Steffi O. Muhanji · Alison E.

 Flint 
Amro M. Farid

eIoT
The Development of the Energy Internet
of Things in Energy Infrastructure
eIoT
Steffi O. Muhanji • Alison E. Flint • Amro M. Farid

eIoT
The Development of the Energy Internet
of Things in Energy Infrastructure

123
Steffi O. Muhanji Alison E. Flint
Laboratory for Intelligent Integrated Laboratory for Intelligent Integrated
Networks of Engineering Systems (LIINES) Networks of Engineering Systems (LIINES)
Thayer School of Engineering, Thayer School of Engineering,
Dartmouth College Dartmouth College
Hanover, NH, USA Hanover, NH, USA

Amro M. Farid
Laboratory for Intelligent Integrated
Networks of Engineering Systems (LIINES)
Thayer School of Engineering,
Dartmouth College
Hanover, NH, USA

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To my sisters Ivy and Whitney,
Ivy, you will forever be in my heart. Never to
be forgotten. I love you both so much, and
I am truly proud of you.
Steffi
Preface

It’s been 20 years since Kevin Ashton coined the term the “Internet of Things”
(IoT). At the time, the concept was advanced by the Auto-ID Center global research
consortium as a means of transforming production and supply chain management. If
every product or “thing” could have an RFID tag, then it could potentially “speak”
to an RFID reader and provide relevant information like its current location, its
production date, and its expected delivery time and location. Products, as they
moved through a supply chain, could gain their own sort of “intelligence” through
intelligent product agents that negotiated with the rest of the supply chain’s entities
to reach their final destination. In short, having real-time product-level granularity
of an entire supply chain was viewed as a key to a digitized industrial revolution
called Industrie 4.0.
In some ways, a lot has changed. In others, much of this original vision has
remained the same. No longer is the Internet of Things solely dependent on RFID
tags and readers. Instead, the proliferation of sensor technology in the last two
decades has tremendously diversified the notion of IoT to include just about any
type of sensor with the potential for connection to a communication network.
Similarly, communication networks, particularly wireless ones, have experienced
similar leaps in innovation and adoption. For perspective, the Wi-Fi Alliance, the
trade association responsible for Wi-Fi technology, was founded in the same year
(1999) that the term IoT was first used. Finally, mobile computing devices (like
smartphones and tablets) have revolutionized the potential for high computing
power near or on edge devices. The associated computing platforms (e.g., Android
and iOS) has brought about yet another proliferation of IoT-friendly “apps.”
This tremendous heterogeneity of new sensors, communication networks, edge
computing, and mobile apps has transformed the IoT landscape from its humble
beginnings centered on RFID tags and readers. In so doing, IoT has emerged
as the dominant new paradigm for the transformation of supply chain operations
management.

vii
viii Preface

Why This Book?

However, it would be insufficient to restrict the concept of IoT solely to traditional

supply chain management and logistics applications. The Internet of Things now
spans every “thing.” Among others, there are applications in transportation, water,
defense, aerospace, and, yes, even energy systems. This book explores the collision
between the sustainable energy transition and the Internet of Things (IoT).
In that regard, this book’s arrival is timely. Not only is the Internet of Things
for energy applications, herein called the energy Internet of Things (eIoT), rapidly
developing, but also the transition toward sustainable energy to abate global climate
is very much at the forefront of public discourse. The 2016 COP21 Paris Agreement
has committed to keep the increase in global average temperature to well below
2 ◦ C. The 2018 report of the Intergovernmental Panel on Climate Change states
that achieving such a goal would require “rapid, far reaching, and unprecedented
changes in all aspects of society.”
It is within the context of these two dynamic thrusts, digitization and global
climate change, that the energy industry sees itself undergoing significant change
in how it is operated and managed. This book recognizes that they impose five
fundamental energy management change drivers: (1) the growing demand for
electricity, (2) the emergence of renewable energy resources, (3) the emergence
of electrified transportation, (4) the deregulation of electric power markets, and
(5) innovations in smart grid technology. Together, they challenge many of the
assumptions upon which the electric grid was first built.
Traditionally, the electricity grid comprised of centralized generation whose
soul purpose was to serve consumer demand. This centralized paradigm came to
shape the way the electricity grid is managed and operated today. However, as
more renewable distributed generations in the form of solar and wind are added
to the grid, power can no longer just flow in one direction (from the transmission
to the distribution system). Instead, consumers that have rooftop solar should be
able to send their power back to the electricity transmission system. Variable
renewable energy resources have also put a strain on system operators because they
must meet the net load (i.e., consumer demand minus variable energy generation).
Furthermore, because many of these variable renewable energy resources are
installed behind metering infrastructure, they are not always able to distinguish
between the variability of load and that renewable generation. To further complicate
the situation, consumers increasingly possess the capability to manage and control
their consumption patterns, making it possible for them to respond to the time-of-
use or real-time price signals.
Instead of this traditional paradigm of active centralized generation serving
passive distributed loads, this book argues that the five energy management change
drivers stated above will activate the grid periphery. This will in turn “pull” eIoT
technologies to become a scalable energy management solution. In so doing, eIoT
will enable a pervasive grid-wide transformation in which a plethora of cyber and
physical grid devices will interact within transactive energy applications. Energy,
Preface ix

power, and other grid “services” will have to be sought in or near real time so as
to maintain grid reliability and economic efficiency at all points in a very much
distributed grid.

The Goal of This Book

The goal of this book is provide a single integrated picture of how eIoT can come to
transform our energy infrastructure. This book links the energy management change
drivers mentioned above to the need for a technical energy management solution. It,
then, describes how eIoT meets many of the criteria required for such a technical
solution. In that regard, the book stresses the ability of eIoT to add sensing, decision-
making, and actuation capabilities to millions or perhaps even billions of interacting
“smart” devices. With such a large-scale transformation composed of so many
independent actions, the book also organizes the discussion into a single multi-layer
energy management control loop structure. Consequently, much attention is given
to not just network-enabled physical devices but also communication networks,
distributed control and decision-making, and finally technical architectures and
standards. Having gone into the detail of these many simultaneously developing
technologies, the book returns to how these technologies when integrated form new
applications for transactive energy. In that regard, it highlights several eIoT-enabled
energy management use cases that fundamentally change the relationship between
end users, utilities, and grid operators. Consequently, the book discusses some of
the emerging applications for utilities, industry, commerce, and residences. The
book concludes that these eIoT applications will transform today’s grid into one
that is much more responsive, dynamic, adaptive, and flexible. It also concludes
that this transformation will bring about new challenges and opportunities for the
cyber-physical-economic performance of the grid and the business models of its
increasingly growing number of participants and stakeholders.

What’s in This Book?

This book is comprised of five chapters organized as follows:

• Chapter 1 presents eIoT as a potential solution to the five energy management
change drivers described above.
• Chapter 2 recognizes that these drivers will require a transformation of the grid
periphery where eIoT is also most suitable as a technical solution.
• Chapter 3 then presents the development of IoT within energy infrastructure
using an energy management control loop as a guiding structure for discussion.
x Preface

• Chapter 4 then ties this overarching techno-economic energy management

control loop with the emerging concept of transactive energy. Applications for
utilities, industry, commerce, and residences are subsequently discussed.
• Chapter 5 serves to summarize the conclusions of the work. In short,
1. eIoT will become ubiquitous.
2. eIoT will enable new automated energy management platforms.
3. eIoT will enable distributed techno-economic decision-making.
Chapter 5 also serves to highlight two open challenges and opportunities for
future work. These are:
1. The convergence of cyber, physical, and economic performance
2. The re-envisioning of the strategic business model for the utility of the future

Hanover, NH, USA Steffi O. Muhanji

Hanover, NH, USA Alison E. Flint
Hanover, NH, USA Amro M. Farid
October 2018
Acknowledgments

The authors would like to thank the Electric Power Research Institute (EPRI) for
the partial funding to support this book project. We’d also like to thank EPRI for its
technical feedback as this work has developed.

xi
Contents

1 eIoT as a Solution to Energy-Management Change Drivers . . . . . . . . . . . . 1

1.1 Energy-Management Change Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Growing Demand for Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.2 The Emergence of Renewable Energy Resources . . . . . . . . . . . . . 2
1.1.3 The Emergence of Electrified Transportation . . . . . . . . . . . . . . . . . 6
1.1.4 Deregulation of Electric Power Markets . . . . . . . . . . . . . . . . . . . . . . . 8
1.1.5 Innovations in Smart Grid Technology . . . . . . . . . . . . . . . . . . . . . . . . 9
1.2 The Need for a Technical Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.3 eIoT as an Energy-Management Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.4 Scope and Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.5 Book Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2 eIoT Activates the Grid Periphery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1 Change Drivers Will Transform Energy Management
at the Grid Periphery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.2 The Challenge of Activating the Grid Periphery . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Deploying eIoT as a Scalable Energy Management Solution . . . . . . . . . 24
3 The Development of IoT Within Energy Infrastructure. . . . . . . . . . . . . . . . . 27
3.1 Network-Enabled Physical Devices: Sensors and Actuators . . . . . . . . . . 28
3.1.1 Network-Enabled Physical Devices: Overview . . . . . . . . . . . . . . . 28
3.1.2 Sensing and Actuation of Primary Variables in the
Transmission System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1.3 Sensing and Actuation of Supply Side Secondary
Variables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.1.4 Sensing and Actuation of Primary Variables in the
Distribution System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.1.5 Sensing and Actuation of Demand-Side Secondary
Variables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.1.6 Network-Enabled Physical Devices: Conclusion . . . . . . . . . . . . . 54

xiii
xiv Contents

3.2 Communication Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

3.2.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3.2.2 Grid Operator and Utility Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.2.3 Commercial Telecommunication Networks . . . . . . . . . . . . . . . . . . . 67
3.2.4 Local Area Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
3.2.5 IoT Messaging Protocols . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.3 Distributed Control and Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
3.4 Architectures and Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
3.5 Socio-Technical Implications of eIoT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
3.5.1 eIoT Privacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
3.5.2 eIoT Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
4 Transactive Energy Applications of eIoT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.1 Transactive Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
4.2 Potential eIoT Energy-Management Use Cases . . . . . . . . . . . . . . . . . . . . . . . 97
4.2.1 An eIoT Transactive Energy Aggregation Use Case . . . . . . . . . . 98
4.2.2 An eIoT Economic Demand Response in Wholesale
Electricity Markets Use Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
4.3 Applications for Utilities and Distribution System Operators . . . . . . . . 104
4.4 Customer Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
4.4.1 Industrial Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
4.4.2 Commercial Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
4.4.3 Residential Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
5 eIoT Transforms the Future Electric Grid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
5.1 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.1.1 eIoT Will Become Ubiquitous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.1.2 eIoT Will Enable New Automated
Energy-Management Platforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
5.1.3 eIoT Will Enable Distributed Techno-Economic
Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
5.2 Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
5.2.1 The Convergence of Cyber, Physical, and Economic
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
5.2.2 Re-envisioning the Strategic Business Model for the
Utility of the Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Nomenclature

Measurement Units
$/kW h dollars per kilowatt-hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
μA microamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
Bps bits per second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
BT U British Thermal Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 49
Gbps gigabits per second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 62
GW gigawatts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 4
Hz Hertz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 78
kbps Kilobits per second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 69
kH z Kilohertz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 34
km kilometers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
kV kilovolts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
kV A kilo Volt-Ampere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
kW kilowatt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 24
kW h Kilowatt-hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 42
m meters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
mA milliamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
Mbps megabits per second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 62
MH z Megahertz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 65
MMBT U Million British Thermal Units . . . . . . . . . . . . . . . . . . . . . . . p. 1
ms milliseconds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
Mtoe Million tons of oil equivalent . . . . . . . . . . . . . . . . . . . . . . . . p. 2
MV A Mega Volt Amp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 87
MW megawatt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 24
ns nanoseconds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
pu per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
Quads quadrillion BTU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
s seconds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
T Wh Terawatt-hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 112
V AR Volt-ampere reactive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 95
W watts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1

xv
xvi Nomenclature

Acronyms
3GP P Third Generation Partnership Project . . . . . . . . . . . . . . . . p. 69
AC Alternating current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 41
ACE Area Control Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 35
ADMM Alternate Direction Method of Multipliers . . . . . . . . . . . p. 78
ADSL Asymmetric digital subscriber line . . . . . . . . . . . . . . . . . . p. 67
AEP American Electric Power . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 94
AGC Automatic generation control . . . . . . . . . . . . . . . . . . . . . . . p. 34
ALADI N Alternating Direct Inexact Newton . . . . . . . . . . . . . . . . . . p. 78
AMI Advanced Metering Infrastructure. . . . . . . . . . . . . . . . . . . p. 43
AMM Automated meter management . . . . . . . . . . . . . . . . . . . . . p. 43
AMQP Advanced Message Queuing Protocol . . . . . . . . . . . . . . . p. 75
AMR Automatic meter reading . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 43
ANSI American National Standards Institute . . . . . . . . . . . . . . . p. 41
AP I Application Programming Interface . . . . . . . . . . . . . . . . . p. 75
AP P Auxiliary Problem Principle . . . . . . . . . . . . . . . . . . . . . . . . p. 78
ARRA American Recovery and Reinvestment Act . . . . . . . . . . . p. 43
AT C Analytical Target Cascading . . . . . . . . . . . . . . . . . . . . . . . . p. 78
AV R Automatic voltage regulator . . . . . . . . . . . . . . . . . . . . . . . . p. 34
AW S Amazon Web Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 86
BB-P LC Broadband power-line communication. . . . . . . . . . . . . . . p. 62
BEMS Building energy-management systems . . . . . . . . . . . . . . p. 111
BP A Bonneville Power Administration . . . . . . . . . . . . . . . . . . . p. 96
BP SK Binary phase-shift keying . . . . . . . . . . . . . . . . . . . . . . . . . . p. 66
BY OT Bring Your Own Thermostat . . . . . . . . . . . . . . . . . . . . . . p. 112
CAI SO California Independent System Operator . . . . . . . . . . . p. 105
CI M Common Information Model . . . . . . . . . . . . . . . . . . . . . . . p. 87
CoAP Constrained Application Protocol . . . . . . . . . . . . . . . . . . . p. 75
CSOC Cyber Security Operations Center . . . . . . . . . . . . . . . . . . . p. 96
CT current transformer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 112
DACR Distribution automation circuit reconfiguration . . . . . . . p. 95
DDS Data Distribution Service . . . . . . . . . . . . . . . . . . . . . . . . . . p. 75
DER Distributed Energy Resources . . . . . . . . . . . . . . . . . . . . . . . p. 9
DERP Distributed Energy Resource Provider . . . . . . . . . . . . . . p. 105
DG Distributed Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 9
DMS Distribution-management system . . . . . . . . . . . . . . . . . . . p. 22
DN P 3 Distributed Network Protocol . . . . . . . . . . . . . . . . . . . . . . . p. 63
DR Demand Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 9
DSL Digital subscriber lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 67
DSM Demand Side Management . . . . . . . . . . . . . . . . . . . . . . . . . p. 24
DSO Distribution System Operators . . . . . . . . . . . . . . . . . . . . . p. 104
DV R Digital video recorder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 46
EI A Energy Information Administration . . . . . . . . . . . . . . . . . p. 45
eI oT Energy Internet of Things . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
EI SA Energy Independence Security Act . . . . . . . . . . . . . . . . . . p. 83
Nomenclature xvii

EMS Energy-management system . . . . . . . . . . . . . . . . . . . . . . . . p. 22

EP RI Electric Power and Research Institute . . . . . . . . . . . . . . . p. 32
ESCO Energy service company . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 71
ET SI European Telecommunications Standards Institute . . . . p. 65
EV Electric vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 4
F ACT S Flexible AC Transmission System . . . . . . . . . . . . . . . . . . p. 34
F AN Field Area Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 66
F CC Federal Communications Commission . . . . . . . . . . . . . . . p. 66
F ERC Federal Energy Regulatory Commission . . . . . . . . . . . . . p. 35
FIT Feed-In Tariff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 4
F RA frequency response analysis . . . . . . . . . . . . . . . . . . . . . . . . . p. 2
G3-P LC 3rd Generation Power-Line Communication . . . . . . . . . p. 62
GH G Greenhouse gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 5
GP RS General Packet Radio Service . . . . . . . . . . . . . . . . . . . . . . p. 69
GP S Global Positioning System . . . . . . . . . . . . . . . . . . . . . . . . . p. 34
GSM Global System for Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . p. 65
GW AC GridWise Architecture Council . . . . . . . . . . . . . . . . . . . . . p. 84
H AN Home Area Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 66
H ART Highway Addressable Remote Transducer . . . . . . . . . . . p. 73
H DSL High-bit-rate digital subscriber line . . . . . . . . . . . . . . . . . p. 67
H EM Home energy management . . . . . . . . . . . . . . . . . . . . . . . . . p. 65
HT T P HyperText Transfer Protocol . . . . . . . . . . . . . . . . . . . . . . . p. 75
H V AC Heating Ventilation and Air-Conditioning . . . . . . . . . . . . p. 46
I CT Information and Communication Technologies . . . . . . . p. 87
I EA International Energy Agency . . . . . . . . . . . . . . . . . . . . . . . . p. 2
I EC International Electrotechnical Commission . . . . . . . . . . p. 80
I EEE Institute of Electrical and Electronics Engineers . . . . . . p. 86
I EEE-P ES-DMS IEEE Power and Energy Society Distribution
Automation/Management System . . . . . . . . . . . . . . . . . . . p. 20
I ET F Internet Engineering Task Force . . . . . . . . . . . . . . . . . . . . p. 75
IFT T T If This Then That . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 112
I I oT Industrial Internet of Things . . . . . . . . . . . . . . . . . . . . . . . . p. 73
I oT Internet of Things . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 1
IP Internet Protocol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 64
IPP Independent Power Producers . . . . . . . . . . . . . . . . . . . . . . p. 19
I P SO Internet Protocol for Smart Objects . . . . . . . . . . . . . . . . . p. 11
I P v6 Internet Protocol version 6 . . . . . . . . . . . . . . . . . . . . . . . . . p. 11
I SO Independent System Operator. . . . . . . . . . . . . . . . . . . . . . . . p. 9
IT Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 43
IT C Investment Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 5
I T ES Intelligent Transportation Energy System . . . . . . . . . . . . p. 53
IT U International Telecommunication Union . . . . . . . . . . . . . p. 62
I T U -T ITU Telecommunications Standardization Sector . . . . . p. 62
KAI ST Korea Advanced Institute of Science and Technology . p. 11
KKT Karush–Kuhn–Tucker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 78
xviii Nomenclature

LAN Local Area Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 54

LMP Locational Marginal Price . . . . . . . . . . . . . . . . . . . . . . . . . p. 101
LoRa Long Range . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 65
LoRaW AN Long Range Wide-Area Network . . . . . . . . . . . . . . . . . . . p. 65
LP W AN Low-power wide-area network . . . . . . . . . . . . . . . . . . . . . p. 65
LT C load tap changer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 2
LT E Long-Term Evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 56
M2M Machine-to-machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 20
MAC Medium Access Control . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 65
MAS Multi-agent system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 79
MASCEM Multi-agent system competitive electricity markets
simulator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 80
MAT SI M Multi-Agent Transport Simulation . . . . . . . . . . . . . . . . . . p. 52
MI S metal-insulated semiconductor . . . . . . . . . . . . . . . . . . . . . . . p. 2
MI T Massachusetts Institute of Technology . . . . . . . . . . . . . . . p. 11
MQT T Message Queue Telemetry Transport . . . . . . . . . . . . . . . . p. 75
MT U Master Terminal Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 31
N 2N NAN-to-NAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 70
NAN Neighborhood Area Network . . . . . . . . . . . . . . . . . . . . . . . p. 54
NB-I oT Narrow band Internet of Things . . . . . . . . . . . . . . . . . . . . . p. 65
N B-P LC Narrowband power-line communication . . . . . . . . . . . . . p. 62
NI ST National Institute of Standards and Technology . . . . . . . p. 88
NOP R Notice of Proposed Rule-making . . . . . . . . . . . . . . . . . . p. 105
NW S Non-wires Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 94
OASI S Organization for Advancement of Structured
Information Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 93
OECD Organization for Economic Cooperation
and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 2
OP F Optimal Power Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 78
OP P Olympic Peninsula Project . . . . . . . . . . . . . . . . . . . . . . . . . p. 94
P 2P Peer-to-peer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 101
P DC Phasor data concentrator . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 64
P H EV Plug-in electric vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 4
PHY Physical layer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 65
P LC Power-line carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 62
P LC Programmable logic controllers . . . . . . . . . . . . . . . . . . . . . p. 31
P MU Phasor Measurement Unit . . . . . . . . . . . . . . . . . . . . . . . . . . p. 34
P NNL Pacific Northwest National Laboratory . . . . . . . . . . . . . . p. 94
P N W SGD Pacific Northwest Smart Grid Demonstration. . . . . . . . . p. 94
P RI ME PoweRline Intelligent Metering Evolution . . . . . . . . . . . p. 62
P ROF I BU S Process Field Bus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 63
PT potential transformer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 2
PTC Production Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 5
PV Photovoltaic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 3
QB-P LC Quasi-band power-line communication . . . . . . . . . . . . . . p. 62
Nomenclature xix

QoS Quality of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 70

RE Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 113
RF RF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 2
RF I D Radio-frequency identification . . . . . . . . . . . . . . . . . . . . . . p. 12
ROI Return-on-Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 47
RP MA Random Phase Multiple Access . . . . . . . . . . . . . . . . . . . . . p. 66
RP S Renewable energy portfolio standards . . . . . . . . . . . . . . . . p. 4
RT O Regional Transmission Organization . . . . . . . . . . . . . . . p. 105
RT P da Real time pricing with double auction . . . . . . . . . . . . . . . p. 96
RT U Remote Terminal Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 31
SCADA Supervisory control and data acquisition . . . . . . . . . . . . . p. 20
SCED Security-constrained economic dispatch . . . . . . . . . . . . . p. 39
SCU C Security-constrained unit commitment . . . . . . . . . . . . . . . p. 39
SDK Software Developer’s Kit . . . . . . . . . . . . . . . . . . . . . . . . . . p. 86
SDR Software-defined radio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 75
SEDC Smart Energy Demand Coalition . . . . . . . . . . . . . . . . . . . p. 105
SGAM Smart Grid Architecture Model . . . . . . . . . . . . . . . . . . . . . p. 83
SGI G Smart Grid Investment Grant . . . . . . . . . . . . . . . . . . . . . . . p. 43
SGI R Smart grid interoperability reference model . . . . . . . . . . p. 87
SI A Seamless Integration Architecture . . . . . . . . . . . . . . . . . . . p. 87
SI W G Smart Inverter Working Group . . . . . . . . . . . . . . . . . . . . . . p. 41
SN D Software-defined networking . . . . . . . . . . . . . . . . . . . . . . . p. 75
SSL Secure Socket Layers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 75
ST AT COM Static Synchronous Compensator . . . . . . . . . . . . . . . . . . . p. 37
SV C Static VAR Compensator . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 37
T CP Transmission Control Protocol . . . . . . . . . . . . . . . . . . . . . . p. 75
T CP ST Thyristor Controlled Phase Shifting Transformer . . . . . p. 37
T CSC Thyristor Controlled Series Compensator . . . . . . . . . . . . p. 37
TE Transactive Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 9
T eMI X Transactive Energy Market Information Exchange . . . . p. 93
T EN Transportation Electricity Nexus . . . . . . . . . . . . . . . . . . . . p. 52
T LS Transport Layer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 75
T SO Transmission system operators . . . . . . . . . . . . . . . . . . . . p. 108
T SP Transactive Systems Program . . . . . . . . . . . . . . . . . . . . . . . p. 93
UHF Ultra-high frequency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 63
UL Underwriters Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 41
U NB-P LC Ultra-narrowband power-line carrier . . . . . . . . . . . . . . . . p. 62
U SDOE United States Department of Energy . . . . . . . . . . . . . . . . p. 43
UT P Unshielded Twister Pair . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 71
V DSL Very-high-bit-rate digital subscriber line . . . . . . . . . . . . . p. 67
V ER Variable energy resources . . . . . . . . . . . . . . . . . . . . . . . . . . p. 38
V V AR Volt VAR Optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 95
W AMS Wide-Area Monitoring Systems . . . . . . . . . . . . . . . . . . . . p. 34
W AN Wide-Area Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 54
W iMAX Worldwide Interoperability for Microwave Access . . . . p. 69
xx Nomenclature

W iSU N Wireless Smart Utility Network . . . . . . . . . . . . . . . . . . . . . p. 66

WPP Wind power plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 40
W SN Wireless sensor networks . . . . . . . . . . . . . . . . . . . . . . . . . . p. 24
XML Extensible Markup Language . . . . . . . . . . . . . . . . . . . . . . . p. 75
XMP P eXtensible Messaging and Presence Protocol . . . . . . . . . p. 75
List of Figures

