 9:35 pm

      I am supposed to get an automatic email each time a comment is posted. I got one for this one, but not for an earlier one. Let me check in the spam folder and see if it got flagged by the software. Sometimes it happens when there are links; sometimes I have no explanation for why it happened.

      • By GreenEngineer on April 2, 2014 at 9:55 pm

        Oh, great. Thanks Robert! I had thought it was gone forever.
        (If you want, feel free to delete this entire thread.)

        • By Robert Rapier on April 2, 2014 at 9:58 pm

          Going to leave it, because it might help someone else whose comment mysteriously disappears. There were a couple of others in there I was never notified of.

    • By Robert Rapier on April 2, 2014 at 9:39 pm

      Thanks for bringing that to my attention. I would have never known you made the comment, but I found it.

  2. By Forrest on April 3, 2014 at 7:55 am

    I can’t envision the value of an all powerful and controlling smart grid. Unless, the system could be produced cheaply. Smart consumer info with ability to control energy cost seems a natural, even for households. I could envision a stock market approach to energy whereupon the cost reflected upon supply demand cycle. The cost of energy information streamed to consumers with smart controllers for cost control. This is a normal open market approach such as gasoline consumption decisions when price jets up per some supply problem. On top of that automatic cycle, statistics can spot trends such as the wind production times of year or daylight solar. Industry has long used communication protocols for equipment that is part of process or linear machinery. Business and production control is famous for real time communication. Supply management real time energy info? Supplying the utility info on what drill press number three duty cycle seems a bit over kill. Sure, design a aluminum plant to operate energy intensive process during low demand hours. Maybe management will discover that engineering can design small production plants that minimize investment costs that can operate on such a demand cycle. Same with steel mills, or cement factory. Home heating, refrigeration, cooling needs could be smart controlled per homeowner use of application software and low cost PLC type system. The typical wall switch may revert to signal control the desire to turn something on. One flick communicates menyana, two flicks communicates soon, three flicks communicates right now!

  3. By Forrest on April 3, 2014 at 8:54 am

    The fourth point will gain much attention. Not so much per solar and wind energy home or industry production, but per co-generation of heat and power aka CHP. The fossil fuel production of electric power typically inefficient as result a huge waste product of heat. This new energy grid system should enable, more to the need, maximize the incentive to those consumers utilizing fossil fuel heat to switch to CHP technology. Sure heat transfer is efficient, but production of electric power is not. Comparing a 97% furnace to a 96% CHP system is a apple oranges comparison. Electricity is high value energy, especially when produced so close to consumer.
    Also, past the point of intelligent power grid efficiencies, it would be helpful to economy and environment to promote waste heat sharing. Presently, liability concerns, codes, ordinances, and lack of market info an obstacle. Example, the most efficient combined cycle gas turbine power plants have ample waste heat to distill beer to ethanol fuel per typical ethanol plant needs.
    Another opportunity past smart grid control. Micro grid opportunities to share heat and power generation capability and balance load most efficiently. Think of micro turbine generator efficiency ability to heat homes and produce power, solar, energy storage, wood heat, and NG diesel CHP power generator ystem to meet demands of city block of neighbors. Neighbors whom meet face to face to make decisions. The problem with this setup no way for big business or big labor to make money. That’s were or political leadership steps in (laugh).

    • By Forrest on April 4, 2014 at 8:14 am

      Reread the article to pickup on a premise, that should not be assumed. “We must broaden our horizons to reflect changing 21st century energy portfolios.” Consumers of power should not engineer, design, coordinate, nor invest in preconceived biases in attempts to award purchases to specific power generation methods. Were conflating two non related issues and in the process muckin up the water to evaluate costs. It’s o.k. if a beer company, (especially private companies) to market products per self promotions of investing in green energy. It’s wrong for the country to regulate the grid to maximize advantages of poor cost and unreliable power generation per same marketing ideals. The decision making process of investment, technology, business, markets, customers are incredible complex and subtle. Predicting the future is best left to the mass intelligence of marketplace.
      Personally, in my opinion, the government is way over controlling the market to accomplish environmental benefits. For example Europe is concerned of volume of pollution of autos as that’s the measure for environmental damage. So, small cars with high mpg standards get a pass on certification. Our U.S. government is empowered to have control upon every avenue of commercial/human activity. My point is simple….if society wants less air pollution, either tax pollution or give the power generation industry IAPG industry average pollution goals, with fines upon long term abuse/inaction. The power generation industry will understand the rules and plan future more efficiently than the pencil pushers at EPA desk. The market will award the winning solution per purchasing reliable low cost power, even flexing consumption to wind and solar production if price is attractive enough. Consumers will enter into the foray of energy production per normal cost savings evaluations.

  4. By Eric on April 3, 2014 at 3:51 pm


    I just chuckle at the IoT moniker that has been thrown around the last few months. The IP-ification of industrial devices has been steadily going on for a couple decades now. Only now did people notice?

    Cisco wants the “IoT” to become reality because they expect to make a ton of money firewalling all those insecure devices from the Internet. Securing networked devices is VERY DIFFICULT – as has been shown repeatedly by successful attacks on those who should have secure networks (DOD, defense contractors, etc.).

    Many industrial devices benefit from IP connectivity on a local, or private, air-gapped network. Most (99%+?) do not need, nor have any business being connected to the *Internet*. There is simply no need for a refinery to make, for example, a local valve or a pressure transmitter globally accessible via the Internet.

    And I certainly hope that my local electrical utility is not connecting their substations to the Internet. There’s just no reason for anyone but the utility to have connectivity to generating facilities, substations and switchgear. Residential or commercial meter reporting (not control) is different – and Internet connectivity poses little risk aside from inconvenience.

    As with a lot of technological fashion trends, some will fully adopt the “industrial IoT” model. There will be total bedlam at those facilities when the inevitable occurs – and hackers find the thousands of security holes plaguing the devices. That will be followed by articles written by the former cheerleaders of the IoT – questioning why it was ever done to begin with.

  5. By alpha2actual on April 6, 2014 at 5:16 pm

    My utility company rang my door about 7 months ago and informed me that my state of the art smart meter was about to be installed. I mentioned the fact that I was aware of the fact that their 15 home “test program” burnt one house to the ground, and started a house fire in a second. Inferior/sub standard wiring was to blame. I then mentioned that I had read 2 studies, one from Texas the other from Colorado both of which documented that the monthly bills increased after installation. I then mentioned the fact that the technology was susceptible to hacking and this disturbed me, being a retired IT dude, not to worry. I then told the installer to disappear and he did.

  6. By Forrest on April 11, 2014 at 1:34 pm

    DOE published their goals for 2020. Their goals align with Kevin’s article for a smart grid control. DOE cites balance grid power demand and smart grid ability to better utilize all power sources. They want to beef up the reliability and harden the grid per possible attack of terrorist. After reading the article….makes me think they want the smart grid for control and gaining information from consumers. This is a central control solution. Appears not to be a market driven, market choice, system to benefit consumers. The information will be utilized to eliminate choice or customer control influences of electric supply market. Meaning the Green Power may not be attractive to customers, but the smart grid control will make the power your only choice. The grid will allow central control to pull plug upon equipment operation for national security needs, grid integrity, and maximize Green Energy use. The cost of will be hidden from public per the guise of keeping energy costs down, structuring regulations to shift cost to equipment sales, playing with utility billing to give false image.

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