Are Energy and Utility Companies in Position to Generate New Revenues through 5G Services with Existing Physical Infrastructure?

By Matthew Vulpis April 11, 2022

The recent, rapid rise of digitalization has brought with it a vast number of devices and applications revolutionizing the way daily processes get done. Innovative technologies have added ease and optimization into a variety of industries, enhancing efficiency and safety virtually everywhere. Among these technologies, two notably stand out in the impact they’ve had: edge technology and 5G.

Gartner defines edge computing as “a part of a distributed computing topology in which information processing is located close to the edge where things and people produce or consume that information.” The biggest benefit of edge computing has been the ability to process and store data faster, enabling more efficient real-time applications critical to companies. It’s expected to grow at a CAGR of 38.4 percent from 2021 to 2028, predicting a market value of USD 61.14 billion by the end of 2028.

As for 5G, the potential speed of 20 Gbps is a significant draw, but its low latency of 1 millisecond or less and its ability to support multigigabit data rates have been even more attractive for enterprise applications. The global 5G services market size was valued at USD 47.3 billion in 2021 and is expected to expand at a whopping compound annual growth rate (CAGR) of 52.0 percent from 2022 to 2030.

While both of these technologies will surely benefit organizations across all industries, one industry, in particular, can greatly benefit from the adoption of 5G and the edge, that being the energy and utilities industry,” said William Hurley, Chief Revenue Officer, Veea, an edge connectivity, computing, and security company based in New York City. “By adding sensors, applications, compute, and connectivity to the industrial edge, especially in the energy and utility industry, the result will be operational improvements through advanced automation and greater visibility into how systems are operating. 5G allows this to happen in real-time, with lower latency making wireless as powerful as traditional wired networks. Lose the wires – gain significant competitive efficiencies.”

The adoption of the technology by the sector was slow at first but has been on the rise as of recently. The global 5G infrastructure equipment market is expected to grow from $5.86 billion in 2021 to $10.49 billion in 2022 at a compound annual growth rate (CAGR) of 69.4 percent. While for the edge, according to a Forrester research, 84 percent of utility companies are either implementing or planning to implement Edge within the next year.

“This growth comes as no surprise, considering the benefits the technology can offer the industry,” Hurley said. “For example, while 5G enables many new services, there are two that come to mind. First, secure private networking: 5G gives the enterprise advanced, secure wireless reach in the form of private networks. Enterprise IT managers can now extend security policies and profiles with more granular control and lower latency for use cases, including the remote control of critical infrastructure. This allows utilities, for instance, to remotely send commands to distribution devices to change their configurations or to control their operations in real-time, with an end-to-end message latency of less than 1ms. Second, easier management of IoT devices. As the number of sensors and devices proliferate on the shop floor, the amount of data generated that must be transmitted, analyzed, summarized, and acted upon increases geometrically. Robust energy management, for example, the utilization of Tridium Niagara on Veea’s platform, not only improves operational efficiency but ensures the enterprise complies with evolving sustainability requirements that everyone of us face in the energy and utility industry.”

When it comes to the edge, electric utilities with a modernized grid can leverage edge computing solutions to process, analyze and gain insights from a constant stream of data from connected devices. These insights enable utilities to manage and monitor the broad range of their operations at a much higher level of granularity than in the past, clearing a path to new data-driven use cases.

On top of this, because edge computing saves processing time and reduces the need for Internet access, it is often a good fit for utilities and energy companies, which typically have IT assets distributed across wide geographical areas, many times in widely dispersed, inhospitable locales.

The biggest impact 5G and the edge can have on the industry is upgrading the country’s infrastructure to the point where they can begin to close the digital divide. This refers to the gap between demographics and regions that have access to modern information and communications technology and those that don’t.

A recent FCC broadband report found that roughly six percent of the country, which equals 19 million people, still lack access to broadband Internet, also making it difficult to leverage the devices and applications that require such Internet to perform optimally.

“The utilities industry already has built robust fiber networks to support operations for decades, putting them in a unique position to support broadband penetration, leverage their existing or planned middle-mile reserve fiber infrastructure in areas currently unserved or underserved by broadband, and lease capacity to service providers,” Hurley explained. “Energy providers of all kinds, whether traditional electrical and natural gas or the rapidly growing sustainable energy alternatives, including solar, wind, and thermal power, all stand to gain and be more competitive when they add digital capabilities on top of their in-place assets.”

As promising as that sounds, the full endeavor has been simply too expensive to get 5G and broadband and the connected IoT, IIoT, smart building, home, factory, and city innovations to take off.

Help is on the way soon in the form of the recently passed bipartisan Infrastructure Investment and Jobs Act (IIJA). The law allocates over $1 trillion in new and repurposed funds to upgrade the country’s infrastructure. This funding includes $65 billion for broadband infrastructure and government programs aimed at expanding access to more reliable, affordable, and faster Internet services.

Over $45 billion of the IIJA’s broadband budget will go towards the Broadband Equity, Access, and Deployment Program (Program), a set of broadband deployment grants for states and U.S. territories. The Program focuses on providing grants to aid “unserved” locations, which do not have widespread Internet access with at least 25 megabits per second (Mbps) download speed, and “underserved” locations, which lack widespread Internet access with at least 100 Mbps download speeds.

“Overall, 5G and the edge have the potential to not only revolutionize the energy and utilities sector but can also radically increase the percent of those in the U.S. that can access the Internet,” Hurley shared. “The IIJA includes the largest public investment in digital infrastructure in U.S. history and a tangible step towards improving the quality of the energy and utilities sector, as well as providing more Americans the opportunity to remain connected to the evolving economy. Energy and utility companies are the ideal partners, as their infrastructure is so available and ready to be transformed for the future, not just physically but digitally.”

Edited by Maurice Nagle
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