Fig. 1 A closed-loop framework for electrical power system

management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv
Fig. 2 The development of IoT within energy infrastructure as
networked control loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxvii
Fig. 1.1 A closed-loop framework for electrical power system
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Fig. 1.2 World energy growth between 2015 and 2040 . . . . . . . . . . . . . . . . . . . . . . 3
Fig. 1.3 Sankey diagram of American energy system in 2016 . . . . . . . . . . . . . . . 7
Fig. 1.4 Plug-in EVs as a new and significant component of
residential consumer load . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Fig. 1.5 Types of regulated and deregulated environments . . . . . . . . . . . . . . . . . . 8
Fig. 1.6 The California ISO duck curve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fig. 1.7 A conceptual transition from a traditional electric power
grid to a future smart grid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fig. 1.8 A closed-loop control framework for production systems
with intelligent products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fig. 1.9 A closed-loop framework for electrical power system
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Fig. 2.1 A grid periphery activated by variable generation and
demand response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Fig. 2.2 A future smart grid with stochastic and controllable
supply- and demand-side resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Fig. 3.1 The development of IoT within energy infrastructure as
networked control loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Fig. 3.2 Schematic overview of Sect. 3.1 on network-enabled
physical devices: sensors and actuators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Fig. 3.3 Sensor technologies in transmission lines and substations . . . . . . . . . 30

xxi
xxii List of Figures

Fig. 3.4 SCADA as a network of remote terminal units (RTUs)

connected to a master terminal unit (MTU) via modems
and radios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Fig. 3.5 Schematic of a Phasor measurement unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Fig. 3.6 Schematic of automatic generation control . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Fig. 3.7 Schematic of automatic voltage regulation . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Fig. 3.8 Distribution automation upgrades during the smart grid
investment grant program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Fig. 3.9 Aggregate profile of household electric power consumption . . . . . . . 45
Fig. 3.10 Sankey diagram for the energy consumption (TBtu) of the
US manufacturing sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Fig. 3.11 Summary of manufacturing sector electrification alternatives . . . . . . 50
Fig. 3.12 Summary of manufacturing sector electrification alternatives . . . . . . 51
Fig. 3.13 LAN, NAN and WAN networks across the electric power system . 55
Fig. 3.14 A generic hierarchical control structure for a typical power
system area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Fig. 3.15 EU mandate M/490 Smart Grid Architecture Model (SGAM) . . . . . 84
Fig. 3.16 The GridWise Architecture Council interoperability framework . . . 85
Fig. 3.17 The OpenFog reference architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Fig. 3.18 An overview of important eIoT standards . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Fig. 4.1 A use case comparison between a conventional and an eIoT
transactive energy-enabled apartment building. . . . . . . . . . . . . . . . . . . . . . 99
Fig. 4.2 A use case comparison between a conventional and an eIoT
economic DR apartment building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Fig. 4.3 eIoT Economic DR in wholesale electricity markets use case
data: (a) On the left, the daily net load profile of the prior
to demand–response incentives. (b) On the right, the hourly
locational marginal prices (LMPs) experienced within the
wholesale electricity market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Fig. 4.4 An example eIoT-enabled smart home: DERs are connected
to the grid through a cloud-based framework . . . . . . . . . . . . . . . . . . . . . . . 107
List of Tables

Table 3.1 Intelligent transportation-energy system operations

decisions in the transportation-electricity nexus . . . . . . . . . . . . . . . . . . . . 53
Table 3.2 Communication networks for grid operators and utilities . . . . . . . . . 57
Table 3.3 Telecommunication networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Table 3.4 Local area networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Table 3.5 Adherence of existing MAS implementations to design principles 81

xxiii
Executive Summary

The electric power grid was developed on an architectural assumption of centralized

generation being delivered to passive distributed loads irrespective of the cost
required to do so [33]. However, several new energy-management change drivers
are emerging to uproot this status quo. Chapter 1 identifies these drivers as the
rising demand for electricity [34–36], the emergence of renewable energy resources
[37–40], the emergence of electrified transportation [41, 42], the deregulation
of power markets [43, 44], and innovations in smart grid technology [45, 46].
Responding to these drivers requires new and integrated technical solutions for
energy management.
The energy Internet of Things (eIoT) has been proposed as one such energy-
management solution, illustrated in Fig. 1. eIoT is a leading and overarching
perspective where all devices that consume electricity are internet-enabled and,
consequently, can coordinate their energy consumption with the rest of the grid in
or near real-time. eIoT technologies must, therefore, be adopted within the context
of these energy-management change drivers.
Perhaps nowhere will the impact of the energy-management change drivers
identified in the previous paragraphs be felt more than at the grid’s periphery.
Distributed generation (DG), in the form of solar photovoltaics (PV) and small-scale

Sensing in:
Generation,
Techno-Economic
Transmission,
Operational Data
Distribution,
& Demand
Analysis Measurement

Decision Execution Operation

Controllers & Line Balancing

Energy Markets Historical Data
Energy Resource
Response

Fig. 1 A closed-loop framework for electrical power system management

xxv
xxvi Executive Summary

wind, will be joined by a plethora of internet-enabled appliances and devices to

transform the grid’s periphery to one with two-way flows of power and information
[45, 46]. This transformation is a daunting technical challenge. Not only are there
tens of millions of devices at the leaves of the grid’s radial structure, these devices
are relatively small and require innovations in sensing, communication, control,
and actuation. Chapter 1 first describes this transformation and then describes the
challenge of activating the grid’s periphery. Finally, it describes how eIoT can
potentially be deployed as a scalable energy-management solution.
The development of IoT within energy infrastructure is best seen as a control
loop. The control loop is composed of four functions: a physical process (such
as the generation, transmission, or consumption of electricity), its measurement,
decision-making, and actuation. This control structure is shown in Fig. 2 where a
sensor takes measurements of the physical system’s states and outputs. Wireless
and wired communications are then used to pass this information between the
physical layer and other informatic components. This information is used to make
decisions either independently in a decentralized fashion or in coordination with
the informatic components of other devices. Decisions are then sent back down
to network-enabled actuators for implementation. In some cases, this control loop
acts in near real-time. In other cases, some of the information is used as part
of predictive applications that facilitate decisions at a longer time scale. Control
algorithms implemented at different layers of this control loop enable the control of
individual devices as well as the coordination of smart grid devices that comprise
other parts of eIoT. Given the connectivity between the functions of this control
loop, its successful implementation requires architectures and standards that ensure
interoperability between eIoT technologies.
Chapter 3 serves to summarize the most recent developments of IoT within
energy infrastructure. The discussion proceeds from the bottom-up by classifying
these developments according to the generic control structure shown in Fig. 2.
• Section 3.1 discusses some of the state of the art in network-enabled physical
devices, whether they are network-enabled sensors or actuators in the control
loop. Section 3.2 then focuses on the communication networks that send and
receive data to and from these devices.
• Section 3.3 then discusses advancements in distributed control algorithms that
coordinate the techno-economic performance. The chapter concludes with two
discussions of a cross-cutting nature.
• Section 3.4 addresses the importance of control architectures and standards in the
development of eIoT technologies.
• Section 3.5 addresses the security and privacy concerns that emerge from the
development of eIoT technologies.
When these many factors are implemented together properly, they form an eIoT
control loop that effectively manages the technical and economic performance
of the grid. This control loop is most consonant with the emerging concept of
“transactive energy” (TE), which is commonly viewed as a collection of techniques
to manage the exchange of energy in business transactions [47]. A utility, or any
Executive Summary xxvii

other private jurisdiction, can implement TE between its various customers in

industrial, commercial and residential environments to manage distributed energy
resources (DERs) technologies. TE applications incorporate the new eIoT-based
activities for utilities and for industrial, commercial, and residential consumers.
The result is better management of resources, successful integration of renewable
energy, and increased efficiency in grid operations [47]. In many ways, TE is seen
as an effective way to manage the technical and economic performance of various
grid operations at all levels of control—commercial, industrial, or residential. As
such, eIoT technologies directly support the implementation of TE applications.
Chapter 4 discusses how aspects of the eIoT control loop from Chap. 3 are
reflected in various TE applications across different layers of the electricity value
chain:
• Section 4.1 discusses the role of TE in future grid applications and highlights
some of the proposed TE frameworks.
• Section 4.2 presents a few motivational use cases for TE frameworks.
• Section 4.3 then addresses the role of the utility and distribution system operators
(DSOs) within the TE framework. This section also recognizes some of the
challenges and opportunities presented by the implementation of TE.
• Finally, Section 4.4 examines various customer applications for TE and eIoT in
commercial, industrial, and residential settings.
In conclusion, the development of eIoT is an integral part of the transformation
to the future electricity grid. It will transform all aspects of grid operations and
control. This transformation spans both technical and economic layers and leads to

Control Layer Section 3.3

Analysis Decision-Making

Communication Networks Layer Section 3.2

Physical Layer Section 3.1

Network-Enabled Network-Enabled
Sensors Physical Device Actuators

Fig. 2 The development of IoT within energy infrastructure as networked control loop
xxviii Executive Summary

new applications, stakeholders, and energy system management solutions. Chapter 5

serves to summarize the conclusions of the work. In short,
1. eIoT will become ubiquitous.
2. eIoT will enable new automated energy management platforms.
3. eIoT will enable distributed techno-economic decision-making.
Chapter 5 also serves to highlight two open challenges and opportunities for future
work. These are:
1. The convergence of cyber, physical, and economic performance
2. The re-envisioning of the strategic business model for the utility of the future
Chapter 1
eIoT as a Solution to
Energy-Management Change Drivers

The electric power grid was developed on the architectural assumption of centralized
generation being delivered to passive distributed loads irrespective of the cost
implication [33]. However, several new energy-management change drivers have
emerged to uproot this status quo. These drivers include a rising demand for
electricity [34–36], the emergence of renewable energy resources [37–40], the
emergence of electrified transportation [41, 42], deregulation of power markets
[43, 44], and innovations in smart grid technology [45, 46]. Responding to these
drivers requires new and integrated technical solutions for energy management.
The internet of things (IoT) for energy applications, herein called the “energy
internet of things” (eIoT), has been proposed as one such energy-management
solution, illustrated in Fig. 1.1. eIoT is a leading and overarching perspective where
all devices that consume electricity are internet-enabled and consequently can
coordinate their energy consumption with the rest of the grid in real time or near
real time. eIoT technologies must, therefore, be adopted within the context of these
emerging energy-management change drivers.

1.1 Energy-Management Change Drivers

Several change drivers are causing a fundamental shift in energy-management

practices in the electric power grid. These change drivers include:
• Growing demand for electricity,
• Emergence of renewable energy resources,
• Emergence of electrified transportation,
• Deregulation of electric power markets,
• Innovations in smart grid technology.

© The Author(s) 2019 1

S. O. Muhanji et al., eIoT, https://doi.org/10.1007/978-3-030-10427-6_1
2 1 eIoT as a Solution to Energy-Management Change Drivers

Sensing in:
Generation,
Techno-Economic
Transmission,
Operational Data
Distribution,
& Demand
Measurement Analysis

Operation Execution Decision

Line Balancing Controllers &

Historical Data Energy Markets
Energy Resource
Response

Fig. 1.1 A closed-loop framework for electrical power system management

1.1.1 Growing Demand for Electricity

The first of these drivers is the rising global demand for electricity which follows a
larger global trend where the demand for all types of energy in developing countries
is growing. The International Energy Agency’s (IEA) 2016 World Energy Outlook
Report projects the growth of Total Primary Energy Demand from 1161 million
tons of oil equivalent (Mtoe) in 2014 to between 1705–2017 Mtoe in 2025 and
2528–4049 Mtoe in 2040 [48]. During that time, global electricity consumption
is projected to increase by around 2% per year [48]. Demand for electricity
in industrializing economies outpaces renewable electricity generation so that
displacement does not occur, but energy generation from all available sources
continues to grow [48].
Meanwhile, in developed countries, electricity demand will continue to grow.
Although in recent years electricity demand has been nearly flat in many developed
countries, electric load growth is expected to return in order to support fuel-
switching and other decarbonization trends [49, 50]. Figure 1.2 shows that most
of the energy growth will occur in developing countries that are outside the
Organization for Economic Cooperation and Development (OECD) countries.
Furthermore, during that time, renewable generation growth will increase more
quickly than demand and is expected to replace fossil-fuel generation [48]. As a
result, any advancement made to accommodate renewable energy in countries with
existing infrastructure will have a profound impact on the world’s decarbonization
efforts.

1.1.2 The Emergence of Renewable Energy Resources

The growth and widespread adoption of renewable energy resources is expected

to significantly alter the generation mix. This widespread adoption is encouraged
by advanced research, state-of-the-art technologies, and favorable legislation that
1.1 Energy-Management Change Drivers 3

900
OECD
Non-OECD
800

700
World Energy (quadrillion Btu)

600

500

400

300

200

100

0
2012 2015 2020 2025 2030 2035 2040
Year

Fig. 1.2 World energy growth between 2015 and 2040 [1]

continue to improve renewable energy resources. These factors have advanced wind
and solar technologies, and have pushed them to become more efficient and cost-
effective as compared to thermal generation. Research in new wind turbine designs
has resulted in improved turbine efficiency and wind power output [51–53]. With
these improvements, the cost of wind generation is set to decrease significantly. In
fact, the IEA projects that the average costs for wind generation will decline by 15%
for onshore wind and by one third for offshore wind between 2017 and 2022 [54].
Further research in solar cell technologies has also led to much higher conversion
efficiencies for solar cells. For example, the efficiencies of commercial mono- and
poly-crystalline solar modules increased from 12–14% in 2006 to 16–18% in 2016,
while that of high-efficiency N-type modules reached an efficiency of over 21%
[54]. In addition, generation costs for utility photovoltaic (PV) solar are expected to
fall by one-quarter over the period 2017–2022 [54, 55].
Similarly, the growing amount of new legislation and regulations favoring
generation and supply of clean energy has forced the evolution of the electricity
supply infrastructure and operations to support renewable energy sources. Favorable
policies have not only helped lower the cost of investment in these technologies but
they have also created competitive market environments for solar and wind projects
[54]. Two developed countries and the European Union (EU), in particular, display
how renewable energy policy is setting a precedent for countries where the energy
infrastructure has yet to reach maturation. Favorable legislation in China and the
United States (USA) has played a key role in promoting the widespread adoption
4 1 eIoT as a Solution to Energy-Management Change Drivers

of renewable energy resources [56]. These legislations and a commitment towards

decarbonization have encouraged investments in renewable energy resources for
both small-scale consumers and large-scale energy developers.
Legislation initiatives in China have made a strong impact on the growth of the
country’s renewable energy capacity [57]. China is projected to add up to 1300
gigawatts (GW) of generation by 2040, which more than doubles its combined
growth of fossil fuel and nuclear power capacity [48]. In part to cut back air
pollution, China has set 5-year plans to reach 2020 renewable energy targets [56].
As of 2017, China had surpassed its solar PV target and is estimated to meet its wind
target by 2020 [54, 56]. These targets have helped China achieve over 40% of global
renewable capacity growth by 2016 [54]. By the end of 2015, China’s cumulative
installed wind capacity was 180.4 GW with 30.5 GW alone being installed in 2015
[58]. Despite these installations, China still faces many challenges towards the
growth of renewable energy resources such as the uneven distribution of capacity
and unmatched economic growth [58]. China remains the world’s largest solar cell
producer and consumer [59], a position it has held since 2009. As of December
of 2015, China’s installed PV capacity was 43.18 GW accounting for 14.9% of the
global solar PV capacity [58]. Solar PV installations are expected to continue grow-
ing with one study predicting the total installed capacity of 200 GW by 2030 [58].
Developments in wind and solar in China are supported by either a national
feed-in tariff (FIT) program or direct subsidies that are meant to encourage the
deployment of these resources [58, 59]. Overall, China’s central government has
guided participation by developers and financial stakeholders to foster large-scale
investment in renewable energy [60]. Soon, due to an increase in energy subsidies
and integration costs, China is expected to adjust its policies to a quota system
with green certificates [54]. Going forward, however, it is still unclear how this
shift in legislation will affect the country’s overall renewable energy growth
and decarbonization efforts. That said, there are still many challenges facing the
growth of renewable energy resources, such as uneven distribution of capacity
and unmatched economic growth. For example, inner Mongolia has 28% of the
over installed wind capacity despite having a low demand of just 6.78% [58].
While areas like Zhejiang, Fujian, and Guangdong province that have a higher
population density and contribute 20.5% of the consumer load only have 4.7% of the
installed capacity [58]. These disparities in capacity distribution present operational
challenges that may influence future renewable legislation in China.
The USA experienced fast growth in wind and solar technologies primarily due
to: (1) renewable energy portfolio standards (RPS), (2) state-level policies support-
ing distributed solar PV and electric vehicles (EVs), and (3) federal tax credits for
wind and solar industries [54]. As of 2015, the tax credit for wind producers was
2.3 cents per kilowatt-hour, and solar power developers still receive tax credits for
30% of the value of their investment [61]. Both tax credits are set to expire in 2020,
but a 2016 tax bill proposition began phasing out wind credits starting in 2017
[62, 63] and completely terminated solar credits. As per the new tax bill, on the
production tax credit (PTC) is gradually phased down for wind and is expired for
other technologies such as solar, biomass, and geothermal, for projects beginning
1.1 Energy-Management Change Drivers 5

construction after December 2016. The PTC will be subject to a 20% step-down in
2017, 40% in 2018, and 60% in 2019 [63, 64]. A similar phase-out schedule applies
to the wind energy investment tax credit (ITC), where the allowable tax credit is
30% of expenditures in 2016, 24% in 2017, 18% in 2018, and 12% in 2019 [63, 65].
Although the future of federal tax credits is uncertain, the USA is the second-largest
growth market for renewable energy generation sources after China [54].
Most of these changes are happening at the state level with states such as
California and New York taking a lead on decarbonization efforts. For several states,
the goal is to reach 40% decarbonization (50% for California) by 2030 and 80%
by 2050 [66–68]. Decarbonization efforts have focused largely on increasing the
renewable energy capacity and energy efficiency improvements, but, lately, these
efforts are shifting to include electrified transportation and electric indoor heating
[67, 68]. Recently, new regulation by the Federal Energy Regulatory Commission
(FERC) has allowed the participation of distributed energy resources in electricity
wholesale markets [69]. This regulation will not only improve the deployment of
DERs but will also enable the creation of market structures that are more inclusive
for DERs.
In the EU, there is a strong interest in wind energy. However, investment has
lagged behind due to the lack of support for investments by non-member states [70].
Progress in the deployment of wind technologies is contingent upon the creation of
a favorable policy framework that helps bridge this gap in investment [70]. In 2009,
the 2009/28/EC Directive to promote the use of renewable energy was adopted by
the European Parliament and the Council of Ministers. The directive promoted the
development of renewable energy sources as one of the main objectives of the EU
energy policy [71]. It also set mandatory national targets that would ensure at least
a 20% renewable energy share in total energy consumption by 2020 [70, 71]. By
June 2010, each member state was required to have a national plan that defined
the technology mix scenario, the trajectory to be followed, and the measures and
reforms necessary to overcome barriers and to enable the development of renewable
energy [70]. Wind energy was a main component in these national energy plans with
an estimated 209.6 GW of wind capacity to be installed by 2020 within the EU [70].
This accounted for 43.1% of the expected renewable energy technologies installed
by 2020 [70]. Nevertheless, the EU remains on track to meet their goal of reaching
20% renewable generation by 2020 [72].
A recent report by the renewable energy agency shows that the EU has been able
to cut its associated greenhouse gas (GHG) emissions by fossil-fuel generation by
about one-tenth [72]. The share of the renewable energy in the total energy con-
sumed in the EU was reported to be 17% in 2016 from the 16.7% reported in 2015
[72]. These numbers show that the EU is likely to still meet its 2020 decarbonization
target. However, the stability of the policy framework still remains a potential barrier
to meeting this goal for wind energy investors [70]. In future frameworks, policies
must address cooperation among nations within and outside of the EU membership
[71]. Furthermore, cooperation between countries in renewable energy development
projects is imperative for the EU in terms of technical exchanges, economic ties, and
political relationships [71].
6 1 eIoT as a Solution to Energy-Management Change Drivers

1.1.3 The Emergence of Electrified Transportation

Third, the new load from electric vehicles requires fundamental upgrades to the
electricity infrastructure. New advancements in EV batteries and fast charging
technology have led to reduced costs of electric vehicles. A recent review puts the
costs per kWh of an electric vehicle battery pack at $500 [73]. This cost is estimated
to be even lower (≈$300) for vehicle manufacturers [73]. Although this cost needs
to fall to below $150/kWh for electric vehicles to be as price competitive as gasoline
vehicles, these lower costs have made electric vehicles much more accessible and
affordable [73].
In addition to improved technologies, many countries have adopted electric
vehicle mandates to promote EVs and reduce the CO2 emissions of their transporta-
tion system. Countries including China, the UK, France, India, and Norway have
national legislation to encourage the sale and production of EVs [74]. As a result,
car makers are responding with large monetary investments into electrifying their
fleets [75]. Although many countries will not establish similar policies, these large
mandates are set to contribute to a competitive environment for EVs internationally.
Consequently, the falling costs of vehicles will affect the US consumers and
encourage the integration of EV infrastructure into the US electricity grid.
In the USA, federal income tax credits and state-level cash incentives are
available to consumers who purchase electric vehicles [76]. For example, a federal
income tax credit of $7500 is available for vehicles delivered before the end of
2018 and over 13 states offer cash incentives to consumers [76]. In addition to
cash incentives, other non-cash incentives such as carpool lanes and free municipal
parking are offered by some states to EV owners [76]. These incentives have largely
contributed towards the widespread adoption of EVs.
The future fleet of EVs requires a large load of energy that the current electricity
system does not produce or support. Most EVs require around 0.2–0.3 kWh of
charging power per mile of driving [3]. A plug-in vehicle of 1.4 kW more than
doubles the average evening load of a household, and fast chargers, at 6.6 kW or
higher, will significantly alter the load pattern of the consumer [3].
On an energy basis, the electrification of transport will have a substantial impact
on the current capacity of the electric power grid. One study estimates that with a
100% electrification of transport by 2050, the total electricity demand will increase
by 2100 TWh [77]. This represents 56% of the 2015 electricity sales [77]. Consider
Fig. 1.3. In 2016, the USA consumed 27.9 quads (quadrillions, or Btu ×1015 )
of energy whereas the electric power grid only delivered 12.6 quads of useful
electricity. Such a figure suggests that the electric power grid will require significant
upgrades in order to accommodate a large-scale electrification of transportation.
Furthermore, electrified transportation has the potential to complicate power system
operations—in balancing, line congestion, or voltage control [78, 79].
Figure 1.4 shows the potential impact of plug-in electric vehicles on residential
customers’ electrical load. Beyond the need for higher rated electrical panels in the
home, several plug-in vehicles could overload distribution circuits and transformers
1.1 Energy-Management Change Drivers 7

Fig. 1.3 Sankey diagram of American energy system in 2016 [2]

Fig. 1.4 Plug-in EVs as a new and significant component of residential consumer load [3]

that normally operate close to their limits [3]. With normal demand variations,
several plug-in vehicles may overload a 25- or 50-kVA secondary transformer
on a single-phase lateral [3]. EV loads can also create unbalanced conditions on
distribution system feeders [3]. Therefore, advanced control strategies for charging
EVs such as coordinated charging [80, 81], vehicle-to-grid stabilization [79, 82–86],
and charging queue management [87, 88] have been proposed to stabilize electric
vehicles’ charging schedules. These works have determined that a holistic approach
to studying electric vehicles is necessary given the coupling with the electricity
sector [31, 89–91]. Electrified transportation is discussed further in Sect. 3.1.5.7.
8 1 eIoT as a Solution to Energy-Management Change Drivers

1.1.4 Deregulation of Electric Power Markets

Fourth, during the deregulation trend of the 1990s, American power markets
were restructured so as to become more diversified and competitive [44, 92–95].
Figure 1.5 shows a transition from a fully regulated (monopolistic) electric power
system to one that is fully deregulated [96]. Debundling generation, transmission,
and distribution was intended to lower customer rates and improve the quality of
service [44]. Utility activities in resource production have also become deregulated,
thus opening resource trading on wholesale markets by non-traditional parties [97].
Presently, energy retailers interact directly with customers, and in countries with
high regulation, the distribution network operator takes on the role of a service
aggregator [97].
More recently, there has been steady progress towards the development of
deregulated markets in the distribution system as well [98, 99]. Data services present
in physical transmission and distribution are typically unregulated, and IoT can
facilitate supply-chain management as well as demand-side market participation
[97]. As a result, companies that offer aggregation services may play a larger role in
selling distributed power at both the local and wholesale level.
Continuing on the trend towards deregulation, transactive energy (TE) has been
proposed as a means of managing generation and demand through the use of time-
dependent economic constructs while giving adequate consideration to reliability
[100]. In many ways, it is considered a new “smart grid” approach to synthesize
measurements, devices, and market information into an emerging fair market for the
electricity grid [101]. This market requires real-time data, interconnection among
systems, and judicial transparency of information and market operations [101].

Partially Deregulated: Bulk Fully Deregulated: Bulk Electricity

Regulated: Bulk & Retail
Electricity Competition & Retail Competition & Retail Electricity
Electricity Monopoly
Electricity Monopoly Monopoly

Generation Generation Generation Generation

Generation Company
Company 1 Company N Company 1 Company N

Transmission Transmission
Transmission Company Company Company

Distributer
Distributer &
Distributer & Retailer
Retailer

Retailer 1 Retailer 2 Retailer M

Consumers Consumers
Consumers

Fig. 1.5 Types of regulated and deregulated environments

1.2 The Need for a Technical Solution 9

TE approaches can establish distributed energy resources (DERs) in energy

markets, and further liberate consumer choice in power services. However, tech-
niques for measurement, market surveillance, and market contract enforcement are
necessary for expanding the number of market participants [101], which easily
exemplifies how market complexity can increase rapidly. TE, which is discussed
at length in Chap. 4, is perhaps one of the most compelling use cases for eIoT.

1.1.5 Innovations in Smart Grid Technology

In recent years, the electric power system has seen a steady stream of new
“smart” technology innovations [102–104]. Although these innovations enable new
functions and services, they also increase the operational complexity of the grid
[105–107]. A smart grid is commonly defined as a power system that allows two-
way communication and two-way flow of power [106] through advanced control
and decision-making functionality. It supports decentralized energy generation
where power is injected from the grid periphery back into the larger electrical
power system. This brings about many opportunities in distributed generation (DG),
distributed energy resources (DER), demand response (DR) as well as TE. These
technological innovations are quickly transforming the structure and function of the
electric power grid. Consequently, pricing mechanisms and regulatory bodies must
keep pace with this rapid technological transformation by creating appropriate
framework adjustments and legislation to standardize the grid’s development
[46, 106].

