Reduce Energy Use: Data’s Critical Role in Controlling Energy Costs


Reduce Energy Use: Data’s Critical Role in Controlling Energy Costs

Thursday, August 4th, 2011 - 13:38
Thursday, August 4, 2011 - 17:35
A coordinated technological architecture that combines expanded use of sensors, seamless information sharing and effective data analysis can lead to successful achievement of cost control and reduction in energy use.

Technology advances have become drivers and inspiration for actionable strategies to change the manner in which businesses, consumers and government organizations devise policies, make decisions and implement practical plans around energy use.

The Three I's: Instrumentation, Interconnection, and Intelligence

The pace of technological change in energy use is as dazzling as in any other field involving complex systems. Technology provides a critical foundational backbone to make an energy cost reduction strategy effective. Developments in instrumentation, interconnection of sensors, systems and data and intelligence derived from all these readings produced by a coordinated energy technology infrastructure reflect technology’s impact and its prominence in continuing to propel energy cost reductions.


Technology's dual capacity, as both support and stimulus for cost control, can be exemplified by the explosion of sensors that make energy use monitoring possible to a degree not previously available. With an ability to track asset function or data characteristics like temperature, duration and speed; smart sensors can constantly monitor everything from turbine speed in a wind farm to the length of time lights stay on in a building. At a current cost ranging down to 5 cents, Radio Frequency Identification (RFID) tags alone have been deployed in the billions, with more being generated each year—possessing ever more complex signaling capabilities. The future of instrumentation neatly approximates Moore’s Law, with sensors becoming so cheap and small that they may even wind up being scattered as ‘smartdust’ to expansively monitor real-world conditions affecting energy exploration, distribution and use—all in pursuit of cheaper outcomes in each area.


Amassing the data collected in these sensors and transmitting it throughout energy information systems creates transformational power to control energy use. Imagine a scenario in which an unexpected Toronto heat wave causes that city’s air conditioners to churn and gobble up kilowatt hours. Local utility companies have to buy spot power, which may be particularly expensive because the weather effect puts an unexpected strain on supply. However, interconnection enables the utilities to collect energy use data in real time, monitor and communicate the changing price, calculate the impact to power consumers and recommend alternative energy use times, all in a simple dashboard passed to the customer by a web-based account portal. Customers choose the lower price, the companies buy less power, and the grid faces less stress. Then there’s the concept of the Smart Grid itself, a premier model for illustrating interconnection’s ability to reduce cost. A grid becomes ‘smart’ because data reported in each node passes to a collection point for analysis. Once programmed to respond to data-based conditions, the grid alters behavior through automated changes to the function of its components. If this increases efficiency and stability, it also results in a better cost structure.


Intelligence is the value produced from the data and its transmission. Ubiquitous sensors constantly broadcasting their findings leads to new opportunities for analysis, automation and innovation. Envision scientists using Big Data to model energy output from ethanol sources to determine whether certain agricultural products are less costly as food or fuel. Think of a Smart Meter that receives machine readable information about a city’s power grid, directing appliances to turn on and off in response to a customer’s preset preferences. Consider the example of a metropolitan area’s grid regularly reporting heat maps of transmission loss to a utility’s engineers and architects as justification to upgrade distribution transformers to a newer design.

The effects of technology and technology’s rapid advance have powerful implications for energy use, in terms of keeping supply steady, making energy affordable and providing critical support to manifest new energy sources that maintain a balance between energy consumption and environmental sustainability. A review of the 'Three I's' provides insight into methods by which actors in the energy field—including everyone from a solar array deployment engineer to a utility customer reading a smart meter—will influence the industry’s cost dynamics.

Coming Up Next:

Join us tomorrow as move from the operational level and enablers to the implementation and energy domains.

Let Us Hear From You:

What do you think of the three I’s? How do you think the three I's will influence the industry's cost dynamics?


Tim Fain Bio Tim Fain is an Associate Partner and Service Area Leader within IBM’s Global Business Services Public Sector. Mr. Fain has more than 30 years of technical, managerial, and consulting experience. Specifically his experience involves developing organizational, economic development and environmental and energy sustainability strategies; improving business models and processes; and helping organizations develop transformation roadmaps. He uses his extensive knowledge of Federal regulatory and budgetary processes, e-Government principles and methodologies, and strategic planning to help public sector clients address policy, service, and transformational challenges.

Prior to joining IBM, Tim spent eight years at the Office of Management and Budget where he worked on a broad range of Federal government information technology and policy issues. A former US Navy Submarine Officer, Tim holds a BS in Metallurgical Engineering, a MA in National Security Studies, and a MPP in International Trade and Finance.

Tim Fain (



Tom SomersTom Somers is a Managing Consultant in IBM's Strategy and Innovation practice. Mr. Somers has 8 years of technology strategy, organizational integration and systems management experience. He spent an additional 5 years in the legal field focusing on intellectual property, open source and tech industry standards matters. Mr. Somers has experience with the development and dissemination of IBM Smarter Planet solutions in energy, other natural resources and capital investment planning. He also develops collaboration, case management and cloud solutions.

Mr. Somers holds a JD from the University of Southern California and an international relations degree from Johns Hopkins.

Tom Somers (