1.2 The Need for a Technical Solution

Responding to these five energy-management change drivers presents new relia-

bility challenges to the overall operation of the power grid. In grid operations,
balancing and frequency control are affected by renewable energy generation (for
example, wind and solar PV). Due to the variability of renewable energy generation,
grid operators must now dispatch to a real-time load profile that is significantly
different from the daily load profile. Consequently, the grid operators may have
to adjust their balancing operations to accommodate this new requirement on the
system. For example, high penetration rates of solar PV bring about what is often
called a “duck curve” (shown in Fig. 1.6), which exhibits a very sharp ramp during
the early evening hours when solar PV generation is fading away [4].
During this time, dispatchable generation must respond quickly to the evening
load peak in the absence of solar PV generation. Solar PV and wind generation,
as variable energy resources, also exhibit forecast errors that are significantly
greater than the forecast errors for load [108, 109]. This is partly due to operators
having many more decades of experience forecasting load than wind and solar PV
generation. The larger forecast errors further complicate balancing operations.
10 1 eIoT as a Solution to Energy-Management Change Drivers

Fig. 1.6 The California ISO duck curve [4]

Consumers Residences
Microgrids
Distribution Distribution
System ~ ~ System ~ ~
Transmission Transmission
System System

~ ~ ~ ~

Fig. 1.7 A conceptual transition from a traditional electric power grid to a future smart grid

In addition to these challenges in balancing operations, much renewable energy is

integrated as distributed generation at the periphery of the electric power system (see
Fig. 1.7). Currently, the electric distribution system is designed for one-way flow of
power out to consumers [33, 110]. The presence of distributed generation creates
the potential for two-way power flow in the distribution system. Consequently, the
distribution system’s protection equipment must be redesigned to accommodate
two-way flow of power [111].
1.3 eIoT as an Energy-Management Solution 11

Furthermore, the widespread integration of DG on a radial topology has the

potential to exceed transformer ratings [112, 113] and/or exceed line flow limits
in this backward direction. Hence, when adding two-way power flow from variable
energy resources, voltage limits, phase balances, and load balancing are threatened
[114].
Finally, the distribution system was designed for a monotonically decreasing
voltage profile from generation down to the load. The presence of distributed
generation at the grid periphery can cause over-voltages as power flows upstream
towards the transmission system. These structural changes to the physical grid bring
about new dynamics at multiple timescales. Within seconds to minutes, ancillary
services like frequency regulation must resolve minor disturbances and short-term
ramping effects. Hourly balancing uses forecasts to meet loads at peak and off-peak
demand which creates the daily shapes of energy consumption.
In the long-term, seasonal patterns affect renewable energy generation, the
consumption of natural gas, and end-user power consumption. Naturally, these many
structural and behavioral changes require technical solutions that are responsive at
multiple timescales and can be applied to the grid periphery. Furthermore, these
technical solutions will need to be supported by appropriately designed technology,
policies, and regulations.

1.3 eIoT as an Energy-Management Solution

This work advocates the “energy internet of things ” (eIoT) as a promising technical
solution to the challenges presented above. The eIoT is one application of the inter-
net of things (IoT). The IoT term was first used in 1999 by Kevin Ashton [115] and
later became an integral part [116] of a global research consortium called the Auto
ID Centre [116] that included the Massachusetts Institute of Technology (MIT),
the University of Cambridge, ETH Zurich, Fudan University, Keio University, and
Korea Advanced Institute of Science and Technology (KAIST). It is a technology
that has expanded the use of communication technologies namely; over the internet,
from user-to-user interaction to device-to-device interaction [117]. The adoption of
the IoT has been supported by business efforts, such as the establishment of the
Internet Protocol for Smart Objects (IPSO) Alliance in 2008, and technological
advancements, such as the launch of Internet Protocol version 6 (IPv6) in 2011
[117]. Internet technologies with IoT have enabled growth in industry, especially in
home automation and supply chains [117]. As a way to connect humans, computers,
and devices, IoT presents itself as a key enabling technology of new energy-
management approaches.
From the beginning, decentralized supply-chain management was an integral part
of the IoT vision [5–13, 118]. The idea of was that the IoT provided unprecedented
visibility of shop floor and supply-chain operations. Each piece of raw material,
work in progress, or final product could be on tracked in near real time through the
control loop captured by Fig. 1.8. When this information is relayed to manufacturing
12 1 eIoT as a Solution to Energy-Management Change Drivers

Auto ID Product Data

(Product Sensing) Operational Data

Measurement Analysis

Operation Execution Decision

Product Activities Software Agent

Database Resources

Fig. 1.8 A closed-loop control framework for production systems with intelligent products [5–13]

execution systems and enterprise information systems, it could be used to support

reactive and proactive decision-making on how to best manage production systems
and their associated supply chains.
Next-generation production systems [119–121] such as Industrie 4.0 advocated
for the concept of “intelligent products” [8, 122, 123] that used “product agents”
[124–131] that negotiated in real time with supply-chain resources to make it to their
final customer. The presence of an embedded product sensor (e.g., a radio-frequency
identification (RFID) tag) enabled this new paradigm in industrial control systems.
eIoT emerges when the vision of IoT described above is applied to “energy
things.” In other words, it forms a “digital energy network” [132] where IoT technol-
ogy is integrated into the smart grid as a full supply chain that includes centralized
generation, transmission, distribution, DERs, and customer premises. IoT enables
opportunities for smart grid applications such as DG, DER, DR as well as TE. The
distributed nature of these technologies makes them ill-suited for the hierarchical
and centralized systems as is typically found in conventional bulk power systems.
The decentralization of the energy system requires device-to-device connectivity
so as to achieve distributed energy management. Eventually, the number of devices
(things) that connect to the periphery of the power system is expected to grow
significantly. In the consumer market, the number of things that use electricity is far
greater than the number of things connected to the internet. However, the number
of internet-connected devices is rapidly increasing [133]. As electric loads become
dynamic and responsive, it is imperative that the increasing number of “things”
that connect to the grid are managed through faster, real-time communications
and control.
When the concept of decentralized IoT-based supply-chain management is
applied to “energy things,” it has the potential to become a powerful energy-
management solution that not only reaches the grid periphery but also addresses
dynamics at multiple timescales. IoT can manage end-point devices with real-time
communications and control, and achieves monitoring, tracking, management, and
location identification through protocol-based communications and data exchanges
[133]. Smart devices (RFID tags, sensors, actuators, etc.) connect via communica-
tion networks (cellular networks, ZigBee, WiFi, etc.) to decision-making entities
and actuators [133]. The process forms an IoT-enabled control loop that can be
used to monitor the equipment state of devices, collect information for analysis, and
1.4 Scope and Perspective 13

Sensing in:
Generation,
Techno-Economic
Transmission,
Operational Data
Distribution,
& Demand
Measurement Analysis

Operation Execution Decision

Line Balancing Controllers &

Historical Data Energy Markets
Energy Resource
Response

Fig. 1.9 A closed-loop framework for electrical power system management

control the smart grid for a variety of applications [133] (Fig. 1.9). For example,
TE is the realization of a control loop interacting with market information, two-
way communication networks, and real-time pricing mechanisms that incentivize
the generation and consumption of electricity.
With the emergence of IoT, the technical development of the grid’s infrastructure,
the changing role of the grid’s stakeholders, and the energy market development can
all be advanced with real-time data. The ability to connect devices, create market
signals, and influence generation and consumer behavior within an overarching
energy-management framework is known as the energy internet of things (eIoT).

1.4 Scope and Perspective

The goal of this work is to provide a broad perspective of the implications of eIoT
on the management and control of the electricity grid. This book offers a formal
definition of the IoT within the context of the electricity supply and distribution
control loop. It presents the growing demand for advanced and internet-enabled
sensing and actuation devices for the generation and transmission system layers as
well the distribution system layer. More importantly, it presents the changing roles
of existing grid stakeholders as well as the gap in energy-management solutions that
could potentially be filled by new stakeholders. Specifically, it recognizes a closer
working relationship that may emerge through collaborations with telecommuni-
cation companies as new communication networks are adopted. Additionally, the
book shows a convergence of cyber, physical, and economic frameworks as more
eIoT devices seek to function and collaborate effectively. Finally, this work presents
the role of TE as a core application of the eIoT control loop. Two TE use cases are
presented to illustrate the changing nature of consumer interactions with utilities.
This brings up the issue of how utilities are going to address the growing penetration
of eIoT and DERs. Overall, the book presents the challenges, opportunities, and the
transformative implications of eIoT on all the layers of the electricity supply and
demand value chain.
14 1 eIoT as a Solution to Energy-Management Change Drivers

1.5 Book Outline

To that end, the rest of this document is structured as follows:

Chapter 2 address the activation of the grid periphery.
• Section 2.1 recognizes that DERs will transform the nature of energy manage-
ment at the grid periphery.
• Section 2.2 discusses some of the challenges presented by this transformation.
• Section 2.3 finally presents eIoT as a scalable energy-management solution for
the activation of the grid periphery.
Chapter 3 focuses broadly on the development of eIoT within the energy
infrastructure. This development is discussed in the context of a control loop.
• Section 3.1 presents the sensing and actuation in the transmission and distribution
levels of the power grid. This section is discussed in four main categories:
– Section 3.1.2 discusses sensing and actuation of primary variables in the
transmission layer.
– Section 3.1.3 addresses the sensing and actuation of secondary variables
required for the reliable supply of solar, wind, and natural gas resources.
– Section 3.1.4 introduces the sensing and actuation of primary variables in the
distribution system focusing on key devices such as the smart meter.
– Section 3.1.5 discusses sensing and actuation of secondary variables within
the demand side, recognizing the role of automation, smart home devices,
real-time demand-side data, and the challenge of integrating plug-in-electric
vehicles.
• Section 3.2 presents the communication layer of the control loop recognizing that
the current communication structure must evolve to deal with the heterogeneity
of sensing and actuation devices. This evolution will occur within all layers of
the energy system’s jurisdictions.
– Section 3.2 addresses the communication network for grid operators and
utilities.
– The shift from current grid communication networks to telecommunication
networks is discussed in Sect. 3.2.3.
– Section 3.2.4 addresses the growing demand for local area networks on the
consumer side.
• Section 3.3 presents the need for distributed control algorithms to deal with the
growing heterogeneity and number of control points in the electricity grid. This
section examines the evolution of control algorithms and applications within
multi-agent systems studies, game-theory approaches, and microgrid control.
• Section 3.4 discusses the changing architectural needs for the electricity grid and
the need for standardization of cyber-physical/economic frameworks to enable
interoperability of technologies.
1.5 Book Outline 15

• Section 3.5 examines the social implications of eIoT deployment both from the
perspective of privacy concerns and eIoT cyber-security.
Chapter 4 presents TE as an overarching application of the eIoT control loop.
• Section 4.1 presents a broad definition of TE and offers a review of some of the
current applications of the TE framework.
• Section 4.2 explores potential transformative impacts of TE in the energy system
management. These impacts are summarized in two plausible eIoT use cases as
potential transactive energy applications.
• Section 4.3 discusses the implications of eIoT for the future of electric utilities
especially in North America, and finally,
• Section 4.4 considers the implications of eIoT for industrial, commercial, and
residential consumers.
The book is concluded in Chap. 5 with a high-level discussion of the three main
eIoT transformations in Sect. 5.1 and two major challenges and opportunities in
Sect. 5.2. This chapter broadly reflects on the implications of eIoT advancement on
the future of the electricity grid.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons licence and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons licence, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons licence and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 2
eIoT Activates the Grid Periphery

Perhaps nowhere will the impact of the energy-management change drivers identi-
fied in Chap. 1 be felt more than at the grid’s periphery. DG in the form of solar PV
and small-scale wind will be joined by a plethora of internet-enabled appliances and
devices to transform the grid’s periphery to one with two-way flows of power and
information [45, 46]. This transformation presents a daunting technical challenge.
Not only are there tens of millions of devices at the leaves of the grid’s radial
structure, these devices are relatively small and require new innovations in sensing,
communication, control, and actuation.
This chapter first describes this transformation in Sect. 2.1. Section 2.2 describes
the challenge of activating the grid’s periphery. Finally, Sect. 2.3 describes how eIoT
can potentially be deployed as a scalable energy-management solution.

2.1 Change Drivers Will Transform Energy Management

at the Grid Periphery

The installation of DG in the form of solar PV and small-scale wind causes two-
way flows of power and information at the grid periphery. The change drivers
discussed in Sect. 1 directly and indirectly incentivize growth in renewable energy
generation. Renewable energy is, by nature, decentralized, and the deployment of
small-scale power generation is increasing in industrial, commercial, and residential
applications [134]. For example, the installations of solar PV systems in the USA
nearly doubled from 2014 to 2016 [134]. Generation at the grid periphery introduces
a power flow inward, or upward, towards the transmission system in addition to the
normal outward power flow to consumers.
As the generation at the periphery of the grid continues to grow, energy-
management systems must adjust from a “top-down” hierarchical structure of
communication and control to one that is more dynamic and distributed [135]. The
variable nature of renewable energy resources (for example, solar PV and wind)

© The Author(s) 2019 17

S. O. Muhanji et al., eIoT, https://doi.org/10.1007/978-3-030-10427-6_2
18 2 eIoT Activates the Grid Periphery

Grid Reliability
Supply Economics
Environmental Requirements
Wholesale Markets Demand-side
resources

Bulk generation
Bulk Flow of power Capacity, Energy, &
power & Ancillary services Ancillary

Variable generation Flow of Information & Control

Demand Response

Fig. 2.1 A grid periphery activated by variable generation and demand response (adapted from
[14])

means that in order to achieve sustainability, data acquisition, and new networks
to monitor real-time power flows are imperative [136]. This is best illustrated in
Fig. 2.1 which shows the need for two-way flow of information and control between
the grid generation and transmission system and the grid periphery with a large
penetration of distributed generation and demand response.
In addition to DG, a plethora of internet-enabled appliances and devices further
reinforce the presence of two-way flows of power and information at the grid
periphery. The demand side provides devices for controlling the balance of power
consumption and generation through real-time demand response. High penetration
rates of renewable energy motivate the need for real-time demand response;
furthermore, deregulation and increased consumer participation is achieved with
active economic real-time demand response. IoT devices, at the periphery, such as
electrified vehicles (EVs); electricity storage in industry, commercial buildings, and
residences; and smart devices in the home have created a new demand-side network
of devices that requires the grid to become more dynamic as device interactions
increase [97].
With drivers to incorporate DER and DR programs, smart grid technologies will
enable end users to actively manage their electric loads according to price incentives.
This active balancing of power at the grid periphery can shift in real time from
positive (due to excess DG) to negative (due to modulated/controlled/incentivized)
demand response. Internet-enabled appliances and devices in the grid periphery
must be monitored and controlled in order to take advantage of real-time shifts in
economic demand response. Bidirectional information flow sends pricing signals
to the devices, while device information is sent to the controller. Where feedback
2.1 Change Drivers Will Transform Energy Management at the Grid Periphery 19

loops are physical rather than economic, these devices can also potentially provide
ancillary services in response to operational signals, for example, grid frequency,
voltage, and line congestion.
The need to monitor and control two-way flows of power with two-way flows of
information emphasizes the role of data gathering in the power grid. Data are needed
to make accurate control decisions in the grid’s increasingly flexible and fast-paced
environment. Utilities are deploying more devices to collect more data of increasing
diversity. The global number of devices being managed by utility companies is
projected to grow from 485 million in 2013 to approximately 1.53 billion in 2020
[97]. Improved grid monitoring and control involves increasing the quantity of field
distribution automation devices, field monitoring devices, substation monitoring
and control, and interconnections and monitoring of independent power producers
(IPPs) [137].
Also, future utility investments are expected to develop smart metering infras-
tructure across industrial, commercial, residential, transformer, and field meters
[137]. Each application should accommodate a utility’s business model and the
network’s specifications. For example, field distribution automation devices include
remote monitoring and control of distribution reclosers, switches, voltage regula-
tors, and capacitor banks that must be united under a common communication
network [137]. All of these devices produce data at regular intervals, although
there is a shift towards real-time data streaming. For instance, some smart sensor
systems produce large streams of data from thousands of sensors, which—without
appropriate planning and design—have the potential to overload system operators
[138]. Due to the growing magnitude of deployed devices, and the use of propri-
etary and non-proprietary solutions, the monitoring devices on the grid produce
increasingly heterogeneous data [139]. More devices, recording ever-more diverse
measurements, create a thorough monitoring environment that has the potential
to improve power system operations with new self-healing and reconfiguration
capabilities. Granular data will also shift the grid from load-following to load-
shaping energy management [3].
In order to support the two-way flows of information in the power grid, new
networks are necessary. Many smart devices use applications that depend on data
sets distributed across many devices. Furthermore, this information is often relayed
to centralized centers for further storage, processing, and decision-making [140].
Multiple types of networks are required to co-exist. Although the supervisory
control and data acquisition (SCADA) system gives utilities limited control of
their upstream functions, the distribution network is insufficiently monitored and
controlled [141].
As a solution, distribution-management solutions are expected to integrate
with upstream SCADA as well as interoperate with the complex multitude of
downstream network-enabled devices. In a survey sent to over 300 members of the
Institute of Electrical and Electronics Engineers (IEEE) power energy system (PES)
distribution-management system (DMS) task force, which comprises 76% utilities,
about 72% of responders noted that SCADA facilities would be an integral part in
distribution-management systems (DMS) [142]. Over 80% of survey participants
20 2 eIoT Activates the Grid Periphery

also responded that more than one mechanism is necessary to handle DMS data
acquisition and control requirements [142]. This is because SCADA’s centralized
and hierarchical structure is ill-suited for the developments in information and
communication technology at the grid’s periphery.
Because SCADA is a utility-purchased software that monitors hardware in the
electricity infrastructure [143], consumer-owned smart devices are out of the realm
of SCADA control. Therefore, consumer devices require either their own local
area network (LAN) or access to a common network such as the internet. For
example, a private solution-specified network may include machine-to-machine
(M2M) systems that remotely read customer energy consumption and interface
with power grid communications [97]. The IoT can further enhance the operational
capabilities of M2M systems by connecting several such systems together [97].
Naturally, interoperability of the emerging networks is crucial. However, open
network access raises privacy and security concerns. Cyber-security efforts must be
directed towards individual devices as well as the communication channels between
them. With many networks existing beyond the scope of the utility, these efforts are
ever-more integral to the physical security of the grid.
As two-way flows of power and information become common place at the grid
periphery, new energy market structures can evolve from their current hierarchy. The
integration of renewable energy into market operations requires new measurements,
measurement devices, and market information to ensure efficient and equitable
operation [101]. As renewable energy and active demand-side resources become
more prevalent, the grid’s periphery will become not just a source of power, but
also a place for diversified market activities [97]. As new market agents appear,
they will require real-time measurements for market surveillance and contract
compliance [101]. More specifically, DER incentives rely on bidirectional price and
consumption data to be effective [144].
Grid and meter data can support the efficacy of these market mechanisms at
both the wholesale and local levels. Furthermore, such data can help shape the
development of monetized efficiency services based upon the real-time behaviors
of residential, industrial, and commercial customers [97]. These trends, taken in the
context of deregulation, encourage the participation of non-traditional parties [97].
DG, in particular, has the potential for large-scale market disruption. It is uncertain
how the structure of energy markets will change as energy consumers evolve into
prosumers [145].

2.2 The Challenge of Activating the Grid Periphery

The transformation of the grid periphery is a daunting technical challenge because

it is characterized by millions of small devices; all of which need to be coordinated
to achieve high-level technical and economic energy-management objectives. For
example, actively shaping the load profile when it is composed of so many devices
2.2 The Challenge of Activating the Grid Periphery 21

is a great challenge as it requires precision control, accurate forecasts, and flexible

resources. Such a grid transformation poses integration challenges in operations
as well as in the fiscal and strategic planning of distributed resources. Sensing
equipment must improve to support demand-side management, and system planning
requires cheaper devices that can be deployed at scale. In addition to extending
sensing and control capabilities in the distribution system, other challenges in
periphery management include inflexible loads.
The technical challenges of integrating the grid with peripheral devices in
DR solutions, all through a consistent regulatory and economic framework, are
staggering. The ongoing interconnection of the electric power system requires
foresight and planning on the part of operators as well as regulators. All the while,
the grid needs to be in full operation at its usual level of reliability and security.
Not only will the transformation of the grid periphery be complicated by
their large number but also by their tremendous heterogeneity. This means that
coordination and control algorithms must account for a wide variety of devices each
with their own device-specific behaviors. “The future electric system will include a
large network of devices that are not only passive loads, as most endpoints today are,
but devices that can generate, sense, communicate, compute, and respond. In this
context, intelligence will be embedded everywhere, from EVs and smart appliances
to inverters and storage devices, from homes to microgrids to substations” [146].
Independent actors at the grid periphery are expected to add tens of millions of
devices with different sizes, consumption patterns, time scales, and with different
control and economic capabilities [146]. Such DERs (devices) include both gen-
eration and consumption. On the generation side, generation can be derived from
wind energy systems, photovoltaic cells, microturbines, fuel cells, solar dishes, gas
turbines, diesel engines, and gas-fired internal combustion engines [147]. Demand-
side resources would include smart appliances, EVs, water heaters, air-conditioners,
and energy storage in homes, buildings, and factories [148]. DERs also make use
of power electronic interfaces so as to connect flexibly to the grid [147]. The
centralized control of such devices is limited to hundreds or even a few thousand
monitoring and control points.
As such, the distribution system is ill-equipped to control and coordinate the
millions of homes, buildings, and factories with their associated energy devices
[148]. Each customer and device has the potential to independently and dynamically
interact with grid operations and markets. Such cases would require the implemen-
tation of complex algorithms for monitoring and control [146].
Due to the small size of devices and their increasingly complex interactions,
the distribution system needs to be controlled with even more precision. Power
system performance, control and daily operation use various mathematical models
that need accurate generation, transmission, and distribution parameters in order to
run [149]. It is very difficult to control and coordinate a large number of devices so
that they achieve positive global objectives, especially when distribution monitoring
is inadequate.
22 2 eIoT Activates the Grid Periphery

Such a multi-objective system coordination problem, that is, factoring not only
improved system quality, security, customer service, and economics, requires more
effective and robust control strategies [149]. Evaluating these different control
options opens the question of whether the control architecture should exhibit
hierarchy, heterarchy, or aspects of both. In the hierarchical system, linked aggre-
gation points feed to a centralized control station. Aggregation is expected to be
used in short-ranged sensor networks and connecting M2M networks with other
technologies [150]. However, a comprehensive aggregation strategy is not clear. In
heterarchy, control is distributed among centers with separated functions.
Present-day control centers are progressively characterized by separated control
systems, energy-management models, data models, and middleware-based dis-
tributed energy-management system (EMS) and distribution-management system
(DMS) applications [101]. Distribution control algorithms allow for scalability at
pace with the growth of consumer nodes, but many suitable algorithms have yet to
be developed. Most likely, the grid requires a mixture of aggregation and distribution
philosophies to meet its diverse objectives.
To further complicate matters, the distribution system and grid periphery, unlike
the transmission system, have not been traditionally monitored or controlled.
Traditional, centralized control depends on independent system operator (ISO)
supervision with the participation of large generators and load-serving entities.
ISOs, however, cannot view the system past substations [151]. Essentially blind,
operators are concerned about renewable generation at the periphery [148, 151].
ISOs currently aggregate variable net load at the transmission substation, which
results in uncertainty that must be counterbalanced by expensive and inefficient
operations, such as larger transmission and reserve capacity acquisition by the ISO
and power providers [151].
Consequently, the activation of the grid periphery to include full control loops
of sensing, decision-making, and actuation requires significant technology develop-
ment and implementation. DERs must be visible and controllable by grid operators
and planners in order to secure reliability and enhance economic efficiency.
Such integration needs a framework for transmission, distribution, and demand-
side resources that includes new analysis tools, visualization capabilities, and
communications, and control methods [144]. Naturally, any effective strategy has
to assume that there will be a migration from traditional passive devices to an ever-
increasing but gradual penetration of network-enabled devices.
As more DG and network-enabled devices are integrated into power grid oper-
ations, utilities and grid operators are less able to accurately predict the stochastic
net load profile. Since the inception of the electric grid, consumers have dictated the
quantity of power that has been sourced by controllable generation. The design of
the electric system was built on this paradigm; it was not intended for substantial
amounts of uncontrollable generation, such as variable renewable energy [152].
In today’s grid, operators turn on generators to meet a prediction of aggregated
consumer demand. However, renewable energy’s dispatchability (ability to dispatch
to accurately meet demand) remains largely uncontrollable, and its predictability
can change due to weather conditions and site-specific conditions [152, 153].
2.2 The Challenge of Activating the Grid Periphery 23

Fig. 2.2 A future smart grid with stochastic and controllable supply- and demand-side resources
[15–17]

As a result, forecast errors are expected to increase. Prediction models need to

be individually developed per site, since local characteristics influence renewable
power generation [152]. Utilities may develop such prediction models for large-
scale renewable generation, but it is impractical to invent a separate model for each
residential and small-scale distributed generator [152]. Referencing Fig. 2.2, the
increasing penetration of variable energy is analogous to shifting from controllable
loads to stochastic loads, but operator management of the system at large does not
change as quickly. Forecast error is a long-standing operational challenge that will
continue to grow as the penetration of renewable energy generation increases. In the
immediate future, operation and control of demand-side resources must be precise
in controlling set points of frequency, voltage, and line flows. Furthermore, these set
points must be responsive to the errors propagated by inaccurate forecasting.
While the need for accurate forecasting in grid operations is ever-increasing, cost
barriers remain to the implementation of advanced monitoring. Equipment expenses
and other implementation objectives combat pressures for heavy monitoring in the
grid. Conventional monitoring and diagnostic systems require expensive wiring and
regular maintenance [154]. In contrast, wireless sensor networks (WSNs) have been
pursued for their low cost, rapid deployment, and flexibility [154]. To deploy at
scale, utilities maximize the per unit investment cost of sensing. For example, a
fifty-dollar sensor on a 50-mW unit is far more valuable than the same cost sensor
on a 50-kW unit. Such costs act as barrier to entry despite market deregulation [155].
Centralized generators often do not support investment in distribution monitoring
systems, not just because of their costs, but also because they shift market power
to DERs [155]. However, sensor technology developers are actively driving down
the price of sensors for their widespread adoption. For example, the Auto-ID
Center—the organization accredited with the term “Internet of Things”—set a goal
24 2 eIoT Activates the Grid Periphery

of decreasing the cost of RFID tags from upwards of $0.50 to as low as $0.05 per
tag [156]. Lower costs must come from new technologies and methods and cannot
depend on simple economies of scale [156].
Finally, it is important to recognize that the control and coordination of demand-
side resources is fundamentally more complex than supply-side resources. Besides
operational challenges, short-term and long-term consumer behaviors will need
to be altered through DER management and incentivized DR programs [46]. The
ultimate objective of DR is to alter demand so as to enhance grid reliability
and economic efficiency [46]. Nevertheless, it is complicated by the inflexibility
and time-varying economic utility of loads. While supply-side management exists
solely to serve demand, demand-side management (DSM) primarily supports a non-
electrical activity, such as driving a motor or heating a building. Any behavioral shift
(by DR programs) to support the reliable operation of the power grid is often at odds
with the original intention of electricity consumption. Furthermore, it is important
to recognize that a consumer’s preference for electric consumption is time varying
and “meddling” with service may lead to discomfort [46].
Fundamentally speaking, economic utility depends on the application of electric
consumption. The value delivered by 1 kW of electricity for one purpose is not the
same as the value delivered by another kW for another purpose, even if the kilowatt
is consumed by the same customer! For instance, a manufacturing plant using 10 kW
gets much more value when the electricity is consumed by a machine on the shop
floor than by the back office. Uncertain economic utility and imperfect behavioral
response make the control and coordination of demand-side resources particularly
difficult.

2.3 Deploying eIoT as a Scalable Energy Management

Solution

This work argues that the challenges of activating the grid periphery, described in
the Sect. 2.2, may be addressed by deploying eIoT as a scalable energy-management
solution. In essence, the energy-management challenges described in the previous
section may be viewed as a control loop where dispatchable devices, whether they
are traditional large-scale centralized generators or millions of small-scale internet-
enabled devices, must meet the three power system control objectives of balanced
operation, line congestion management, and voltage control. These objectives can
be achieved despite the presence of disturbances such as customer load or variable
energy generation from solar PV and wind resources.
Fortunately, eIoT is fundamentally a control loop consisting of small-scale
sensing technologies, wireless and wired communication technologies, distributed
control algorithms, and remotely controlled actuators. And yet, despite eIoT having
2.3 Deploying eIoT as a Scalable Energy Management Solution 25

all of the components of a scalable energy-management control loop, the challenge

is to continue to integrate more of these technologies in such a fashion that
the control objectives are achieved well into the future. Chapter 3 details the
development of eIoT technologies in terms of their role in a control loop.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons licence and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons licence, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons licence and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 3
The Development of IoT Within Energy
Infrastructure

The development of IoT within the energy infrastructure is best seen as a control
loop. The control loop is composed of four functions: a physical process (such as the
generation, transmission, or consumption of electricity), its measurement, decision
making, and actuation. This control structure is shown in Fig. 3.1 where a sensor
takes measurements of the states and outputs of a physical system. Wireless and
wired communications are used to pass this information between the physical layer
and other informatic components. This information is used to make decisions either
independently in a decentralized fashion or in coordination with the informatic
components of other devices. Decisions are sent back down to network-enabled
actuators for implementation.
In some cases, this control loop acts in near real-time; in other cases, some of
the information is used as part of predictive applications that facilitate decisions at a
longer timescale. Control algorithms implemented at different layers of this control
loop enable the control of individual devices as well as the coordination of smart
grid devices that make up other parts of eIoT. Given the connectivity between the
functions of this control loop, its successful implementation requires architectures
and standards that ensure interoperability between eIoT technologies.
This chapter serves to summarize the most recent developments of IoT within
the energy infrastructure. The discussion proceeds bottom-up by classifying these
developments according to the generic control structure shown in Fig. 3.1.
• Section 3.1 discusses some of the state of the art in network-enabled physical
devices, whether they are network-enabled sensors or actuators in the control
loop.
• Section 3.2 focuses on the communication networks that send and receive data to
and from these devices.
• Section 3.3 discusses advancements in distributed control algorithms to coordi-
nate the techno-economic performance.

© The Author(s) 2019 27

S. O. Muhanji et al., eIoT, https://doi.org/10.1007/978-3-030-10427-6_3
28 3 The Development of IoT Within Energy Infrastructure

Control Layer Section 3.3

Analysis Decision-Making

Communication Networks Layer Section 3.2

Physical Layer Section 3.1

Network-Enabled Network-Enabled
Sensors Physical Device Actuators

Fig. 3.1 The development of IoT within energy infrastructure as networked control loop

The chapter concludes with two discussions of a cross-cutting nature:

• Section 3.4 addresses the importance of control architectures and standards in the
development of eIoT technologies.
• Section 3.5 addresses the security and privacy concerns that emerge from the
development of eIoT technologies.

3.1 Network-Enabled Physical Devices: Sensors and

Actuators

3.1.1 Network-Enabled Physical Devices: Overview

In many ways, the development of network-enabled physical devices forms the heart
of eIoT implementation. As such, this section provides a broad review of these tech-
nical developments taking into consideration their tremendous heterogeneity and
relative placement within the electric power system. Figure 3.2 provides a schematic
overview of the section making sure to distinguish between the measurement and
actuation of primary and secondary electric power system variables.
Definition 3.1 (Primary Electric Power System Variables) Physical quantities
that describe the physical behavior of electric systems. They are voltage and current
magnitudes and phase angles, active power, reactive power, magnetic flux, and
electrical charge. 
3.1 Network-Enabled Physical Devices: Sensors and Actuators 29

Sec. 3.1.3 Sec. 3.1.2 Sec. 3.1.4 Sec. 3.1.5

Generation Transmission Distribution Electrical Demand

Building Occupancy
Irradiance Solar Smart Homes
SCADA Temperature
Windspeed Wind Smart Meters Smart Buildings
PMUs Production Schedules
Natural Gas Flow Natural Gas Industry 4.0 Business Needs

Secondary Measurement Primary Measurement Primary Measurement Secondary Measurement

Fig. 3.2 Schematic overview of Sect. 3.1 on network-enabled physical devices: sensors and
actuators

Definition 3.2 (Secondary Electric Power System Variables) Physical quantities

that are distinct from primary electric power system variables and that have a direct
impact on the generation, transmission, distribution, and consumption of electric
power. They often serve as inputs to the electric power generation and consumption
functions (e.g., wind speed, solar irradiance, and building occupancy). 
• Section 3.1.2 begins with the (traditional) primary variables in the transmission
system.
• Section 3.1.3 turns the discussion towards concerns around the secondary
variables associated with wind, solar, and natural gas generation.
• Section 3.1.4 returns to the primary variables in the distribution system so as to
address smart meters and other “grid modernization” technologies.
• Section 3.1.5 discusses smart homes, industry, and transportation in the context
of demand-side secondary variables. Each of these sections addresses network-
enabled sensors and actuators.
Sensing technology plays an indispensable role in providing situational aware-
ness within an eIoT control loop that activates the grid periphery. As such, sensors
exist at the periphery of a communication network to relay data and information
from the physical grid to a control or decision-making center. Given the tremen-
dous heterogeneity in the number, type, and input of physical eIoT devices, the
measurement role of network-enabled sensing technologies increases immensely.
Fortunately, there has been significant innovation in sensing technologies to accom-
modate these needs. Such advancements include miniaturization, wireless data
transfer, and decreasing implementation costs. Miniaturization technologies have
enabled monitoring of household devices where it was previously infeasible to
collect data. Noninvasive wireless technologies have reduced implementation costs
by forgoing wired installation. These two factors have made sensors increasingly
ubiquitous in electric grid applications.
Although network-enabled sensors vary in design and location within the power
system, they have a commonality of function that is fundamental to measurement
within the control loop. At a basic level, a sensor is composed of a sensing unit,
a processing unit, a transceiver unit, and a power unit [138]. Depending on its
function, a sensor component must balance various design aspects such as power
consumption, memory allocation, lifespan, and cost [138]. These trade-offs lead
to a heterogeneity in sensor operations such as data collection intervals, wired
or wireless communication, type of power source, and their connection to other
devices. Furthermore, and as mentioned in Sect. 2.2, the need for precise control
and accurate net load forecast also drives the deployment of a greater heterogeneity
of sensors [138]. Here, the distinction between primary and secondary variables
30 3 The Development of IoT Within Energy Infrastructure

becomes important. Traditional primary variables have often been measured first
due to physical and monetary constraints [157]. However, the need to better
characterize variable energy, energy storage, and demand-side resources has led to
the development of secondary measurement applications as well. These additional
measurements improve situational awareness because they show the underlying
causes for the supply and demand of electricity.

3.1.2 Sensing and Actuation of Primary Variables in the

Transmission System
3.1.2.1 Network-Enabled Sensors: SCADA and PMUs

The development of monitoring and sensing technologies began in the transmission

system in response to the Northeast Blackout of 1965 [158, 159]. It was found that
as the North American power system became ever-more connected it was necessary
to deploy new sensing technology so as to gain greater situational awareness
of the transmission system as a whole. As shown in Fig. 3.3, a tremendous
heterogeneity of sensors is deployed in the transmission system where they are
used in transmission lines and substations to monitor “traditional” variables directly

Vandalism
Structure Animal Interactions
Overhead Transmission Corrosion

Compression Connector RF Temp & Current

RF Temp & Current

Conductor
Motion Sensor

Shield Wire RF Fault Magnitude & Location

RF Lightning
TLSA RF Leakage
Current Underground Transmission
Insulator

Load Tap Change LTC Gassing

Substation Disconnect RF Disconnect

CTs & PTs RF Acoustic Emissions

Breaker RF SF6 Density

Post & Brushing External Oil

RF Leakage Current
Insulation

Substation Antenna Array

Wide Online Infrared MIS Sensor

Online FRA
Acoustic Fibre
Transformer
Optic

RF Top Tank Temperature

3D Acoustics
MIS Gas
RF Vibrator Sensor
Gas Fibre Optic

Fig. 3.3 Sensor technologies in transmission lines and substations (adapted from [18])
3.1 Network-Enabled Physical Devices: Sensors and Actuators 31

related to power quality, operations, and system limits. These variables are key
to ensuring system stability and reliability and include voltage, current, their
phase angles, active power, and reactive power. In the transmission system, line
monitoring is achieved through sensors that measure voltage, detect faults, and
conduct predictive maintenance [160].
Transmission sensors also help to monitor the physical condition of power supply
equipment to improve safety, and determine when to deploy a workforce for repairs
or outage prevention [18]. These sensors can be deployed in substations, in overhead
lines, or in buried lines used for underground cable systems [18]. Sensors in the
transmission system can also inform operational databases [18] to guide decision
making that ensures system reliability. The reader is referred [18] for a deeper
review of existing technologies.
The need for situational awareness also motivated the development of sensor
networks. As is discussed in greater depth in Sect. 3.2, sensor networks are a
collection of sensors tied to a modular communication network that bridge the
gap between physical devices and decision-making points elsewhere [161]. These
sensing networks are spatially distributed across the electric grid to form an
interconnected monitoring and perception layer. The first and most prominent of
such sensor networks is the SCADA system [19, 101, 162] shown in Fig. 3.4.
SCADA is deployed in substations and distribution feeders where it is able to
sense voltage, frequency, and power flows, and then send these measurements to
centralized operations control centers. SCADA systems are also able to send remote
signals to change generation levels, switch circuit breakers, and control devices
through programmable logic controllers (PLCs) [101, 162]. SCADA systems and
other sensor networks are discussed further in Sect. 3.2 where they are part of
a larger discussion on communication networks. Further mention of the SCADA
system in this section refers collectively to its embedded sensors.
Despite the elaborate SCADA-based sensing network in the transmission system,
several challenges are yet to be addressed to allow for the effective adoption of
eIoT. First, the transmission system is spread out over a wide area, making real-
time data collection a challenge [163]. Generally, the transmission system is remote
and deploying resources for scheduled maintenance checks is costly [164]. Many of
the sensors are located on transmission carriers with approximately 60–125 carriers
between substations [160]. The distance between two carriers ranges from 400 to
800 m [160]. Furthermore, a typical utility with about 25,000 km of high-voltage
(≥69 kV) power lines and thousands of transformers, capacitors, and breakers is
expected to have 100,000 distinct sensors spread over a 20–80,000 km2 area [138].
Traditionally, any outside-the-system threats are from weather (such as storms
or overheating), aging, physical destruction, and other environmental elements
[160]. Given the wide geographical range and the numerous sensors involved,
manual checks are less efficient compared to receiving signals from automated
sensors. Furthermore, the Electric Power Research Institute (EPRI) advocates that
data communication and automation reflect condition-based rather than time-based
management of the transmission system [18]. Probabilistic (rather than determin-
istic) methods for assessing risk in the transmission system can also be used to
32 3 The Development of IoT Within Energy Infrastructure

RTU Modem
#1 RTU
Modem #2 RTU
Modem #3

Radio

Operator Control Center Modem

Modem
RTU
#4
Operator I/O
MTU

Modem Radio
Radio

Fig. 3.4 SCADA as a network of remote terminal units (RTUs) connected to a master terminal
unit (MTU) via modems and radios [19]

preemptively solve faults and address sub-optimal conditions [18]. In all cases, real-
time data is needed to better monitor the conditions of the transmission system to
ensure safety and reliability [138].
Second, the SCADA system, currently in place, cannot observe the dynamic
phenomena in transient and small signal stability models [163]. SCADA has a
relatively low sampling rate of 2–4 s, making dynamic state estimation over a
wide area difficult [163]. Instead, SCADA data are often used in static state
estimation algorithms [165–168] for manual decision making [169, 170]. Dynamic
state estimation is further complicated by SCADA’s lack of measurements with
synchronized time stamps [163].
To address these issues, SCADA systems must be equipped with the ability
to study temporal trends with finer resolution and synchronization [169]. These
requirements imply better coordination and compatibility between SCADA ter-
minals [163]. Such developments in wide-area measurements are set to enhance
corrective actions against system-wide disturbances [171]. All in all, the electric
grid must be updated with new sensors to enable the better gathering, transfer, and
processing of measurement data [172].
Sourcing power for sensors can pose a major challenge to their deployment
in sensor networks. The main energy intensive components in a typical sensor
include microcontrollers, wireless interfaces, integrated circuits, voltage regulators,
3.1 Network-Enabled Physical Devices: Sensors and Actuators 33

and memory storage devices. Nevertheless, this challenge can be overcome through
the use of batteries or environmental power sourcing techniques [18]. A key
factor in designing sensors for remote applications is ensuring sustainable energy
consumption and supply. In order to minimize operation and maintenance costs,
sensors must be designed in such a way that optimizes hardware and software
energy use while taking advantage of energy harvesting opportunities from naturally
occurring sources of energy such as thermal, solar, kinetic, and mechanical energy
[138, 173]. Furthermore, some sensors can switch between a static “asleep” and a
dynamic “awake” mode as needed.
In addition to such energy minimization techniques, designers must also optimize
the use of passive components such as capacitors, resistors, and diodes to reduce
leakage currents and switching frequencies [138]. Reducing the energy dependence
of sensors on the electric power grid is of vital importance to prevent cascading
failures between the physical electric grid and the informatic sensor network [174].
Such decoupling of the power grid’s sensors from its physical power flows serves to
increase the resilience of the two systems together [174].
These sensing challenges in the transmission system have motivated the deploy-
ment of phasor measurement units (PMUs) (that is, synchrophasors). Phasor
measurements provide a dynamic perspective of the grid’s operations because their
faster sampling rates help capture dynamic system behavior [169, 170, 175–185].
PMUs measure voltage and current, and can calculate watts, vars, frequency, and
phase angles 120 times per power-line cycle [163, 176]. Figure 3.5 shows the
schematic of a PMU. This PMU data immediately enhances topology error correc-
tion, state estimation for robustness and accuracy [163], faster solution convergence,
and enhanced observability [186]. Simulations and field experiences also suggest
that PMUs can drastically improve the way the power system is monitored and
controlled [186]. However, the installation of PMUs and their dependent solutions
can be hindered by monetary constraints [186, 187]. A completely observable
system requires a large number of PMUs which utilities usually install incrementally
[187].

Pulse per second

Synchrophasors,
Frequency,
ROCOF
GPS
Receiver
Data Streaming

Phasor
Modem
Micro-Processor

A/D
Analog Inputs Converter

Fig. 3.5 Schematic of a Phasor measurement unit [20]

34 3 The Development of IoT Within Energy Infrastructure

Recent studies have explored algorithms for optimal placement of PMUs to

minimize the number of PMUs required to collect sufficient information [188–190].
PMU-based wide-area monitoring systems (WAMS) use the global position system
(GPS) to synchronize PMU measurements [170]. Such synchronized measurements
allow two quantities to be compared in the real-time analysis of grid conditions
[186]. Through wide-area monitoring and synchronization, PMUs have made great
strides in power system stability [170] which was often hindered by SCADA’s
slow state updates [191]. The implementation of synchrophasors has also allowed
voltage and current data from diverse locations to be accurately time-stamped
in order to assess system conditions in real-time [186]. Synchrophasors are also
available in protection devices, but since requirements for protection devices are
fairly restrictive, the full integration of synchrophasors into line protection is
still debated [186]. The increasing application of synchrophasors in wide-area
monitoring, protection and control systems, post-disturbance analyses, and system
model validation has made these measurement tools invaluable [176, 187].
While the integration of PMUs into the transmission system will do much
to enhance situational awareness in the transmission system, it is by no means
sufficient for the grid as a whole. First, PMUs are primarily meant for applications
in the transmission system and to a large extent are not feasible in the distribution
system. They are even less appropriate for understanding customers’ power con-
sumption profiles. In that regard, the emergence of smart meters has fulfilled a much
needed functionality. Second, PMUs only measure voltage and current phasors.
As such, they are able to provide much needed insights into grid conditions but
are not able to inform why these conditions exist. As the electric grid comes to
depend more on interdependent infrastructure, weather conditions, and consumers’
dynamic behavior, secondary measurements of these quantities become increasingly
important. In that regard, sensors used in other sectors will have an indispensable
role in taking secondary measurements.

3.1.2.2 Network-Enabled Actuators: AGC, AVR, and FACTS

In order to take full advantage of the heterogeneity of sensing and measurement

technologies, a heterogeneity of actuation methods is also needed. Much like
with sensing technologies, actuation technology has long been a part of power
systems operations and control. Perhaps, the earliest remotely controlled actuator
in the electric grid is automatic generation control (AGC) [192] which is used to
maintain grid frequency in the face of fluctuating consumer load. In time, power
system operations came to include automatic voltage regulation (AVR) [193, 194]
to maintain voltage stability. Finally, a plethora of flexible alternating current
transmission system (FACTS) [195] devices have been developed to address line
congestion in addition to supporting AGC and AVR technologies.
AGC, formerly known as load-frequency control was established in the early
1950s [196] to adjust the power output of interconnected generators in order to
meet variations in load (Fig. 3.6). Imbalances in real power generation and load
3.1 Network-Enabled Physical Devices: Sensors and Actuators 35

- P1mec
1/R1 Generator 1
+
P1ref

- -
1/R2 Generator 2 +
+
+ P2mec f
P2ref + Power System
- +
1/R3 Generator 3
+ P3mec
P3ref

-
1/R4 Generator 4
P4mec
+
P4ref

Fig. 3.6 Schematic of automatic generation control [20]

cause frequency fluctuations that could compromise the stability of the system. For
a given control area, each energy control center aims to maintain zero area control
error (ACE). ACE defines the difference between the net interchange power and the
deviation in net frequency in megawatts (MWs) [196]. Controlling the ACE is the
main role of AGC, and it is achieved through a mix of specialized control algorithms
and automatic signals to generators. AGC achieves control of output generation by
sending signals to generators every 4 s. The ability of generators to respond to these
signals is governed by various characteristics of the generator, such as type of plant,
fuel type, age of the unit, as well as operating point and operator actions [197]. In
most cases, units under AGC tend to have faster ramping capabilities, such as fast
start natural gas units.
As the electric grid becomes more and more interconnected, the AGC process
has been complicated and research into distributed control algorithms for AGC is
steadily underway [198]. (See Sect. 3.3 for further explanation.) AGC control has
also become more decentralized with the Federal Energy Regulatory Commission
(FERC) even allowing third-party AGC [199]. Such decentralized AGC is more
likely to require advanced communication for any large-scale application to be con-
sidered feasible. Specifically, the current star-shaped communication architecture
would need to change to a meshed one [172].
In addition to frequency regulation, voltage regulation is a key component in
ensuring power stability. Voltage stability regulation has played a significant role in
controlling the reactive power flow in the electric grid. The schematic of automatic
voltage control is best captured by Fig. 3.7. In North America, voltage control is
done at a local level although there is a possibility of expanding this to a regional
level [172] where it has been successfully implemented in China and the UK.
Voltage instability occurs when a condition in the system results in deficient reactive
power. Currently, voltage instability analyses have relied heavily on contingency
analysis to prevent conditions that could potentially result in deficient reactive power
36 3 The Development of IoT Within Energy Infrastructure

Limiter and
protection

Voltage
measurements
load compensation

Synchronous
Regulator Exciter
machine

PSS

Fig. 3.7 Schematic of automatic voltage regulation [20]

[172]. This contingency analysis and prevention has been made possible by the
use of automatic voltage regulators. With DERs, issues such as steady-state voltage
spikes are likely to occur making the use of a single voltage regulator for multiple
feeders infeasible [200]. Going forward, possible multi-agent approaches could be
applied to provide more flexibility to the voltage regulation process [201].
The use of FACTS in power transmission has tremendously improved the amount
of power that can be transported within the power grid. This has enhanced the
stability of the grid in the face of increasing demand and variable generation
capacity. FACTS devices can increase or decrease power flow in certain lines
and respond to instability problems almost instantaneously. These devices have
aided in power routing and have helped send power to areas that were previously
insufficiently connected [202]. FACTS devices are a wide range of power electronic
devices that are split into three categories depending on their switching technology:
(1) mechanically switched, (2) thyristor switched, or (3) fast-switched [202]. They
include but are not limited to: static synchronous compensator (STATCOM) and
static VAR compensator (SVC) for voltage control, thyristor controlled phase
shifting transformer (TCPST) for angle control, and thyristor controlled series
compensator (TCSC) for impedance control [202]. SVC is an automated impedance
matching device that switches in capacitor banks to bring up the voltage under
lagging conditions and consumes VARs from the system under reactive conditions.
The SVC and TCSC represent what is commonly referred to as the first
generation of FACTS devices [202]. A STATCOM is based on a power electronics
voltage source converter and can act as a source or sink for reactive AC power
as needed. This device is commonly used for voltage stability and belongs to the
second generation of FACTS devices [202]. FACTS devices have played a key role
in deregulated markets by helping to increase the load ability for power lines, reduce
system losses, improve the stability of the system, reduce production costs, and
3.1 Network-Enabled Physical Devices: Sensors and Actuators 37

control the flow of power in the network. These functions make FACTS devices
indispensable as the electric grid becomes more interconnected and adopts eIoT.
As eIoT develops even more, FACTS devices may need to become smarter so as to
receive signals and regulate flow as necessary. Such facilities are particularly helpful
in the control of DERs. The ability to connect to communication networks is also
necessary for these devices to ensure that they communicate and work with other
sensors and wireless devices.

3.1.3 Sensing and Actuation of Supply Side Secondary

Variables

As mentioned earlier in the section, the deployment of variable energy, energy

storage, and demand-side resources requires a greater understanding of their
associated secondary variables. For example, the power injection and withdrawal of
these resources depends on solar radiance, wind direction and speed, temperature,
humidity, and rain [160]. Therefore, sensing and actuating these secondary variables
enables the control of the supply and demand of electricity based on its root causes.

3.1.3.1 Networked-Enabled Sensors: Wind, Solar, and Natural Gas

Resources

Perhaps the best way to appreciate the benefits of measuring secondary variables is
by observing how IoT analogously enabled “smart manufacturing,” which is defined
as “the use of information and communications technology to integrate all aspects
of manufacturing, from the device level to the supply chain level, for the purpose of
achieving superior control and productivity [203].” Smart manufacturing implies the
use of embedded sensors and devices that communicate with each other and other
systems [203]. Through data gathering and sharing, these devices inform decision
making and automation throughout the manufacturing network [203]. The system
uses big data to improve, evaluate, and analyze operations, consumer interests,
resource planning, and management systems via cloud-based tools [203].
Smart manufacturing involves a holistic approach where it tracks a product’s
life cycle from raw material, to factory, to end use [203]. Most important, smart
manufacturing makes use of a distributed approach by ensuring that every entity
in an organization has the necessary information, at the time it is needed, to
make optimal contributions to the overall operation through informed, data-based
decision making [203]. Systems such as Industrie 4.0 advocated for the concept of
“intelligent products,” which used “product agents.”
Furthermore, IoT has enabled greater supply chain integration both upstream
and downstream of a given production system [119–121]. The information about
incoming parts and services from upstream suppliers help streamline operations
management decisions [8, 122, 123]. Similarly, the information about downstream
38 3 The Development of IoT Within Energy Infrastructure

demand allows production systems to manage when and where they need to deploy
resources closer to real-time [124–131]. When the electric power system is viewed
as a full supply chain, it can mirror smart manufacturing applications to extract the
full value of eIoT.
In that regard, the reliable integration of solar and wind resources requires sec-
ondary measurement applications in the electric grid. Such measurements include
wind speed and solar irradiance. This kind of secondary monitoring of weather-
dependent variables is not entirely new to electric power systems. Hydrologists
have been monitoring water flows and elevations to understand the potential
for hydropower generation for decades [204]. Indeed, as concerns over global
climate change and water availability rise, the energy-water nexus has received
considerable attention [205–212, 212, 213, 213–225]. These works have investigated
the availability of water for the energy infrastructure [217–225], the co-optimization
of water and energy infrastructure [212, 213, 213–216], and the impacts of water
consumption on the electric grid demand-side management [220, 226, 227].
However, solar and wind resources, unlike hydropower, are often called variable
energy resources (VERs). They exhibit intermittency in that their power generation
value is not entirely controllable. They also exhibit uncertainty in that their power
generation value is not perfectly predictable [228–233]. In both cases, access to
real-time secondary measurements of weather-based variables can greatly reduce
the uncertainty they impose on electric power system operations [234, 235].
Furthermore, as solar and wind resources become more prevalent at the grid
periphery as DG, concerns over voltage fluctuations, power quality, and system
stability necessitate better forecasting [109].
Despite these similarities, solar and wind power generation requires distinct
prediction and monitoring techniques. Solar PV monitoring is best served with
effective short-term predictions of fluctuations in solar irradiance over short intra-
day and intra-hourly timescales [109]. Such predictions when combined with the
fixed parameters of the solar PV arrays (for example, size and efficiency), they
can be used to calculate power generation values [109]. In most cases, forecasting
techniques based purely on historical data are insufficient. Instead, many of the most
promising approaches propose hybrid machine-learning techniques that combine
historical data with real-time weather data [236].
Wind power generation also combines wind speed predictions with site-
dependent variables such as surface landscape and weather conditions to accurately
predict power output [236]. In both cases, solar and wind variability occurs
on all timescales, from turbine control occurring from milliseconds to seconds
to integrated wind-grid planning occurring from minutes to weeks [237–239].
Furthermore, wind and solar predictions quickly lose accuracy at longer timescales
[232, 237, 240–244]. Consequently, a holistic approach to forecasting must address
the many applications of power system operations and control [15]. These include
reserves procurement and energy market optimizations such as unit commitment
and economic dispatch [237, 245–250]. Advanced sensing technologies introduced
through eIoT are expected to play a key role in obtaining and communicating raw
data inputs to solar and wind prediction models.
3.1 Network-Enabled Physical Devices: Sensors and Actuators 39

Similar to VERs, even dispatchable resources such as natural gas can have
variable supply chains that require secondary measurement to ensure reliable
grid operation. The challenge of natural gas relative to other dispatchable power
generation fuels is that its gaseous state requires purpose-built facilities for its
storage. Coal and oil are often stockpiled at the input of power generation resources
to ensure an effective ramping response to grid conditions. Natural gas, on the other
hand, is fed by pipeline and has only limited storage capability in many geographical
regions.
Therefore, the flow of natural gas is quite susceptible to pipeline capacity
constraints. As the price of natural gas has fallen in recent years (in response to
the expanded availability of shale gas), this susceptibility has only grown. Some
ISOs now have over 50% of their power generation capacity come from natural
gas units [251]. To ensure reliability, power grid operators must now coordinate
their operations with natural gas operators to make certain that sufficient natural gas
capacity is available for power generation [252].
And yet, coordinated operation of the natural gas and electric power systems
requires a recognition of their inherent similarities and differences. The natural
gas industry, like the electric industry, has undergone deregulation to encour-
age competitive markets [252–254]. The electric power system has wholesale
energy markets that implement security-constrained unit commitment (SCUC)
and security-constrained economic dispatch (SCED) decisions. They competitively
clear 1 day ahead and every 5 min, respectively [253]. Meanwhile, natural gas
supply contracts have durations from 1 day to 1 year [254]. This optimal supply
mix of natural gas also compensates storage and not just supply and transmission
(as is the case in electric power) [254]. Furthermore, natural gas is transported by
shipment as liquefied natural gas or by pressure differences in a pipeline network
as a gas [252]. In contrast, electricity has no such differentiation of material
phase. Finally, the natural gas system has an entirely different set of organizations,
regulations, and scopes of jurisdiction that further complicate coordination with the
electric power system.
Nevertheless, the presence of deregulation and market forces now means that
natural gas and electricity prices are often closely correlated [255]. This is especially
true during particularly hot or cold days when both systems experience peak demand
from heating, ventilation, and air conditioning (HVAC) units [253]. The challenge
during these times is to design the control room operations and the markets for both
commodities such that both infrastructures continue to operate reliably and cost-
efficiently [252–263]. Naturally, these requirements further motivate the need for
secondary measurement from eIoT.

3.1.3.2 Networked-Enabled Actuators: Wind and Solar Resources

The effect of VERs on power system stability and control is significant due to the
intermittent nature of resources such as wind and solar. However, recent studies
and applications are showing that these resources are not so variable after all. In
40 3 The Development of IoT Within Energy Infrastructure

fact, they can be used to provide ancillary services such as frequency and voltage
regulation or “artificial inertia.” Wind turbine generators have varying reactive
power regulation capabilities, depending on the manufacturer. Types 1 and 2 wind
turbines are based on induction generators and have no ability for voltage control.
While types 3, 4, and 5 wind turbine generators have power electronic converters
that allow them to control reactive power and regulate voltage [264].
Although Type 1 and 2 wind turbines cannot control voltage directly, they are
usually fitted with power correction capacitors to maintain the reactive power output
at a fixed set point [264, 265]. These voltage control capabilities can be used to
regulate the voltage at the collector bus of the wind farm [264, 265]. A centralized
controller would usually communicate with individual wind turbines directly to
regulate their voltage. Presently, grid codes require wind power plants (WPPs) to
have a specified reactive power capability (for example, 0.9 lagging to 0.9 leading),
making reactive power capabilities fundamental to the design of WPPs [264, 265].
In recent years, the concept of “synthetic” or “artificial” inertia has been
introduced as a potential application for frequency control. A study conducted on
the New Zealand system explored a possible use of wind turbine generators for
frequency regulation by providing a megawatt contribution within a small period of
time [266]. The study also proposed the following activation mechanism to mimic
the first frequency response produced by real inertia: (1) the activation must occur
within 0.2 s after the frequency reaches 0.3 Hz lower than nominal, (2) the ramp
rate of the output must be no less than 0.05 pu/s of the machine’s total capacity in
megawatts, (3) the output must be maintained for at least 6 s from activation, and (4)
the machine must deactivate the artificial megawatt output once the frequency has
returned to the nominal frequency [266]. With this activation technique, low inertia
devices can contribute MWs towards a falling system frequency. Other studies
have also proposed a mechanism of reprogramming power inverters connected to
wind turbines to imitate “synchronized spinning masses” or synthetic inertia [267].
Hydro-Québec TransÉnergie was the first to adopt this application of synthetic
inertia and the general response is good although not enough to sustain the growing
penetration of wind [267]. As wind turbine designs advance to supply more inertia,
they are increasingly viewed as contributors to system stability.
The nature of remotely controlled devices requires them to be self-sufficient
and self-sustaining. Remote devices include power transmission line monitoring
systems, sensors, backbone nodes, video cameras set up in the transmission lines
and towers. Given their location, repair and maintenance of these devices is severely
limited. As such, remote devices are constrained by battery capacity, processing
ability, storage capacity, and bandwidth [161]. These devices are in need of remote
sources of power although they can use power acquisition technology [161] to
harvest their own power. In addition, these devices must be suited for vary-
ing environmental conditions and must be waterproof, dust-proof, anti-vibration,
anti-electromagnetic, anti-high-temperature, and anti-low-temperature [161]. Data
fusion technology has been suggested as an application that can be used to collect
data more efficiently, and combine useful data for these remote devices [161].
3.1 Network-Enabled Physical Devices: Sensors and Actuators 41

As for solar PV actuation, smart inverters are seen as key components for the
effective coordination of solar PV systems with other eIoT devices. Inverters play
a key role in the intersection between the measurement and decision-making layer
of the control loop. New developments in the field of power electronic devices and
modern control strategies for inverters have provided numerous operation strate-
gies for efficient management of the inverter-controlled systems. However, future
inverter designs need to allow for modularity to ensure independent scalability of
components especially when deploying them to distributed systems such as solar
PV installations [268]. Modular inverter design is also key to fast and effective
standardization [268].
With smart inverters, the integration of IoT devices with the direct current
interfaces has become much easier [268]. For an inverter to be considered smart,
it must have a digital architecture with the capability for two-way communication
and a solid software infrastructure. The ability to send and receive messages quickly
is imperative for effective eIoT deployment. Smart inverters must be capable of
sending granular data to utilities, consumers, and other stakeholders quickly. This
allows for faster and more efficient diagnosis of problems as well as maintenance
[269]. For solar PV, smart inverters have a key role to play in improving system
costs and performance as they provide high redundancy through distributed AC
architecture [269]. Microinverters provide a PV system with the ability to provide
ancillary services such as ramp rate control, power curtailment, fault ride-through,
and voltage support through vars [269].
To fully develop and incorporate smart inverters to the grid, designers must
work with utilities and regulators to meet the desired standards and regulatory
requirements. The Underwriters Laboratory/American National Standards Institute
(UL/ANSI) 1741 and IEEE 1547 standard groups together with the Smart Inverter
Working Group (SIWG) are some of the groups that are working collaboratively
towards advancing this technology [269].

3.1.4 Sensing and Actuation of Primary Variables in the

Distribution System

As was discussed extensively in Chap. 2, the greatest transformation of the electric

power grid will occur at the grid periphery. These include the integration of network-
enabled sensors and actuators in distributed generation, distribution lines, and
end-user power consumption. The discussion provided in Sect. 3.1.3, in many
ways, already addressed the sensing and actuation of DG. Because solar PV
and wind turbines are effectively scalable technologies, they may be integrated
equally effectively in the transmission and distribution systems. Consequently, the
conclusions of Sect. 3.1.3 are equally applicable here. This section now addresses
the sensing and actuation of primary variables in the distribution system prior to
addressing secondary variables in Sect. 3.1.5.
42 3 The Development of IoT Within Energy Infrastructure

3.1.4.1 Network-Enabled Sensors: The Emergence of the Smart Meter

In many ways, the degree of transformation of distribution system sensing tech-

nologies surpasses the transmission system development described previously.
Traditionally, electrical equipment installed at the customer point was mainly a
meter, chief purpose of which was consumer billing [270]. It counted the total
number of kilowatt-hours (kWh) consumed and was read once per billing period.
This meant that utilities rarely had access to real-time power consumption data
at the grid periphery. Instead, real-time data would originate from feeders and
substations that were connected to the SCADA network. The remaining “last-mile”
of the grid (between these feeders and electricity consumers) was often managed by
practical engineering rules based upon feeder data and the feeder’s radial topology.
These approaches, however, have limited utility in the presence of DG downstream
of the last SCADA-monitored feeder [271, 272]. Furthermore, they are equally
inapplicable as demand-side resources begin to participate in demand-response
programs [271, 272].
The advent of smart meter technology, however, has greatly expanded the
capabilities of demand-side metering technology. First, instead of simply measuring
aggregate energy consumption, smart meters measure active power consumption as
a temporal variable with a sampling rate of up to 1 Hz [273]. Some smart meters
also measure power quality as well as voltage and current phase angles [274].
Such measurements naturally produce significant quantities of data which must
ultimately be communicated, processed, and stored in new information technology
(IT) infrastructure. Nevertheless, the readings from individual smart meters are
valuable because they can be used to make advanced analyses for individual meters
or aggregated networks [141, 270].
Second, smart sensors, such as smart meters in advanced metering infrastructure
(AMI), monitor a bidirectional flow of power and allow for two-way communication
between the utility and the consumer [275, 276]. AMI is a system of technologies
that measures, saves, and analyzes energy usage from devices such as smart meters
using various communication media [46]. AMI meters have embedded controllers,
generally including a sensor, a display unit, and a communication component such
as a wireless transceiver, and they are generally powered by the electrical feed
that they are monitoring [276]. AMI can also incorporate older systems such as
automatic meter reading (AMR) and automated meter management (AMM) [46] in
their applications. An older AMR system may be capable of remotely collecting
power consumption data, remotely relaying power usage, remotely turning a system
on or off, and generating bills with different pricing rates [277, 278].
Most utilities have upgraded their investments from AMR to AMI to install
two-way communication in a transition to smart technologies with improved
demand-side management capabilities [141]. In 2013, the number of two-way AMI
meters overtook the number of one-way AMR meters for the first time [279] and
by 2016, there were about 46.8 million AMR meters and about 70.8 million AMI
3.1 Network-Enabled Physical Devices: Sensors and Actuators 43

smart meters installed by utilities [279, 280]. As eIoT advances to include demand-
side management, older technologies need to be upgraded in order to maximize the
benefits of eIoT technologies.

3.1.4.2 Network-Enabled Actuators: Distribution Automation

Although distribution automation was initially implemented in the USA (in the
1970s) to increase reliability and resilience in the face of electrical faults [281], eIoT
is placing increased demand for automated power quality and real-time network
adjustments. Automated feeder switching provides traditional reliability in response
to fault identifications, load control and load management [282]. Distribution
automation is important not only for resilience with faults, but also as a solution
to today’s more dynamic loads. Tools such as automated feeder switching must
accomplish network-wide reconfigurations for self-healing operations and day-to-
day operations with increased load variability [283]. Other tools, such as automated
voltage regulation and automated power factor correction, increase efficiency and
improve power quality [21, 282]. Optimal load balancing through automation results
in decreasing power losses, deferring capacity-expansion investment, and improving
voltage profiles [21, 283].
Automation in distribution is a step towards a larger, eIoT-enabled smart grid
that integrates microgrids for optimal performance [281, 282]. The DOE’s Smart
Grid Investment Grant (SGIG) Program made advances in distribution automation
as an imperative to modernize the electric grid [21]. Partly funded by the American
Recovery and Reinvestment Act (ARRA), utilities in the SGIG program installed
82,000 smart devices to 6500 distribution circuits [21]. Figure 3.8 shows the
installations of distribution assets from the program.

Distribution Automation Asset Total Installed

Transformer Monitors 20,263

Remote Fault Indicators 13,423

Automated Capacitors 13,037

Smart Relays 11,033

Automated Voltage Regulators 10,665

Automated Feeder Switches 9,107

Automated Feeder Monitors 4,447

Fig. 3.8 Distribution automation upgrades during the smart grid investment grant program [21]
44 3 The Development of IoT Within Energy Infrastructure

3.1.5 Sensing and Actuation of Demand-Side Secondary

Variables

The sensing and actuation of demand-side secondary variables serves to empower

customers to create energy-aware smart homes [284–286], commercial buildings
[287, 288], and industrial facilities [289, 290]. In that regard, eIoT developments
should be seen as an energy extension to long-standing efforts for automation.
Network-enabled sensors again play the key role of providing insights into electric-
ity consumption patterns with potentially device-level granularity. Network-enabled
actuators on these devices can then respond to energy-aware decisions that make
trade-offs between consumer preferences and energy consumption.
That said, it is important to recognize that secondary variables on the supply
and demand sides are fundamentally different. On the electricity supply side, the
need for sensing and actuation is entirely motivated by a single purpose: the
generation and sale of electricity. On the demand side, secondary variables describe
the behaviors of electricity consumers in the residential, commercial, and industrial
sectors. The electrical consumption patterns serve a more fundamental purpose of
enabling these sectors to carry out their activities outside of the electricity sector.
Consequently, an effective implementation of eIoT on the demand side always
needs to answer the question “What is the electricity used for?”. For example,
a production facility that uses 1 kW to run a milling machine will not shed that
consumption because it directly contributes to production throughput. In contrast,
it may shed 1 kW of a back-office because laptop computers can run on their own
batteries. Consequently, the remainder of this section breaks the discussion into the
various application of eIoT devices.

3.1.5.1 Energy Monitors with Embedded Data Analytics

While device-level sensing granularity of electricity consumption has become a goal

of eIoT, in many cases it is not cost feasible. Instead, energy monitors, particularly in
home applications, have developed to fill a much needed gap in the eIoT landscape.
They are best understood by comparison to smart meters. Smart meters measure
aggregate power approximately every minute, and provide data “outward” to the
utility. Energy monitors, in contrast, measure a home’s or facility’s aggregate power
consumption every millisecond (1 kHz), and the data is sent “inwards” to the
homeowner or facility manager [291]. The operating principle of an energy monitor
is illustrated in Fig. 3.9. The aggregate power consumption consists of several
device-specific “signatures” that make it possible via data analytics algorithms to
recognize when one device is operating versus another. Such a technique is most
effective in differentiating high-consuming devices while less so for small devices.
The resulting data can be provided to home owners and facility managers for cost-
saving decisions. Home energy monitors are currently available at a variety of price
3.1 Network-Enabled Physical Devices: Sensors and Actuators 45

Fig. 3.9 Aggregate profile of household electric power consumption [22]

points from about $150 to $400. Continuous gains in energy cost savings outweigh
a consumer’s initial $300 investment in a home energy monitoring system.
Meyers, Williams, and Matthews in an article in Energy and Buildings [292]
used the US Energy Information Administration’s Residential Energy Consumption
Survey data to estimate the inefficiencies in US home energy usage. The authors
estimate that in 2005, 39% of energy delivered to US homes was wasted, costing
the homeowners a total of $81.5billion, or $733.60 per household on average.
Assuming that 41% of the energy inefficiencies could be reduced in part by using a
home monitoring system to identify costly consumption behavior, the homeowner
could see benefits within the first year of purchasing the system.

3.1.5.2 Network-Enabled Smart Switches, Outlets, and Lights

While energy monitors are relatively effective in resolving an aggregate power

consumption profile into its constituent device-level components, they do leave
room for further technological development. First, the data analytics algorithms
will never resolve devices whose individual power consumption is comparable to
the aggregate power consumption’s noise level. While this may seem like a trivial
issue, in reality, it is important because most facilities have large populations of
small devices that together may make up a large part of the total power consumption.
Indeed, the Department of Energy has provided practical advice about “phantom
loads” that draw electric power simply by remaining idle while plugged in [293].
46 3 The Development of IoT Within Energy Infrastructure

Phantom loads are costly and inefficient [294, 295]. The average US households
waste $100 per year on devices that draw power while not being used [293].
Electronics such as digital video recorders (DVRs) are large users of energy even
in standby mode, using 37 W in a home [294]. “Dumb” devices can help decrease
phantom loads. For example, connected power strips can make disconnecting groups
of appliances easier [294, 296]. Intelligent actuators in home automation overcome
inconvenience and human forgetfulness to eliminate phantom loads and provide
household savings [297]. Unfortunately, energy monitors do not actuate individual
devices without manual intervention. For these reasons, a wide range of smart home
devices have developed in recent years to give homeowners device-level visibility
and control.
Device-level visibility and control have the potential to transform energy man-
agement. eIoT extends to individual home appliances, or production profiles
for factories, or HVAC patterns for commercial buildings. The success of such
coordination depends on real-time data exchange between smart devices, electricity
operations, and the energy consumer [298]. The data includes forecasts of prosumers
(dependent on local variables), the energy usage schedule of consumers, and energy-
management signals from economic and operation centers [298]. A smart scheduler
can then act autonomously to collect data and control devices without active
consumer engagement [298]. In so doing, it smooths a household’s demand curve
and optimizes energy costs [298].
In essence, a smart scheduler is designated as a two-way communication device
that synthesizes cost data and appliance profiles to ensure that a household’s
aggregate consumption does not exceed a predefined limit [298]. The scheduler
can shed or defer loads by sending “off,” “on”, “pause,” and “resume” signals to
flexible appliances [298]. Hourly profiles can be developed from historical data of
the appliances within a month, and it can be determined which appliances are used
by a household [298]. Finally, a smart scheduler can act as a load aggregator with the
potential to communicate with time-dependent retail and wholesale markets [298].
Perhaps the most common of smart home devices are smart outlets, switches,
and lights. Smart outlets are used to cut off phantom loads at the source, without the
inconvenience of unplugging appliances. Smart switches can operate by a button, or
remotely through apps or a timer [299]. Motion sensors can detect room occupancy
and switch lights on and off accordingly [297]. In addition to energy-efficient bulbs
(see [300]), there are smart bulbs that can save energy by customizing brightness or
color to a set schedule [301]. Although smart home devices are more expensive than
their traditional alternatives, their annual energy savings are a counterbalance to the
initial investment. Within smart homes, these devices offer not just cost savings
but also a level of convenience that many homeowners may wish to have. Because
of this, the rationale for adoption is not strictly based upon a return-on-investment
(ROI).
In commercial and industrial applications, however, the investment decision
is often strictly based upon ROI. Nevertheless, these sectors (as discussed in
Sects. 4.4.2 and 4.4.1) often have larger, more energy-intensive equipment that make
it easier to rationalize the investment of network-enabled sensors and actuators and
3.1 Network-Enabled Physical Devices: Sensors and Actuators 47

their associated energy savings. Given that at least 40% of electricity generation
is consumed in commercial and residential buildings, it is important to invest in
energy-efficient systems that are also capable of participating in demand response
[302].

3.1.5.3 Network-Enabled Heating and Cooling Appliances

While smart outlets, switches, and lights can go a long way to reducing demand-side
energy consumption, devices that serve a heating or cooling function are the most
energy intensive. Reconsider Fig. 3.9. There are clear power consumption spikes
associated with refrigerators, kettles, toasters, heaters, and ovens. Furthermore, air
conditioners, alone, account for approximately 6% of US electricity consumption
and account for about $49 billion in energy costs.
The appliance marketplace has recognized the potential for developing “smart
appliance” versions of these devices. Some appliances have an established market
for smart products, while others are just forming. For example, smart refrigerators
have a broad offering of features/specifications and efficiency capabilities [301].
Their price depends on the variations in size, doors, cooling features, freezing
compartments, displays, efficiency, and power usage.
Smaller devices such as toasters and kettles are emerging as niche tech products.
A smart kettle or coffee maker can connect to a smart home hub or to a smart
phone app via WiFi, 3G, and 4G to program water temperatures [303, 304]. While
the kettle doesn’t draw less energy, the scheduling feature has the opportunity to
reduce unneeded energy usage. Similarly, a smart toaster can connect to an app on
your phone through Bluetooth that enables the remote adjustment of the cooking
timer, and return notifications when the toast is ready [305–307]. Smart ovens are
another appliance that can connect to smartphone apps to schedule cooking, measure
cooking temperatures, and engage either pre-set or customized cooking programs
[308]. There also exist smart all-in-one filter, heating, and cooling devices that are
able to measure and transmit the temperature and air quality of a room to a mobile
app. These values can then be scheduled and controlled in several automated and
semi-automated modes [309, 310].
In all these cases, these network-enabled heating and cooling appliances are
automated with sensing and software capabilities to optimize their control and
performance. Once network-enabled, these devices can be operated remotely to
operate at the best possible time regardless of the user’s presence. For example,
electrified HVAC systems have used a technique called pre-cooling [311]. Instead
of cooling a building at the hottest time of the day, the building can be cooled to
an artificially low temperature earlier so that it warms but remains at a comfortable
temperature during the peak.
Such a technique dramatically reduces electricity consumption because air
conditioners are more energy intensive at high ambient temperatures [312]. This
technique can be further enhanced with a system that receives and responds to
(readily available) weather predictions [311]. Furthermore, smart thermostats can
48 3 The Development of IoT Within Energy Infrastructure

use georeferencing to match the global positioning system (GPS) on a homeowner’s

phone to the home’s thermostat [313]. The device then activates the air-conditioning
system based on the phone’s proximity and expected time of arrival, and it
deactivates the air-conditioning system otherwise.

3.1.5.4 The Electrification Potential of eIoT

Beyond these traditional electrical devices, it is important to recognize the elec-

trification potential of eIoT. Figure 1.3 shows a Sankey diagram for the Amer-
ican energy system. Electricity consumption accounts for just 12.6quads of the
97.3quads total. This means that in order to make radical improvements in
decarbonization, many of the energy uses that rely directly on fossil fuels must
first be electrified so that they will have the potential to be powered by renewable
energy sources. In this regard, the transportation sector with 27.9quads of energy
consumption (28.7% of the US total) is the first candidate for electrification. Of
this quantity, electrified transportation accounts for only 0.03quads (or 0.1% of the
transportation total). The manufacturing sectors also consume 24.5quads of energy
(25.2% of the US total). Of this quantity, electricity for manufacturing accounts
for only 3.19quads (or 13.0% of the industrial total). Finally, the residential sector
consumes 11.0quads of energy (11.3% of the US total). Of this quantity, electricity
for residential use accounts for only 4.8quads (or 43.6% of the residential total). In
all of these cases, a switch from fossil fuels to electricity as an energy source can
have a large decarbonization impact [24].

3.1.5.5 Net-Zero Homes: Electrification of Residential Energy

Consumption

In residential applications, eIoT can directly support the electrification to achieve

homes with net-zero carbon emissions. Returning to Fig. 1.3, the residential
consumption of natural gas and petroleum accounts for 5.56 quads of energy, much
of which goes to heating applications. Rather than using fossil-fuel furnaces and
boilers, net-zero homes [314] often use air [314] and water [314] heat pumps with
electricity as an energy supply.
From an energy balance perspective, heat pumps are often twice as efficient
as simple resistive electric heating, boilers or furnaces [315]. These energy effi-
ciencies translate directly into significant cost savings as well. Furthermore, recent
generations of heat pump technology have embraced IoT [316]. They can be either
controlled directly from a smartphone or interfaced with a smart thermostat. Such
implementations allow homeowners to tune heating schedules so that they coincide
with their home (or even room) occupancy for added savings. The introduction of
smart heat pumps also facilitates their usage in active demand-response schemes
and their coordination with rooftop solar energy.
3.1 Network-Enabled Physical Devices: Sensors and Actuators 49

Fig. 3.10 Sankey diagram for the energy consumption (TBtu) of the US manufacturing sector [23]

3.1.5.6 Net-Zero Industry: Electrification of Industrial Energy

Consumption

eIoT can have a similar role in the electrification of industrial energy consumption.
Unlike residential applications, the electrification of industrial energy usage must (1)
strictly follow an ROI rationale and (2) match the required manufacturing processes
of the industrial facility. Nevertheless, many industrial sectors have already invested
significantly into IoT technologies for supply chain management. Extending these
efforts towards energy management is a logical next step.
In 2010, the US Department of Energy conducted a manufacturing energy
consumption survey detailing how much of each type of energy was consumed for
all major manufacturing sectors [23, 317, 318]. Figure 3.10 shows the associated
Sankey diagram for the manufacturing sector in aggregate. It shows a heavy reliance
on fossil fuels for steam generation and process heating [23]. In many cases, these
fossil-fuel options can be replaced with their electrified alternatives. Figures 3.11
and 3.12 summarize the cost and payback periods of such electrification alternatives
for a wide variety of manufacturing sectors. Furthermore, these proposed electri-
fication technologies should be considered as an integral part of eIoT and lend
themselves to energy-management practices within the manufacturing plant and the
electric grid as a whole [24].

3.1.5.7 Connected, Automated, and Electrified Multi-Modal

Transportation

Finally, the transportation sector represents one of the most prominent applications
of eIoT. This is due in large part to three fundamental technological shifts that
have the potential to transform the sector as a whole [319]: connected automation,
electrification, and IoT-based ride sharing.
50 3 The Development of IoT Within Energy Infrastructure

Fig. 3.11 Summary of manufacturing sector electrification alternatives (adapted from [24])

First, vehicles (of all types) are increasingly outfitted with connectivity solutions
so as to become a veritable part of IoT [320–323]. At first vehicle connectivity
was simply for emergency roadside assistance and extensions of the driver’s
mobile phone capabilities [324, 325]. However, the connectivity solutions have
greatly expanded in the context of vehicle automation. Adaptive cruise control,
where a vehicle’s automatic cruise control responds in congested conditions to the
fluctuating speed of the car in front, has given rise to a plethora of vehicle-to-vehicle
connectivity applications [324–327].
Whereas, the first application of adaptive cruise control was driver convenience,
it is now being developed for its potential environmental benefits. Research is
underway to enable automated vehicle platoons where vehicles automatically follow
each other at short range so as to reduce overall road congestion and save fuel
consumption by aerodynamically drafting. Such automated solutions motivate the
need for vehicle-to-infrastructure as well. Beyond highway driving, there remains a
significant need to reduce traffic congestion, improve air quality, and reduce energy
consumption in congested city roads [328, 329].
One important challenge is the coordination of road intersections. Traffic light
scheduling, whether it is done statically or dynamically in response to road
congestion, has long been an area of extensive research [330–332]. And yet,
3.1 Network-Enabled Physical Devices: Sensors and Actuators 51

Fig. 3.12 Summary of manufacturing sector electrification alternatives (adapted from [24])

solutions like traffic lights retain a driver-in-the-loop control paradigm. More recent
research envisions the elimination of traffic lights so that the intersection itself
can coordinate the crossing of vehicles and potentially even pedestrians [333–336].
Vehicle automation has been classified into five levels of technology development
with some analysts predicting full Level 5 automation by 2030 [337–340].
It is important to recognize that these developments toward connected automa-
tion exist in all modes of transport. Planes and trains have been automated to varying
degrees for decades [46, 341–343], while buses and trucks are directly benefiting
from developments in the car market [344]. Nevertheless, the shift toward connected
and automated road vehicles is important because of its share of overall vehicle
miles traveled [340] and because of the difficulty of its coordination and control
problems.
As a second fundamental shift in technology, electrified transportation greatly
complements the benefits of connected and automated vehicles. As mentioned, in
Chap. 1, the electrification of transportation is one of the five identified energy-
management change drivers. Electrified transportation supports energy consumption
52 3 The Development of IoT Within Energy Infrastructure

and CO2 emissions reduction targets [41, 345–348]. Relative to their internal
combustion vehicle counterparts, EVs, whether they are trains, buses, or cars,
have a greater “well-to-wheel” energy efficiency [348, 349]. They also have the
added benefit of not emitting any carbon dioxide in operation and rather shift
their emissions to the existing local fleet of power generation technology [42].
Furthermore, the technical, economic [350–352], and social barriers [82, 353] to
their adoption have eased. Despite continuing challenges in battery technology
[354–356], a wide variety of battery chemistry options have emerged leading to
greater capacity and subsequently vehicle ranges [357–359]. Fast chargers have
also been introduced into the market which allow 80% of the battery capacity
to be charged in 30 min [360–362]. From an economic perspective, both plug-in
hybrid EVs and battery-EVs show significant learning rates and cost improvements
over time [73, 352]. There also exist significant improvements in public attitudes
[363–366] and social transition rates [82, 349, 353, 367]. As a result, a number of
optimistic market penetration and development studies have emerged for a wide
variety of geographies [368–374]. Consequently, supportive policy options have
taken root worldwide [363, 375, 376].
The true success of electrified (multi-modal) vehicles depends on its successful
integration with the infrastructure systems that support them. From a transportation
perspective, plug-in electric cars may have only a short range of 150km [365],
but it may still require several hours to charge them [377]. This affects when a
vehicle can begin its journey and the route it intends to take. From an electricity
perspective, the charging loads can draw large power amounts that may exceed
transformer ratings, cause undesirable line congestion, or cause voltage deviations
[378–381]. These loads may be further exacerbated temporally by similar charging
patterns driven by similar work and travel lifestyles or geographically by the relative
sparsity of charging infrastructure in high-demand areas [380]. This transportation-
electricity nexus (TEN) [31, 89–91, 382] requires new assessment models whose
scope includes the functionality of both systems. Recent works have also proposed
axiomatic design as a means to model large systems such as the transportation and
manufacturing systems [383–387]. As the complexity of these systems increases,
it becomes more relevant to consider their resilience while especially focusing on
flexibility and reconfigurability [382].
Relatively few studies have considered this coupling from an operations man-
agement perspective. A simplified study based on the city of Berlin has been
implemented on the multi-agent transport simulation (MATSIM) [362]. Meanwhile,
the first full-scale study was completed in the city of Abu Dhabi [379, 388–390]
using the clean mobility simulator [391]. A third study focused on the differences
between conventional plug-in and online (wireless) EVs [31]. More recently, a
performance assessment methodology for multi-modal electrified transportation has
been developed that integrates the methodologies of previous studies [91]. An older
review compares a variety of open source transportation modeling tools [392].
IoT-based ride sharing, as the third fundamental shift in transportation technol-
ogy, has the potential to dramatically intertwine vehicle automation and electri-
fication. It expands the transportation options available to travelers so that even
3.1 Network-Enabled Physical Devices: Sensors and Actuators 53

incumbent paradigms of vehicle ownership are questioned [393–395]. Travelers,

particularly in large cities, are now more likely to rely on a combination of
transportation modes to arrive to their destination. In some cities, IoT-based ride
sharing has already shifted transportation behavior from the traditional use of private
cars [393, 395]. This work, however, argues that IoT-based ride sharing is likely to
converge with eIoT-based energy management because their underlying decisions
are fundamentally coupled.
Consider an EV rideshare fleet operator [379, 388–390]. They must dispatch their
vehicles like any other conventional fleet operator, but with the added constraint
that the vehicles are available after the required charging time. Once en route,
these vehicles must choose a route subject to the nearby online (wireless) and
conventional (plug-in) charging facilities. In real-time, however, much like gas
stations, these charging facilities may have a wait time as customers line up to
charge. Instead, the EV rideshare driver may opt to charge elsewhere. Once a
set of EV rideshare vehicles arrive to a conventional charging station, the EV
rideshare fleet operator may wish to implement a coordinated charging scheme
[45, 80, 81, 396–404] to limit the charging loads on the electrical grid. The local
electric utility may even incentivize this EV rideshare operator to implement a
“vehicle-to-grid” scheme [82, 362, 405] to stabilize variability in grid conditions.
These five transportation-electricity nexus operations management decisions are
summarized in Table 3.1 [31, 89]. The integration of such decisions in a coordinated
fashion ultimately forms an intelligent transportation-energy system (ITES) [389].
Naturally, significant research remains on how to best integrate these decisions so
that they achieve operational benefits in both the transportation and electric power
systems. More recently, studies have focused on the design of smart cities and their
core infrastructures such as transportation, district heating and cooling (DHC), and
electric power grid. Specifically, hetero-functional graph theory has been introduced
as a more advanced means of studying coupled infrastructures such as the TEN
[406, 407].

Table 3.1 Intelligent transportation-energy system operations decisions in the transportation-

electricity nexus [31]
• Vehicle dispatch: When a given EV should undertake a trip (from origin to destination)
• Route choice: Which set of roads and intersections it should take along the way
• Charging station queue management: When and where it should charge in light of real-
time development of queues
• Coordinated charging: At a given charging station, when the EVs should charge to meet
customer departure times and power grid constraints
• Vehicle-2-grid stabilization: Given the dynamics of the power grid, how can the EVs be
used as energy storage for stabilization
54 3 The Development of IoT Within Energy Infrastructure

3.1.6 Network-Enabled Physical Devices: Conclusion

This section has provided an extensive discussion of the state of the art in network-
enabled physical devices, whether they are network-enabled sensors or actuators in
the control loop. In order to organize the discussion, Fig. 3.2 was used to distinguish
between primary and secondary electric power system variables. In all, four major
categories of network-enabled devices were discussed.
• Section 3.1.2 addressed the (traditional) primary variables in the transmission
system.
• Section 3.1.3 discussed the concerns around the secondary variables associated
with wind, solar, and natural gas generation.
• Section 3.1.4 returned to the primary variables in the distribution to address smart
meters and other “grid modernization” technologies.
• Section 3.1.5 discussed smart homes, industry, and transportation in the context
of demand-side secondary variables.

3.2 Communication Networks

3.2.1 Overview

The tremendous heterogeneity of network-enabled devices described in the pre-

vious section demands advancements in communication networks to route sensed
information to control and decision-making entities. Because these devices vary
greatly in size, power consumption, use case, and on-board computing, new types of
networks will emerge that can enable two-way flows of information. Consequently,
these networks must have different scope and ownership.
Figure 3.13 shows several network areas relevant to the electric power system.
Starting at the center of the grid, utility networks are the communication backbone
for grid operations. Wide-area networks (WAN), as the largest in geographical
scope, encompass centralized generation, transmission, and substations under the
utility’s domain. Moving “downstream” from the substations, neighborhood area
networks (NAN) are of intermediate scope and use public and commercial telecom-
munication networks throughout the distribution network. The NAN serves AMI,
meter aggregations, DER, and microgrids, which can also include utility participa-
tion. Finally, local area networks (LAN) address the private communication scope
of residential, commercial, and industrial entities. These networks can encompass
subnetworks that connect to a NAN or directly to the public internet [25]. The
following definitions apply to the rest of this discussion:
Definition 3.3 (Commercial Telecommunication Network) A telecommunica-
tion network that is owned and operated by a commercial telecommunication
company. 
3.2 Communication Networks 55

Communication Networks for Grid

Operators and Utilities

Neighborhood
Wide Area Network Area Network Local Area Network

Bulk Generation Residential consumers

Grid-scale Renewables

Substations and transmission

Commercial &
Distributed Energy Resources Industrial
consumers

Grid Scale
Transmission Power Distribution Consumers
Generation

Fig. 3.13 LAN, NAN and WAN networks across the electric power system (adapted from [25])

Definition 3.4 (Private Network) A network that is owned and operated by a

private entity, be it residential, commercial, or industrial. In scope, a private network
may be a WAN, NAN, or LAN. It may use interoperable, standard, or proprietary
technologies. 
Definition 3.5 (Proprietary Network) A network that is not based upon an inter-
operable standard. Note that some networks may use open standards but are not
interoperable because the standards themselves are not interoperable. 
The development of mature eIoT communications is likely to be a gradual
migration process. Traditionally, the power system has used private networks within
the jurisdiction of grid operators and utilities. These include transmitted data over
wired networks (e.g., power-line carrier and fiber optics) as well as wide-area
wireless networks such as SCADA (supervisory control and data acquisition).
However, with “grid modernization,” commercial telecommunication networks are
increasingly playing a role.
Cellular data networks, and in particular 4G and long-term evolution (LTE),
have the potential to transmit relatively high bandwidth data across long distances.
Furthermore, WiMax networks can provide connectivity at the grid periphery at
the neighborhood length scale. Finally, a large part of eIoT will require local
area networks, be they wired Ethernet, WiFi, Z-wave, ZigBee, or Bluetooth. Nat-
urally, industrial energy-management applications continue to leverage preexisting
industrial network infrastructure in addition to these local area network options.
Technological developments in communication networks are most likely to occur
56 3 The Development of IoT Within Energy Infrastructure

as a gradual migration rather than a swift shift from one technology to another.
Furthermore, these developments are likely to occur in parallel so as to become
complementary and mutually co-existing.
• Tables 3.2, 3.3, and 3.4 summarize the eIoT communication networks discussed
in this section.
• Section 3.2.2 discusses grid operator and utility networks.
• Section 3.2.3 discusses telecommunication networks.
• Section 3.2.4 discusses local area networks.

3.2.2 Grid Operator and Utility Networks

Grid operator and utility networks use a range of legacy communication systems and
technologies that are very much a product of the regulated electric power industry
from several decades ago [428]. Nevertheless, technological developments in data
acquisition, data analysis, and renewable energy generation are now pressuring
grid communication systems to evolve and adapt. For example, the variability of
renewable energy generation (discussed in Chap. 2) requires automatic control
whose data rates are faster than what legacy communications systems are able to
provide. This section highlights some of these traditional technologies so as to
contextualize the discussion of eIoT communication technologies.
This section categorizes grid operator and utility communication into wired and
wireless networks, each with their respective trade-offs and applicability within the
electric system.
• For wired communications, power-line carrier networks and fiber optics are
covered in Sect. 3.2.2.1 [412]. Wired communications are relatively reliable
and secure and very much represent the historical default for electrical utilities.
However, their widespread deployment is associated with high rental fees and
installation costs [106, 412]. Grid operators and utilities have also made extensive
use of wireless networks, which in comparison have lower cost and reliability.
Their flexibility and ease of installation, however, often supports their adoption.
• Section 3.2.2.2 is devoted to SCADA-based wide-area monitoring systems as a
traditional wireless power grid communication network.
• Section 3.2.2.3 then delves into the emerging world of low power wide-area
networks (LPWAN).
• Section 3.2.2.4 discusses the wireless smart utility network (Wi-SUN) as a new
development. Other types of wired and wireless communication networks are
discussed more deeply in the context of commercial telecommunication and local
area networks.
Table 3.2 Communication networks for grid operators and utilities
Grid operator and utility networks
Data rate Distance Wired/
Network Application Data rate Distance wireless Standard Topology Advantages Disadvantages
PLC Transmission, 10 kbps– 200– Wired (1) HomePlug [408] Star (1) Wide coverage [408] (1) High noise over power lines
3.2 Communication Networks

distribution 200 Mbps 3000 m (2) Narrowband [408] (2) Low cost [408] [408]
[409] [409] [410] (3) IEEE P.1901 [408] (3) Flexibility and range (2) Capacity [408]
(4) IEEE 1901 [408] [408] (3) Open circuit problem [408]
(5) HomePlug AV [408] (4) Mobility [408] (4) Attenuation and distortion
(6) High definition (5) Easy installation of signal [408]
power-line [408] (5) Inadequate regulations for
communication (6) Stability [408] broadband PLC [408]
(HDPLC) [408] (7) Located where the (6) Not interoperable [408]
(7) ITU-T G.9960 circuits are required (7) Not independent of the
standard [408] [411] power distribution system
(8) CENELEC EN 50065 (8) Equipment installed [411]
standard [408] in utility owned land, (8) Carrier frequencies often
or structures [411] not protected on a primary
(9) Economically basis [411]
attractive for low (9) Expensive on a per-channel
numbers of channels basis compared to
extending over long microwave [411]
distances [411] (10) Will not propagate over
open disconnects [411]
(11) Inherently few channels
available [411]
(continued)
57
 58

Table 3.2 (continued)

Grid operator and utility networks
Wired/
Network Application Data rate Distance wireless Standard Topology Advantages Disadvantages
Fiber Transmission, 155 Mbps– 60,000– Wired PON [410] Star (1) Reliability [410] (1) Different skill set for
optics distribution 40 Gbps 100,000 m WDM [410] (2) High quality [410] fiber optics needed [411]
[412] [410] [410] SONET/SDH (3) Immune to electromagnetic (2) Expensive test equipment
[410] interference [411] [411]
(4) Immune to ground potential (3) Inflexible network
rise [411] configuration [411]
(5) Low operating cost [411] (4) Cable subject to breakage
(6) High channel capacity [411] and water ingress [411]
(7) No licensing required [411]
Digital Transmission 1–100 1500– Wired ADSL [410] Star (1) Low investment cost [106] (1) Non-ownership of
subscriber Mbps 5000 m HDSL [410] (2) High speed [106] infrastructure can cause
line (DSL) [410] [410] (3) High bandwidth [106] reliability issues [106]
(2) May not be available in
remote locations [106]
LoRaWAN Distribution 0.3– 2–5 km Wireless AES-128 Star Low power [415, 416] No guaranteed message receipt
27 kbps 15 km [415, Fairly high data rates [417]
[417] [417] 416] Low cost [417]
Flexible and open network [417]
SigFox Transmission, 100 bps up to Wireless BPSK Star Low power Network owned by SigFox
distribution, [417] 50 km [415, [418, 419] Bidirectional communication [417]
transmission [419] 416] [418, 419] Only 14 packets/day per device
Low cost [417]
Only 12 bytes per transfer
[417]
Signal frequency prone to
interference [420]
3 The Development of IoT Within Energy Infrastructure
SCADA- Transmission 9.6– Wired Modbus [413] Star/Peer- (1) Minimal latency for WAMs (1) Low bandwidth [272]
Wide area 115.2 kbps and DNP3 [413] to-peer [414] (2) Security concerns with
monitor- [413] wireless IEC 61850, (2) PMUs provide continuous open communication
ing [138] measurements [414] protocols and
(3) Faster data rate collection than unintentional
traditional SCADA [414] connection with other
networks [413]
(3) SCADA devices have
limited computational
abilities [272]
3.2 Communication Networks

NB-IoT Transmission, <100 kbps <10 km Wireless 3GPP R13 Star Wide area Bidirectional Relatively expensive
distribution [422] [421] [421, 422] Low power [421, 422]
LTE [421, 422] consumption [421, 422] Massive
GSM connections, 50k [421, 422]
[421, 422]
Ingenu Distribution 624 kbps 5–6 km Wireless RPMA Star Higher data rates [417] Lower range [417]
156 kbps [417] [417, 418] Higher power consumption
[417] [417]
59
Table 3.3 Telecommunication networks
60

Telecommunication networks
Wired/
Network Application Data rate Distance wireless Standard Topology Advantages Disadvantages
Cellular Data Distribution 14.4 kbps– 50,000 m [410] Wireless GSM, Meshed (1) LTE is characterized by (1) Cellular service providers
(NAN) 100 Mbps 2.5G, high face challenges from a
[423] [410] 3G, (2) Reliability and low growing mobile, user
4G, latency [424] base which may effect all
LTE (3) Scalability [424] users [425]
[410] (4) LTE can serve as the (2) Future uses may need
default or backup faster data rates than
network [424] 4G networks can provide [425]
(3) Poses increased security
threat by being a public
network [423]
(4) Sharing the network may
result in decreased
performance [106]
Wi-Max Distribution 75 Mbps 50,000 m Wireless 802.16 Meshed (1) Control of the proprietary (1) Initial infrastructure cost
[138] [410] [410] [410] network [424] for radio equipment [424]
(2) Bandwidth and range (2) Radio equipment requires
suited for NAN optimizing the number of
[412, 424] station installations and
(3) Relatively high data rates quality of service
[424] requirements [424]
(4) Low latency [424]
(5) Relatively low
deployment and
operating costs [424]
(6) Can support real-time
data transfers needed
for smart meters [424]
3 The Development of IoT Within Energy Infrastructure
Table 3.4 Local area networks
Private area networks
Ethernet Home and 10 Mbps– 100 m Wired 802.3× Star (1) High data rate [410] (1) Inflexibility of topology [426]
building 10 Gbps [410] [410] (2) Range of data rates (2) Unlikely to find connections
automation [410] depends on cable used [426] on home appliances [426]
3.2 Communication Networks

(3) High cost [426]

(4) High power requirements [426]
Wi-Fi Home and 2–600 100 m Wireless 802.11× Meshed (1) High speed [427] (1) Not meant for moving devices,
building Mbps, [410] [410] (2) Used for a variety of personal and though not intended for
automation [410] devices (interoperability) [426] metropolitan areas it has been
(3) High bandwidth [426] extended to larger areas [427]
(2) High energy consumption [423]
Z-Wave Home 40 kbps 30 m Wireless Z-Wave Meshed (1) Low cost [426] (1) Low bandwidth [426]
automation [410] [410] (2) Low power consumption [426]
ZigBee Home and 250 kbps 100– Wireless Zigbee, Meshed (1) Long range in HAN [427] (1) Devices have limited internal
building [410] 1600 m [410] Zigbee [410] (2) Low power consumption [412], memory, limited processing
automation Pro rates [412, 423] capability, and low data
(3) Long range in HAN [412] (2) Weak security [412]
Bluetooth Home 721 kbps 100 m Wireless 802.15.1 Meshed (1) Low power consumption [412] (1) Weak security [412]
automation [410] [410] [410]
61
62 3 The Development of IoT Within Energy Infrastructure

3.2.2.1 Wired Communications: Power-Line Carriers and Fiber Optics

Grid operators and utilities have used power-line carriers and fiber optic cables in
transmission and neighborhood distribution applications. Over numerous decades,
these technologies have undergone several upgrades from their original implementa-
tions, including from analog to digital communication [411]. In the past, the primary
need for wired communication was fairly limited to application such as timely and
efficient fault detection. This meant that communication systems needed to adhere
to stringent cost rationales. A common strategy was to make use of existing utility-
owned power poles or rent telecommunication poles to route information back to
a control center [411]. This required wired communication systems often to match
the radial topology of the underlying physical infrastructure.
Power-line carrier (PLC) communication uses power cables as a medium for data
signal transmission [412]. It falls into four categories:
• Ultra-narrow band power-line communication (UNB-PLC)
• Narrowband power-line communication (NB-PLC)
• Quasi-band power-line communication (QB-PLC)
• Broadband power-line communication (BB-PLC)
Depending on PLC technology, data transfer speeds range from 100 Bps to 1.8
Gbps [409, 423]. The X-10 PLC protocol was influential in establishing narrowband
PLC communication in the USA [409]. Since then, today’s NB-PLC standards
include PoweRline Intelligent Metering Evolution (PRIME) (ITU-T G.9904), G3-
PLC (ITU-T G.9903), IEEE 1901.2 2013, and ITU-T G.hnem [409]. The 63-PLC
smart-grid applications have a 1.3–8 km range [409]. Depending on modulation
type, this PLC could have a bandwidth of 30–35 kilobits per second (kbps) or 100
kbps [409]. PLC technologies are used in a diverse array of applications including
home, transmission, and connective energy systems [409, 429]. For example, the
G3-PLC standard has been used experimentally in the mid-voltage range with
several topologies [429]. It has also been used to enable “smart grid” technologies
such as AMI, vehicle-to-grid communications, demand-side management, and
remote fault detection [408]. Broadband PLC, in particular, is suitable for local
area networks (LANs) and AMI applications in the smart grid because it has higher
bandwidth (but shorter range) as compared to narrowband PLC [409, 423].
In recent years, utilities have applied optical fiber communication as an upgrade
to aging infrastructure [412]. Optical fiber is mainly used as a “backbone” distri-
bution communications network, in what is called fiber-to-pole networks [412].
Optical fiber is characterized by high transfer rates, good stability, strong anti-
interference ability, flexible network configuration, large-system capacity, and high
reliability [412]. The data rate of optical fiber ranges from 155 megabits per
second (Mbps) to 40 Gbps [410]. However, its implementation is a large investment
because it requires relatively expensive testing and highly skilled installation and
maintenance [411, 412].
The wide-area deployment of wired technologies (that is, PLC and optical fiber)
is costly but does provide the benefits of communications capacity, reliability,
3.2 Communication Networks 63

and security [412]. Some utilities have also installed specialized communication
networks according to their specific technical and economic needs. Such specialized
lines are mainly composed of twisted-pair cable and provide for small capacity, high
reliability, low transfer rate, and moderate anti-interference for a small investment
[412].

3.2.2.2 SCADA Networks and Wide-Area Monitoring Systems

SCADA was developed in the 1950s because utilities needed a way to gather power
output data from the scattered geography of the electric grid’s sensing endpoints
to conduct load-frequency control and economic dispatch [101]. SCADA systems
now communicate commands and system state data back and forth between utility
control stations and individual substations within several seconds [428]. Due to the
expansive geographical area covered by the transmission system, monitoring is a
large task, and has special sensor communication requirements. SCADA systems
have increased “openness” by connecting to wide-area monitoring systems (WAMS)
and other networks through proprietary connections and the Internet [430]. This
point is emphasized since connection to the internet is an important stepping stone
in the development of eIoT.
The SCADA system in actuality uses a combination of wired and wireless
technologies. Wired options include telephone lines and optical fiber; wireless
alternatives include microwave and ultra-high frequency (UHF) radio [19]. The
choice of implemented technology depends on an individual system’s needs for
data rate, cost, and data security [19]. With traditional technologies, the data rate
is typically 9.6–115.2 kbps [413]. SCADA protocols are based on IEEE C37.1 for
the communication between remote terminal unit (RTU) and the master terminal
unit (MTU) [19]. Traditionally, SCADA allows for serial communication between
master and remote terminal units, but newer hybrid protocols allow peer-to-peer
communication [272, 413]. These protocols include Modbus, DNP3, PROFIBUS
(from standards IEEE 11674, IEEE 61158), DeviceNet, ControlNet, and Fieldbus
[272].
The advantages and disadvantages of operating a legacy SCADA system are
typical of any aging communication technology. On the one hand, the operating
costs are small relative to the initial investment in infrastructure. On the other,
the bandwidth and computational capability is relatively low [272]. Furthermore,
as SCADA networks have developed, they have suffered unintentional negative
consequences. Since the 1990s, utilities began transitioning from closed proprietary
networks to interconnected and open internet-based networks [430]. The push
for open communication protocols has increased network accessibility and conse-
quently the potential for connection to other networks [413]. This is also an effect
of custom networks being standardized so as to be sold as off-the-shelf SCADA
systems [430]. As proprietary networks are turned into open networks, and peer-
to-peer communication among SCADA devices increases, cybersecurity concerns
have naturally increased [413].
64 3 The Development of IoT Within Energy Infrastructure

In addition to SCADA, WAMS are being deployed as a form of complementary

sensor network. A WAMS is a collection of hundreds of phasor measurement
units (PMUs) at various locations in the electrical grid [414]. PMUs have faster
data collection rates than SCADA systems, with 30–60 data points per second
as compared to SCADA’s 1 data point per 1–2 s [431]. Data communications
specifications are provided by the IEEE C37.118-2005 standard [414]. A phasor
data concentrator (PDC) aggregates measurements from local PMUs through a
local communication network, and then routes the data to a utility’s core network
using proprietary networks [414]. Data transfers from the PMU to the PDC are
required to have minimal latency for an efficient smart grid [414]. PMU data are
produced continuously and synchronously and are therefore delay-sensitive [414].
Consequently, it must be intelligently scheduled to manage communication load and
maintain quality requirements [414].

3.2.2.3 LPWAN Commercial Wireless IoT Technologies

Due to power constraints on remote IoT sensors and actuators, IoT devices need to
operate in an energy efficient manner. Recently, commercial applications to support
wide-area communication have emerged. Low power wide-area networks (LPWAN)
is an umbrella term that encompasses technologies and protocols that support wide-
area (> 2 km) communication and consume low power over long periods of time
[432]. Data ranges for these devices are from 10 bps to a few kbps [433]. LPWAN
networks must meet the following considerations [433]. Devices should have the
following characteristics:
• Be cheap to deploy
• Operate on very low power
• Function when required, preferably in star topologies
• Ensure secured data transfer
• Have robust modulation.
LPWAN networks will generally include devices, a network infrastructure, proto-
cols, controllers, network and application servers, and a user interface [433]. This
service can be provided as a single package or through coordination among multiple
providers [433].
LoRa, short for long range, is a physical-layer LPWAN application by SemTech
Corporation [434]. The system works in the 902–928 megahertz (MHz) frequency
band in the USA and in the 863–870 MHz in Europe [418]. The LoRa system is
composed of the PHY layer which is proprietary while the LoRaWAN protocol is
an open standard that is managed by the LoRa Alliance which has over 300 members
[415, 418, 433]. LoRa chips can be produced by various silicon providers to avoid
a single source [433]. LoRa networks follow a star topology to relay messages
between end-devices and a central network node [415, 416, 418]. Long-range wide-
area network (LoRaWAN) radios are used with low power devices to support low
bandwidth and infrequent ( 128 s) communication over wide areas [415, 416, 432].
3.2 Communication Networks 65

This drives down the cost and extends the battery life of the devices. LoRaWAN
devices draw no more than 2 μA while resting and 12 mA when listening [415, 416].
LoRaWAN can use a bandwidth of 125 kHz, 250 kHz, or 500 kHz depending on
the region, application, or frequency [435]. The data rates can also be determined
based on the frequency chosen [435]. These data rates typically range from 0.3 to
27 kbps [417]. It uses the AES-128 algorithm that is similar to the IEEE 802.15.4
standard [435]. LoRaWAN offers two security layers, one for the network layer and
one for the application layer [433]. It offers a range of 2–5 km in cities and up to
15 km in suburban areas [417]. Another LPWAN technology is the Symphony Link
by Link Labs that is a proprietary MAC layer built on top of the LoRa physical
layer. This technology adds vital connectivity to LoRaWAN such as guaranteed
message receipt [436]. Applications using LoRa technology in the power industry
include radiation leak detection from nuclear power plants [437] and air pollution
monitoring for thermal power plant systems [438].
The NB-IoT is narrowband communication system by the Third Generation
Partnership Project (3GPP) standards body that was launched in 2016 [439]. It is
used for low power, infrequent (over 600 s) communication devices [415, 439]. It
supports a star topology [415, 439]. It can operate either in the GSM spectrum
or LTE [415, 439]. NB-IoT can be deployed in three operation modes: (1) stand-
alone using GSM, (2) in-band where it operates within a bandwidth of a wide-band
LTE carrier, and (3) with the guard-band of an existing LTE carrier [439]. Since
NB-IoT is based on LTE, hardware reuse and spectrum sharing is possible without
coexistence issues [439]. NB-IoT is expected to ensure long battery life (up to 10
years) and to support over 52k low-throughput devices [439]. NB-IoT can cover
a range of <25 km and offers high accuracy rates [422]. The expected latency for
this system is <10 s for 99% of the devices [439]. NB-IoT systems are used in
applications such as smart metering (gas, water, and electricity), smart parking,
smart street lighting, and pet tracking [440, 441]. The NB-IoT forum comprises
of over 500 members, contributors, and developers [441].
SigFox was launched in 2009 by the French company SigFox as the first LPWAN
application for IoT. Compared to LoRa, SigFox is not nearly as widely used in
the USA because its frequency band (900 MHz) is very prone to interference and
its transmission time (≈3 s) is greater than the maximum transmission time of
0.4 s that is allowed by the Federal Communications Commission (FCC) [420].
The SigFox physical layer uses an ultra-narrowband technology that uses standard
ratio transmission method called binary phase-shift keying (BPSK) going up and
frequency-shift keying coming down [418, 419]. The SigFox technology is suitable
for applications that require small and infrequent transmission [419]. The first
releases were unidirectional but recent versions support bidirectional communica-
tion [418, 419]. SigFox offers data rates of 100 bps in the uplink with a maximum
payload of 12 bytes [417]. It claims to support about a million connected objects
with a coverage range of up to 50 km [419]. SigFox has not been as widely adopted,
especially in the USA, due to its limiting transmission characteristics such as a
restriction on the number of packets transferred by a device to only 14/day [417].
66 3 The Development of IoT Within Energy Infrastructure

In the electricity and utility industry, SigFox is used to monitor back-up power
supply systems and smart metering (gas, electricity, and water) and for electric pole
surveillance [442].
Lastly, Ingenu, formally known as On-Ramp Wireless, works in the 2.4 GHz
frequency and has a robust physical layer that allows it to still operate over wide
areas [418]. It offers higher data rates compared to LoRa and SigFox [417].
Specifically, it can transmit up to 624 kbps in the uplink and 156 kbps in the
downlink [417]. Its coverage is, however, shorter (around 5–6 km) and consumes
much higher energy [417]. Ingenu is based on the random phase multiple access
(RPMA) [417, 418].

3.2.2.4 Wireless Smart Utility Network

The wireless smart utility (ubiquitous) network (Wi-SUN) is a mesh topology

network supported by the Wi-SUN Alliance. The Wi-SUN Alliance was founded
in 2012 and comprises of 130 members who include product and silicon vendors,
software companies, utilities, government institutions and universities [443]. The
goal of the Wi-SUN Alliance is to promote open industry standards for wireless
communication networks for both field area networks (FAN) and local area net-
works (LAN) [443, 444]. It also defines specifications for testing and certifying
of said networks to enable multi-vendor interoperable solutions [443]. The Wi-
SUN network was developed according to the IEEE 802.15.4g standard that defines
physical layer (PHY) and medium access control (MAC) layer specifications [445],
TCP/IP and related standards protocols.
Applications for the utility include the provision of field area networks (FANs)
for smart metering infrastructures, distribution automation, and home energy man-
agement. The Wi-SUN coverage range is 2–3 km making it suitable for NANs
[446]. AMI systems can use Wi-SUN technology for multiple meters [446]. Wi-
SUN networks are usually laid out in a mesh topology although they support both
star and star-mesh hybrid topologies [415]. This allows for enough redundancy in
the network to limit single points of failure [415]. This network is deployed on both
powered or battery-operated devices [415]. Devices that support mesh networks
transmit over a short range and are suitable for applications that require distributed
computing. The Wi-SUN mesh networks are self-forming. That is, whenever a new
device is added, it immediately finds peers to communicate with and whenever a
device disconnects the other devices in the peer-network reroute accordingly [415].
The short-range feature allows for faster and consistent data rates. Wi-SUN devices
can perform frequent (up to 10 s) and low-latency communication, and draw less
than 2 μA in resting and 8 mA when transmitting [415].
3.2 Communication Networks 67

3.2.2.5 eIoT Perspectives on Grid Operator and Utility Networks

Grid operators and utilities have long made use of communication networks to gain
situational awareness as an integral part of power systems operations and control. In
many ways, the communication technologies described above were deployed as part
of a regulated electric power industry. eIoT, however, as has been discussed at length
will fundamentally change the nature of power system operations so as to need far
more advanced communication system technologies. With the above interoperable
LPWAN and Wi-SUN technologies, eIoT communication technologies for grid
operators and utilities are likely to improve significantly. Open, interoperable
standards also create room for innovation within this area.
One main need is the communication beyond the purview of just the grid
operators and utilities. In that regard, communication over power-line carriers,
proprietary fiber optics, and SCADA leave many new parties out of the evolving
and highly flexible eIoT “cloud” [428]. As the next subsections will discuss,
there is much room for these utility networks to be complemented by commercial
telecommunication networks and LANs [160, 431]. Such a hybrid communication
system architecture is much more likely to meet the new and unprecedented
requirements for data access and transfer [447]. Naturally, a shift toward hybrid
communication systems brings about very legitimate questions of jurisdiction,
ownership, and authority over the data, servers, and communication channels that
constitute the system. While it is clear that standards will continue to play a central
role in the design of communication systems, it remains unclear what role regulation
and legislation will have in these areas. These are still open questions as the grid
transforms itself towards an eIoT paradigm.

3.2.3 Commercial Telecommunication Networks

One important trend in the development of eIoT communications is the shift towards
commercial telecommunication networks as a complement to existing and dedicated
grid operator and utility networks. In many ways, this has been a long-standing
trend. The preceding section mentioned that utilities and grid operators have often
rented telecommunication poles for wired communications over power-line carriers.
A logical technological next step is to switch from power-line carriers to digital
subscriber lines (DSL) over the (wired) telephone lines themselves [106]. DSL
has high speeds of 1–100 Mbps depending on its type, that is, asymmetric digital
subscriber line (ADSL), very-high-bit-rate digital subscriber line (VDSL), and high-
bit-rate digital subscriber lines (HDSL) [410].
Although DSL technology is often chosen for smart grid projects because the
use of existing telephone infrastructure reduces installation costs [106], the lack of
standardization and differing ownership of equipment can cause potential reliability
issues related to maintenance and repair [106, 412]. Furthermore, the expansion
of telephone infrastructure needs to be cost rationalized in remote applications
[106, 412].
68 3 The Development of IoT Within Energy Infrastructure

Beyond wired telephone lines, eIoT communications is now making extensive

use of wireless telecommunications networks for essential “smart grid” applications
such as AMI-to-utility control center communications [106]. Wireless solutions
have relatively very low cost [412] and are easier to implement in less accessible
regions [106]. Despite these benefits, wireless options present several challenges
including constrained bandwidth, security concerns, power limitations, signal atten-
uation, and signal interference [106].
With these trade-offs in mind, it is useful to acknowledge the needs of the
utilities in choosing the most suitable network. Utility evaluation of communication
networks usually involves consideration of the following [412]:
1. Bandwidth
2. Data rates
3. Coverage
4. Reliability of end-to-end connection solutions
5. Associated protocols
6. Integration of existing systems
7. Ease of deployment
8. Management tools
9. Life cycle costs
Section 3.2.3.1 highlights some of the technological developments in cellular
data networks, and Sect. 3.2.3.2 covers WiMax networks before discussing their
implications on eIoT in Sect. 3.2.3.3.

3.2.3.1 Cellular Data Networks: 2.5G-GPRS, 3G-GSM, 4G, and LTE

Cellular communication systems have provided coverage for data transmission

for several decades [157]. They enable utilities to deploy smart metering in a
wide-area environment and are a relatively quick and inexpensive option for meter-
to-utility as well as distant node-to-node communication [106, 157]. Existing
telecommunications infrastructure reduces investment cost and the additional time
needed to build communications for a power systems purpose [106]. Systems, such
as 2.5G, GSM, 3G, and 4G, are radio networks that communicate via at least one
base station transceiver (or cell) per land area [157].
2.5G, also known as general packet radio service (GPRS), is a packet data
bearer service over the global system for mobiles (GSM) [427]. User data packets
are transferred between mobile stations and external IP networks so that IP-based
applications can run on a GSM network [427]. Data speeds can range from 9.6 to
115 kbps by amalgamating unused time slots in the GSM network [427].
The next generation cellular network, 3G-GSM, provides data rates of 144 kb/s to
over 3 MB/s [412]. GSM itself is widely used internationally for mobile telephone
systems and is based on circuit-switching technology (as opposed to the sole use
of packet-switching in GPRS) [427]. Cellular network operators have approved the
use of GSM networks for AMI communications because they provide sufficient
3.2 Communication Networks 69

bandwidth, data rates, anonymity, and protection of data [412, 424]. At this point,
3G technology is a mature network with a completed theory and experience [412].
It is secured using various encryption technologies, but its security can still be a
concern. Its communication rate is not reliably real-time [412].
More recently, the 4G and LTE standards have been developed. 4G was defined
by the International Telecommunication Union (ITU) using many of the 3G
standards. In 2007, the Third Generation Partnership Project (3GPP) completed its
task of creating the LTE standardization [448]. The project’s objective was to meet
increasing requirements on higher wireless access data rate and better quality of
service [448]. Subsequently, 3GPP immediately started a standardization process
called LTE-Advanced for 4G systems [424, 448]. Because of its high reliability and
low latency, LTE is suitable for NAN smart grid applications such as automated
metering systems and distribution system control [424]. Furthermore, LTE offers
opportunities to scale deployment because it is widely supported and its hardware
costs are expected to improve [424].

3.2.3.2 WiMAX Networks

In complement to the cellular data networks described above, the Worldwide

Interoperability for Microwave Access (WiMAX) standard was developed by the
IEEE 802.16 working group to meet 3G standards and then later revised to meet
4G requirements [448]. It has been developed for “first-mile/last-mile” broadband
wireless access as well as backhaul services in high-traffic metropolitan areas [448].
WiMAX is a communication protocol that provides fixed and fully mobile data
networking. It has versions that work with licensed and unlicensed FCC frequencies
that work in the 10–66 GHz and 2–11 GHz ranges, respectively [427]. WiMAX has
a theoretical data rate of 75 Mbps and is designed for larger areas with a range of
up to 50 km with a direct line of sight [410, 427]. As a standard, WiMAX offers
interoperable microwave access [424].
The WiMAX architecture is a proprietary network, which comes with the benefit
of complete control to utilities [424]. It is well-suited for use in a NAN due to
its bandwidth and range [412, 424]. It offers efficient coverage and high data
rates [424]. It also has low latency and relatively low deployment and operating
costs [424]. These characteristics favor smart meter networking and are sufficient
to support the real-time data transfers required for real-time pricing programs
[424]. Disadvantages of WiMAX include a high initial infrastructure cost for radio
equipment, which requires optimizing the number of station installations and quality
of service requirements [424].

3.2.3.3 eIoT Perspectives on Commercial Telecommunication Networks

As eIoT continues to develop technologically, it is clear that commercial telecom-

munications networks will have an increasingly important role. They provide
70 3 The Development of IoT Within Energy Infrastructure

sufficient bandwidth for wide-area data transfer that allow them to be used for
distributed smart grid applications such as AMI and DERs [106, 423, 424]. These
networks are suitable for NAN, where they can connect peripheral devices to private
area networks [424]. The LTE and WiMax standards also have the bandwidth and
quality of service capabilities to support NAN-to-NAN (N2N) communications
[106, 423, 424]. Beyond simply speed and quality of service, telecommunication
networks and their associated operators offer grid operators and utilities an existing
and cost-effective means for networked energy management. Furthermore, utilities
(especially smaller ones with limited technical staff) have the opportunity to
outsource maintenance and security upgrades in networks that are continually
evolving with new generations of technology. This allows utilities to focus more
on “core” business services [424].
Despite these many advantages, the integration of telecommunication networks
into grid operations faces potential challenges. Cellular networks serve a larger
customer market, which may result in network congestion or decreased perfor-
mance [106]. Critical communications applications may not find cellular networks
dependable in an emergency such as a storm or abnormal traffic situations [106].
Furthermore, although the speed of cellular networks continues to evolve, the
number of mobile devices and their demands for data is also continually growing
[425]. Grid operators, utilities, and telecommunication networks will have to work
collaboratively to ensure that telecommunication networks have sufficient capacity
to handle a continually evolving eIoT and its associated energy-management
applications. In some cases, a utility may prefer its own private network to ensure
quality of service and reduce monthly operating costs [106, 424]. It is also possible
to develop hybrid utility-telecommunication networks so that congestion events do
not interfere with emergency utility operation. LTE, for example, has the ability
to operate either as a default or as a backup network [424]. Finally, from the
perspective of power grid cybersecurity, a public telecommunication network is
often perceived as a vulnerable point of operation [423]. Further work is required
to bolster security on public cellular networks given their new role in eIoT energy
management [423].
Finally, as telecommunication system operators face the strains of increased
mobile and wireless device usage, an advanced, next-generation technology (5G)
is needed [425]. Mobile-cellular subscriptions increased from approximately 109
million to 355 million between 2000 and 2014 [449]. As more devices become wire-
less, the telecommunications industry must address the physical scarcity of the radio
frequency spectra for cellular communications, increased energy consumption, and
average spectral efficiency while maintaining high data rates, seamless coverage,
and a diversity of quality of service (QoS) requirements [425]. Heterogeneous
networks may cause fragmented user experience, and so compatibility of these
devices and interfaces with networks must be ensured [425]. 4G network data rates
may not be sufficient for cellular service providers [425]. Instead, they must adopt
new technologies as a solution for the billions, perhaps trillions, of active wireless
devices [425]. 5G is expected to be standardized around 2020 [425].
3.2 Communication Networks 71

3.2.4 Local Area Networks

In addition to grid operator, utility, and telecommunication networks, there is a

growing need for LANs at the consumer’s premises. Such networks use local area,
often low energy, communication technologies to connect to a wide variety of
devices in the home, commercial building, or industrial site [427]. These LANs
also route information from peripheral devices such as smart thermostats and water
heaters to energy-management systems and smart meters and monitors [410]. Local
area networks are also often connected via smart meters and internet gateways
to other “smart grid” actors such as electric utilities or third-party energy service
companies (ESCOs). Such gateways enable customer participation in the utility’s
NAN applications such as prepaid services, user information messaging, real-time
pricing and control, load management, and demand response [410].
Because LANs support a tremendous diversity of peripheral devices, they are
also characterized by a diversity of standards and protocols. This section highlights
some of the more emergent technologies including [106, 427]:
1. Wired Ethernet in Sect. 3.2.4.1
2. WiFi in Sect. 3.2.4.2
3. Z-Wave in Sect. 3.2.4.3
4. ZigBee in Sect. 3.2.4.4
5. Bluetooth in Sect. 3.2.4.5
A brief discussion of industrial networks is also provided (in Sect. 3.2.4.6) to address
the specific needs of industrial sites.

3.2.4.1 Wired Ethernet

Ethernet is a dominant wired technology and it is widely used in residences and

commercial buildings [450]. Almost all personal and commercial computers are
equipped with an Ethernet port, and Ethernet connections are increasing among
consumer entertainment equipment [426, 450]. Ethernet using an unshielded twisted
pair (UTP) cable has four different supported data rates (10 Mbps, 100 Mbps,
1 Gbps, and 10 Gbps) that are covered by the IEEE 802.3 standard [450]. Although
Ethernet has a high data rate, not all devices in private networks may be suitable
for Ethernet connection. These devices may not have Ethernet ports, such as many
home appliances, or are in environments that cannot support the power requirements
or justify the cost of Ethernet [426].

3.2.4.2 WiFi Networks

WiFi networks are the natural wireless alternative to wired Ethernet. WiFi provides
high-speed connection over a short distance [427]. The IEEE 802.11 standard
72 3 The Development of IoT Within Energy Infrastructure

defines various WiFi ranges and data rates [427]. Its optimal data rates span from 11
to 320 Mbps, and its optimal range spans from about 30 to 100 m [427]. WiFi is not
meant for moving devices, and although not intended for metropolitan areas it has
been extended to larger areas [427]. This is due to its support of personal devices
on wireless internet access. WiFi is an IP-based technology and is widely used for a
variety of electronic devices such as computers and mobile phones [426].

3.2.4.3 Z-Wave Networks

Z-Wave is an example of a proprietary wireless communication technology in

LANs [426]. It is most suited for residences and commercial environments with
low-bandwidth data transfers [426]. It is able to include device metadata in its
communications and is easily embedded in consumer electronic products due to its
low cost and low power consumption [426]. Unlike WiFi, it operates in the 900 MHz
range and can be customized for simple commands such as ON-OFF-DIM for light
switches, and Cool-Warm-Temp for HVAC units [426]. Z-Wave compatible devices
can also be monitored and controlled by gateway access to broadband Internet [426].

3.2.4.4 ZigBee Networks

Zigbee can be used as an alternative to WiFi and Z-Wave [423]. It is often used
in industrial settings [427]. ZigBee can cover about 100 m with a data rate of
20–250 kbps according to the IEEE 802.15.4 standards [412]. In applications that
do not require large bandwidth, ZigBee offers a low-cost solution [412, 427].
ZigBee has real-time monitoring, self-organization, self-configuration, and self-
healing capabilities [423]. It is also appropriate to eIoT applications because LANs
can use it to create a mesh network of devices whose range and reliability increases
as more devices are added [412, 426]. ZigBee devices are battery-powered and this
may factor into the choice of network topology (star, tree, or mesh) [412]. In general,
ZigBee has low power consumption and reliable data transmission [412]. However,
since ZigBee devices are smaller, they tend to have limited internal memory, limited
processing capability, and low data rates [412, 423].

3.2.4.5 Bluetooth Networks

The Bluetooth protocol was developed to provide point-to-point wireless communi-

cation such as between mobile phones and laptop computers [451, 452]. Currently,
it shares the IEEE 802.15 standard with ZigBee technologies. Bluetooth operates in
the unlicensed 2.4 GHz spectrum [427]. In addition to point-to-point capabilities,
it can create meshed networks with a range of 1–100 m at data rates of up to
3.2 Communication Networks 73

3 Mbps [412, 427]. Its range and low power consumption makes it suitable for local
monitoring of devices; however, Bluetooth is vulnerable to network interference and
offers weak security [412].

3.2.4.6 Industrial Networks

In addition to the above communication technologies, there exist a number of

communication technologies that are specific to industrial applications. As has been
mentioned several times in the preceding sections, LANs must offer multi-level
security, be cost effective, comply with standards, provide reliable transmission,
offer ease of access and use. Industrial networks have several additional require-
ments including predictable throughput and scheduling, extremely low down times,
reliable operation in hostile environments, scalability, and straightforward operation
and maintenance by plant personnel (who are not specialized in communication
systems). Ultimately, these (often competing) requirements have led to a diversity of
industrial networks. Some of the leading industrial networks include [453, 454]:
1. DataHighway Plus
2. Modbus
3. Highway Addressable Remote Transducer (HART)
4. DeviceNet
5. ControlNet
6. Ethernet/IP
7. LonWorks
8. AS-1, P-Net
9. Profibus/Profinet
10. Foundation Fieldbus
11. Ethernet
A detailed review of these technologies is beyond the scope of this work,
however, the reader is referred to the following references [453–456] for an
introduction to the topic. In the context of this work, these industrial networks form
the communication layer of the “industrial Internet of Things” (IIoT) [457–459].
Naturally, as energy management becomes an increasingly important part of indus-
trial operations, IIoT and eIoT will be viewed as overlapping and complementary
development rather than mutually exclusive.

3.2.4.7 Perspectives on Local Area Networks

The wired and wireless networks described above perform the communication
function in homes, commercial buildings, and industrial facilities. As eIoT continues
to develop Ethernet, WiFi, Z-Wave, ZigBee, and Bluetooth networks are likely to
continue to exist alongside each other [106, 426, 427]. In most cases, the most
important role of these networks is to connect peripheral “smart” devices back to
74 3 The Development of IoT Within Energy Infrastructure

centralized applications, such as home energy monitors, home hubs, or utility-facing

smart meters. Smart meters, in particular, can act as an interface between the LAN
and the NAN [106, 414]. Such interface can serve several purposes including remote
load control and the monitoring, and control of DER and EVs [414].
Beyond traditional fixed applications, local area networks must increasingly
support mobile devices. Unlike a fixed network topology, a mobile device must
identify the network in which it operates, as well as the identity and location of its
peer devices in order to operate properly [460]. The integration of mobile devices
into LANs necessitates networks with changing topology and algorithms that enable
the real-time discovery and update of new devices [460]. Such applications raise
questions of network security. Data exchange and interface interactions must be
supported by trusted and secure devices that gracefully recover from failure [428].
The security risk of an untrusted device entering the network (or a trusted device
being hacked) increases as the attack surface of the network increases. LANs are
dispersed, highly fragmented, last-mile communication networks of the electric grid
[426]. This heterogeneity of devices and communication channels make it difficult
to protect from security breaches and data poaching.
In addition to network security, the fragmentation in LANs also complicates their
interoperability [426]. Each of the communication technologies described above has
its associated advantages and no one standard is likely to emerge for all applications
[106, 426, 427]. One solution is to use the IP as a unifying translation layer across
many different heterogeneous networks [426]. In such a case, each “smart” device
must have a usable IP (v6) address. Beyond LANs, IP can also serve to improve
the interoperability with other networks such as SCADA. IP and “middleware” can
deliver data to utilities in readable formats [412]. For these reasons, IP is viewed as
an integral part of the widespread development of eIoT.
Finally, it is clear that communication networks will continue to require many
thoughtfully developed technical standards. As communication networks are
advanced, it is important to create protocols that:
1. Transmit data within a relatively small (private) area
2. Transmit data back to a central location
3. Provide backward compatibility to 2G, 3G, 4G, and LTE standards
Successful implementation of these open standards requires engagement of hard-
ware and software companies in both the electric power and telecommunications
sectors [132].

3.2.5 IoT Messaging Protocols

The previous sections have covered eIoT communication technologies that enable
devices to form machine-to-machine networks using various radio technologies. For
LAN, these may include Zigbee, Z-Wave, WiFi, or Bluetooth. This section now
3.2 Communication Networks 75

covers the messaging protocols that are used over communication networks. The
messaging protocols discussed here include:
1. eXtensible Messaging and Presence Protocol (XMPP)
2. Advanced Message Queuing Protocol (AMQP)
3. Data Distribution Service (DDS)
4. Message Queue Telemetry Transport (MQTT)
5. Constrained Application Protocol (CoAP)

3.2.5.1 Data Distribution Service (DDS)

The DDS is a message-passing service that provides publish/subscribe capabilities

[461, 462]. DDS has been used successfully to provide scalable and efficient
applications within the LAN [461, 462]. This service is used for real-time M2M
communication. Its architecture does not involve a broker thus making its com-
munication a distributed service [461, 462]. DDS was developed to support any
programming language and it is the only standard messaging application program-
ming interface (API) for C and C++ [463]. Its publish/subscribe wired protocol
allows for interoperability across various programming languages, platforms, and
implementations [463]. It provides a quality of service (QoS) for different behaviors
[463] but there have been suggestions to leverage the good features of DDS and
MQTT to provide a more flexible QoS IoT applications [462].

3.2.5.2 Message Queue Telemetry Transport (MQTT)

IBM’s MQTT is optimized for centralized data collection and analysis through
a broker [462, 464]. It offers an asynchronous publish/subscribe protocol that is
based on a transmission control protocol (TCP) stack [464]. Usually a client sends
information to a broker or a subscriber elects to receive messages on certain topics
[464, 465]. It provides three QoS options [461, 464]:
1. Fire and forget (no response necessary)
2. Delivered at least once (acknowledgement needed, message received once)
3. Delivered exactly once (ensure delivery exactly one time)
MQTT has been designed to have low overhead and is suitable to IoT messaging
as no responses are needed most of the time [464]. The system may require user-
name/password authentication especially for brokers and this is achieved through
secure socket layers (SSL) /transport layer security (TLS) [464, 466].
76 3 The Development of IoT Within Energy Infrastructure

3.2.5.3 Constrained Application Protocol (CoAP)

The CoAP was designed by the Internet Engineering Task Force (IETF), and
is based on HTTP making it interoperable with the internet [467]. It offers a
request/secure protocol that use both asynchronous and synchronous responses
[464]. It provides four types of messages [464]:
1. Confirmable
2. Non-confirmable
3. Acknowledgement
4. Reset
It also allows for a stop-and-wait transmission mechanism for confirmable
messages and a 16-bit “Message ID” is provided to avoid duplicates [464]. Due
to its compatibility with HTTP, CoAP clients can access HTTP resources through a
translation system [464, 468]. It does not offer any security features [464].

3.2.5.4 eXtensible Messaging and Presence Protocol (XMPP)

XMPP was initially designed for messaging and has been widely in use for over
10 years. However, due to its age XMPP is starting to become outdated for
some of the newer messaging requirements [464]. For instance, Google recently
stopped supporting it [469]. XMPP runs on TCP and provides both asynchronous
publish/subscribe and synchronous request/respond messaging systems. Given that
it was designed for near real-time communication, XMPP is suitable for small and
low-latency applications [464, 470]. It offers the specification of XMPP extension
protocols to expand its functionality [464]. It has TLS/SSL built in for security
purposes but does not offer any QoS [464]. It also uses XML which may cause
additional data overhead and increased power consumption [464].

3.2.5.5 Advanced Message Queuing Protocol (AMQP)

AMQP came out of the financial industry [464]. It mainly uses TCP but can use
other transport services as well. It offers asynchronous publish/subscribe protocols
and has a store-and-forward feature that ensures reliability when service is lost [464,
471]. It provides three QoS [464]:
1. At most once (message sent once whether it is delivered or not)
2. At least once (message delivered one time)
3. Exactly once (message delivered only once)
Security is provided through TLS/SSL. AMQP may have low data rates at low
bandwidths [464, 472].
3.3 Distributed Control and Decision Making 77

3.3 Distributed Control and Decision Making

Thus far, this chapter has closely followed the generic control structure in Fig. 3.1.
Section 3.1 highlighted the tremendous heterogeneity of network-enabled physical
devices that are integrated across the electric power grid to measure and control
primary and secondary variables on the supply and demand sides. Their deployment
naturally inspired the development of multiple mutually coexisting communication
networks. Section 3.2 differentiated these networks based upon their operator, tra-
ditional grid operators, telecommunication companies, and finally LANs belonging
to residential, commercial, and industrial customers.
These two large-scale trends are transformative. No longer is the grid composed
of thousands of centralized and actively controlled generators supplying billions
of passive device loads. Rather, the centralized generation is complemented by
distributed renewable energy that is often variable in nature. Furthermore, many
of the passive device loads have become active and network enabled [45, 46].
The last step in the activation of the grid periphery is control and decision-
making algorithms that serve to coordinate these devices to achieve balancing,
mitigate line congestion, and meet voltage control objectives. Given the spatial and
functional distribution of these devices, scalable and distributed control techniques
that efficiently represent all the interactions are required to control and coordinate
them, whether the interactions are collaborative or competitive [473].
In order to meet the challenges presented by the grid’s physical transformation,
the structure and behavior of the power system’s operation and control must
similarly change. Figure 3.14 shows a generic hierarchical control structure for a
typical power system area. Passive loads are aggregated by a distribution system
utility and passed to an independent (transmission) system operator (ISO) [20].
The ISO runs a wholesale day-ahead electricity market in the form of a centralized

ISO/Wholesale Market

Commitment/SCUC
Utility
Aggregation

Balancing/SCED

AGC 1 AGC 2 AVR 1 AVR 2

Passive
Loads
Centralized Generation Transmission System Distribution System

Fig. 3.14 A generic hierarchical control structure for a typical power system area
78 3 The Development of IoT Within Energy Infrastructure

security-constrained unit commitment (SCUC) as well as a finer-grain “real-time”

balancing market in the form of a security-constrained economic dispatch (SCED).
These two market layers approximate the aggregated load at 1-h and 5-min intervals,
respectively.
Decentralized automatic generation control (AGC) and automatic voltage reg-
ulation (AVR) use feedback control principle to adjust frequency and voltage at
finer timescales (on the order of 1 Hz). Typically, each of these control layers
is studied independently, often separating technical and economic analyses [15].
More recently, the Laboratory for Intelligent Integrated Networks of Engineering
Systems (LIINES) has advanced the concept of “enterprise control” to simulate,
design, and assess such a hierarchical control structure holistically [245, 246, 474–
478]. An extended rationale for power system enterprise control has been published
relative to the methodological limitations of existing renewable integration studies
[15, 245, 246].
Such an approach must now evolve again to address the grid’s physical transfor-
mation. The centralized optimization algorithms found in the market layers of the
generic hierarchical control structure (in Fig. 3.14) do not scale and are unable to
address the explosion of active demand-side resources at the grid periphery [15, 17].
Furthermore, the decentralized control algorithms found in AGC and AVR lack
coordination beyond their local scope of control. For these regions, effective control
algorithms that provide both scalability and wide-area coordination are necessary
[479, 480].
Perhaps one of the key research areas in distributed power system control is in
solving the optimal power flow (OPF) problem in a distributed manner [481–494].
Not only is this problem difficult to solve (by virtue of it being non-convex), it
also consumes significant computational resources. Being able to solve the problem
in a distributed manner allows for faster solutions to the OPF problem, and larger
problem sizes. A common technique is usually based on augmented Lagrangian
decomposition [493, 495, 496] such as dual decomposition [482, 497], the alternat-
ing direction method of multipliers (ADMM) [483, 484, 492, 494, 496, 498, 499],
alternating direct inexact Newton (ALADIN) [485], analytical target cascading
(ATC), and the auxiliary problem principle (APP) [486, 500]. The other common
approach is based on decentralized solution of the Karush–Kuhn–Tucker (KKT)
necessary conditions for optimality and gradient dynamics [487]. The ADMM is by
far the most common of these techniques [488]. Other distributed control study areas
include wide-area control problems, optimal voltage control, and optimal frequency
control [501]. Despite extensive publications in this area, guaranteed convergence
remains a concern for most of these approaches [501].
While the transmission system is likely to remain unchanged, the distribution
system can implement two distribution system energy markets with distributed
algorithms. Furthermore, eIoT devices have the potential to provide AGC and
AVR ancillary services. In some cases, the communication networks described in
Sect. 3.2 will be sufficiently fast to enable the distributed algorithms. In other cases,
network latency will limit these implementations to decentralized control [502].
3.3 Distributed Control and Decision Making 79

To that effect, the power systems literature has developed significant work on
multi-agent system (MAS) distributed control algorithms. In MAS applications,
agents are equipped with the ability to simplify decision making by allowing them to
communicate with few of their immediate neighbors and make decisions that then
inform higher-level decisions [503, 504]. This ensures that devices do not carry
too much information, and allows for better coordination within the system [503].
Key MAS features such as modularity, scalability, reconfigurability, and robustness
make them especially paramount to the realization of distributed control [505]. This
section seeks to highlight some of the important outcomes of this research.
Perhaps the earliest works on multi-agent systems in power system research
occurred at the turn of the century in the context of market deregulation. Then, it
was recognized that as power system markets shifted from a single grid operator to
multiple competing generation companies that such “genCo’s” would deploy new
“game-theoretic” bidding strategies to maximize their profit. Therefore, some of the
first works on the applications of multi-agent systems to the power industry were
focused on modeling electricity markets in a deregulated power industry [506–510].
At the time, most algorithms studied the effect of self-interested agents on
auction market equilibrium with a particular focus on the unit commitment problem
[511–514]. As such, these MAS frameworks were composed of a few mobile agents,
generator agents, and a market facilitator who would oversee the market bidding
process [515]. Game-theoretic strategies were also employed to investigate potential
coalitions or cooperative strategies among different competing parties [516, 517].
Around the same time, various MAS approaches considered optimal cost
allocation techniques to manage cross-border exchanges, be it through tie-lines, or
cross-jurisdictional transmission lines [518–520]. These trends reflect the earliest
MAS trends that set the stage for later applications in electric microgrids, demand
response, and smart grids.
MAS applications later diversified to other aspects of power systems control
and operations such as balancing, scheduling, line control and protection, and
frequency regulation [509, 521–525]. As more renewable energy resources have
gained prominence in grid operation, MAS frameworks, too, have shifted focus to
the provision of ancillary services. A significant number of studies have considered
system restoration under vulnerable system conditions, and later these approaches
have been applied to microgrids with some penetration of variable energy resources.
Usually, these MAS applications study only a single layer of either economic or
technical control [32]. In some cases, a MAS economic layer was combined with a
single physical layer [32]. Later on, MAS applications came to incorporate demand
response at the microgrid and residential levels [526–529].
Agent-based and game-theoretic approaches have also been applied for cooper-
ative and competitive demand-side management and microgrid control [530–537].
Grid level MAS applications have focused on the provision of ancillary services, and
in some cases the parallelization of grid-level communication and control networks
such as SCADA [528, 529]. Game-theoretic approaches such as cooperative and
non-cooperative games have shown great promise in the design of distributed
control strategies for demand-side management [473, 538]. However, given the
80 3 The Development of IoT Within Energy Infrastructure

dynamic nature of the smart grid, these works showed that a stable equilibrium was
not always possible in the presence of faults and slow learning speeds [473].
Multi-agent electric market simulators were also advanced to help in the study
of competitive electricity markets. One such simulator is the multi-agent system
competitive electricity markets simulator (MASCEM) which combined agent-
based modeling and simulation to study the dynamics of competitive electricity
markets [539–545]. Continued research is required to design distributed algorithms
that use game-theoretic principles and ensure robustness, stability, optimality, and
convergence.
Another important application of multi-agent systems in power systems has been
the control and energy management of microgrids. There, it was recognized that
microgrids are often implemented in remote and potentially harsh environments.
Their associated centralized controllers and energy-management software present
a single point of failure [503, 546, 547]. MAS in contrast are fundamentally
more resilient in that they can continue to operate in the face of certain types
of disruptions. Such a functionality is enabled by a modular decision-making
architecture composed of semi-autonomous agents that allows agents to be added
and removed without the need to halt the entire system.
A modular architecture is particularly vital as the penetration of variable energy
resources (VER) grows because it allows for other energy resources to be easily
reconfigured to support microgrid operation [548]. For example, the ability to
island part of the microgrid to allow it to heal is of paramount importance in the
control of microgrids with a high penetration of VERs [548–550]. As a result, many
MAS frameworks have studied self-healing mechanisms of microgrids [548, 551–
555] and some have even demonstrated resiliency of such microgrids under several
reconfigurations [551].
Recognizing the distributed manner in which microgrids are controlled, dis-
tributed MAS-based algorithms have also been proposed for various, usually,
hierarchical microgrid control applications. These control applications include
economic dispatch [556], load restoration [557], decision making [558, 559], and
scheduling [560] to name just a few. There has also been significant research on
the control strategies for microgrids in islanded operation [549, 561, 562] to ensure
reliability within the islanded system. Naturally, a lot of attention has gone into
designing and standardizing the informatic interfaces of multi-agent frameworks.
These frameworks have been designed to closely follow IEC 61850, IEC 61499
[563], and IEC 60870-5-104 [564] as standard architectures for interoperability.
In the meantime, further research needs to ensure that agent groups can perform
functions at or near real-time. Furthermore, more work is required to assess the
performance of distributed algorithms with respect to optimality and its global
behavior relative to centralized algorithms [479].
Despite this extensive MAS research in power systems, an important limitation
has emerged. Much like what has happened with traditional hierarchical control
structures in the transmission systems, these MAS research works generally only
address one control layer at a time. Furthermore, there is a significant dichotomy
between MAS that controls physical variables to secure grid reliability and those
3.3 Distributed Control and Decision Making 81

Table 3.5 Adherence of existing MAS implementations to design principles [32]

[1] Zhabelova and Vyatkin [566] and Higgins et al. [567]; [2] Lagorse et al. [568]; [3] Logenthiran
et al. [569]; Logenthiran and Srinivasan [570]; [4] Dou and Liu [571]; [5] Colson and Nehrir [572];
[6] Cai et al. [573]; [7] Khamphanchai et al. [574]; [8] Rivera et al. [551, 552]

that control economic variables to implement distributed versions of traditional

market structures. In a recent review, only eight works addressed multiple layers
of technical and economic control [32, 565]. The same work assessed these works
against 14 design principles that enable resilient eIoT integration. The result of
the assessment is shown in Table 3.5. As a technology development roadmap, it
identifies the need for further MAS development that:
82 3 The Development of IoT Within Energy Infrastructure

1. Implements distributed control algorithms

2. Addresses both technical and economic control objectives
3. Addresses the multiple timescales found in the integration of variable energy,
energy storage, and demand-side resources
Finally, it is important to emphasize that the effective implementation of
distributed control algorithms requires access to real-time data, data filtering,
coordination, and control [575]. Standards and architectures must be put in place
as platform upon which such algorithms can operate. First, individual nodes must
be equipped with the necessary memory and computing power for low-level control
functions. Second, functional and control standards for devices must be agreed upon
to ensure interoperability between platforms. Third, modularity must be applied as
an integral design principle that facilitates the integration of ever-more sensors and
actuators. Fourth, the computing capacity accorded to each node must match its
functional requirements. Lastly, in a truly distributed system, each node must have
all the information needed to re-initialize new nodes and initiate backup procedures
in the case of failure [575]. These provisions facilitate the design and deployment
of distributed control strategies.

3.4 Architectures and Standards

Fundamentally speaking, many of the discussions presented in this work thus far
can be seen as large-scale architectural changes of the electric power system towards
decentralization. In the original discussion on energy-management change drivers
presented in Chap. 1, the deregulation of electric power markets was introduced.
Figure 1.5 showed the deregulation or unbundling of electric power as a shift
from centralized monopolies to multiple, decentralized, and competitive suppliers.
Similarly, the integration of renewable energy and active demand response shown in
Fig. 1.7 may be viewed as a fundamental change in the architecture of the physical
electric power system itself. The role of centralized generation facilities is being
eroded by distributed renewable generation. The previous section’s discussion on
distributed control algorithms addresses the shift from a more centralized control
structure in Fig. 3.14 to a more distributed one. Together, these three separate
discussions show that eIoT is entirely consonant with a decentralized architecture
in regulation, operations timescale decision making, and the physical power grid.
These three large-scale architectural changes fundamentally change how power
and information are exchanged throughout the electric power system. As has been
discussed several times throughout this work, eIoT brings about the need for two-
way flows of power and information where one-way flows were once common.
The most common examples of these are at the grid periphery where distributed
generation can cause power to flow back up the radial distribution system and where
network-enabled demand-side resources both send and receive information as part
of demand-response schemes. Such two-way flows change the way both cyber and
3.4 Architectures and Standards 83

physical entities in the grid interact with each other. Physical energy resources must
accommodate the two-way power flows. In the meantime, “cyber” entities such
as controllers, enterprise information systems, and organizations as a whole will
have two-way informatic interactions with each other. For example, utilities of the
future [30] may become “distribution system operators” that enable retail electricity
markets. Consequently, their historical role as a load serving entity in wholesale
electricity markets is also likely to change. These changing roles of “cyber” entities
on the grid further indicates fundamental changes in the electric grid’s architecture.
It is difficult to determine at this time what a future eIoT-enabled electric power
system architecture will look like. It is clear that the grid cannot continue to operate
in a centralized hierarchical fashion as it has in the past. On the other hand, a full
transition to eIoT-enabled heterarchy and decentralization is improbable as well.
Much research work still remains in order to achieve the holistic performance
properties that centralized algorithms have already demonstrated and consequently
centralized architectures are likely to endure in those conditions. The meshed
communication networks (such as Z-Wave and Zigbee mentioned in Sect. 3.2.4)
suggest distributed control architectures. However, their limited range similarly
implies centralized nodes that aggregate peripheral devices and present them to the
rest of the electric power system. Overall, the underlying trends that support eIoT
remain strong and so decentralized and distributed control algorithms will take hold
where possible. On a spectrum between total centralized hierarchy and complete
decentralized heterarchy, the electric power grid’s overall future architecture falls
somewhere in the middle.
In recognition of these electric grid’s evolving architectures, there have been
efforts on both sides of the Atlantic to develop open and extensible architectures.
Under EU mandate M/490, the Smart Grid Architecture Model (SGAM) was
developed [26]. As shown in Fig. 3.15, it is a structured approach to modeling and
designing use cases for power and energy systems. The architecture is organized
into a three-dimensional framework consisting of domains, zones, and layers. These
allow energy practitioners to structure the use case design in a clear and concise way.
Meanwhile, on the other side of the Atlantic, the Energy Independence Security
Act (EISA) of 2007 describes severable favorable qualities of a future smart grid
architecture including flexibility, uniformity, and technology neutrality [576, 577].
To that effect, the GridWise Architecture Council (GWAC) created its inter-
operability framework created its interoperability framework shown in Fig. 3.16
[27, 28, 578]. (This framework has often been nicknamed the “GWAC Stack”
for simplicity.) Much like the SGAM, the GWAC Stack recognizes the need for
multiple layers of integration in order to ensure interoperability, but does not add
the dimensions of domains and zones. At the bottom, three layers ensure the
interoperability of technical connectivity. When these layers are abstracted, they
can form two informational layers that provide business context and semantic
understanding. These layers may be further abstracted to form three organizational
layers that address policy, business objectives, and business procedures. Both the
SGAM and the GWAC Stack serve as the basis for the future development of
84 3 The Development of IoT Within Energy Infrastructure

Fig. 3.15 EU mandate M/490 Smart Grid Architecture Model (SGAM) [26]

an electric power reference architecture that supports standard and interoperable

implementations of eIoT.
In the meantime, there have been several efforts to develop commercial and
quasi-commercial IoT platforms. Specifically, the OpenFog Consortium was
launched in 2015 to spearhead the creation of an open architecture essential for
creating IoT platforms and applications based on the fog computing ecosystem
[579, 580]. The aim of the OpenFog Architecture is to accelerate the decision-
making process of IoT sensors and actuators by bringing essential computation,
networking, and storage closer to devices and reducing the latency brought about
by all devices communicating directly with the cloud [579]. This architecture
essentially serves as a middleman between the cloud and IoT devices and, thus, is
not a replacement for cloud computing but rather complementary to the cloud [581].
The approach of bringing processing, that is, computation, storage, and networking
closer to where the data is gathered is called fog computing, hence, the OpenFog
Architecture [580, 581].
The OpenFog Architecture comprises of an OpenFog Fabric, OpenFog Services,
devices and applications, and cloud services. The OpenFog Fabric is a computation
platform on which services are delivered to all the devices [580]. The OpenFog
3.4 Architectures and Standards 85

Fig. 3.16 The GridWise Architecture Council interoperability framework [27, 28]

Services interface between the devices and the platform. The services delivered by
this platform include content delivery, video encoding, analytics platform to name
just a few [580]. The device and application layer include sensors, actuators, and
standalone applications running within or spanning multiple fog applications [579,
580]. Cloud services are available to be used for larger computational processes that
later inform bigger decisions [579, 580]. The entire architecture is built to ensure
the security of all communications and data. The OpenFog reference architecture is
built upon eight pillars [579, 580]:
1. Security
2. Scalability
3. Openness
4. Autonomy
5. Reliability, Availability, and Serviceability (RAS),
6. Agility
7. Hierarchy
8. Programmability
Figure 3.17 illustrates the OpenFog reference architecture [580]. Recently, this
reference architecture has been adopted as IEEE fog computing standard 1934
[580].
Other architectural standards are also provided by corporations such as
Microsoft, Cisco, SAP, and Amazon. Amazon offers the Amazon Web Services
(AWS) IoT Core which is a platform through which one can connect various
IoT devices [582]. The AWS IoT comprises a device SDK that helps users
connect and disconnect devices to the platform [582]. It provides broker-based
publish/subscribe messaging through the MQTT, HTPP, or WebSockets Protocols
86 3 The Development of IoT Within Energy Infrastructure

Fig. 3.17 The OpenFog reference architecture [27, 28]

2559 Use Case Management

2351

Fig. 3.18 An overview of important eIoT standards (adapted from [29])

[582]. The SDK supports C, Arduino, and JavaScript programming languages

in addition to client libraries and a developer’s guide [582]. SigV4 and X.509
certificate-based authentication is also supported by this platform [582]. Further
discussion on this platform is beyond the scope of this book; however, more
information on third-party IoT platforms can be found here for Amazon [582],
SAP/INTEL [583, 584], Cisco [585], and Microsoft [586].
Consequently, the implementation of eIoT as automated and interoperable
solutions rests upon a significant effort to develop effective standards. Beyond the
communication standards mentioned in Sect. 3.2, several standards initiatives were
3.4 Architectures and Standards 87

launched early on at national and international levels [587–589] including concerted

efforts by the IEC [590], IEEE [591], and NIST [577]. The following standards are
highlighted as directly relevant [29, 592] (Fig. 3.18):
• The IEEE 1547 Series provide requirements related to the performance, oper-
ation, testing, safety, and maintenance of DERs [593]. The presence of an
international standard was seen as a roadblock to the implementation of DG
projects. That said, the standard does provide some technological flexibility for
regulators at the local, state, and federal level [593]. The standard is intended to
be technology-neutral and cover resources up to 10MVA.
• The IEEE 2030 Series establish interoperability as a basis for extensibility, scala-
bility, and upgradeability [594]. IEEE 2030 defines interoperability as “the capa-
bility of two or more networks, systems, devices, applications, or components to
externally exchange and readily use information securely & effectively” [593].
The standard is widely accepted as a pioneering document in architecture and
interoperability in the electrical industry [414]. The standard uses perspectives
from communications, power systems, and information technology platforms in
the smart grid to provide design criteria for smart grid interoperability across
generation, transmission, distribution, and customer domains [414, 594] The
standard creates the smart grid interoperability reference (SGIR) model and
supplies a premise for interoperability knowledge by presenting terminology,
evaluation criteria, functions, applications, and other characteristics [594]. Fur-
thermore, end-to-end solutions and security are addressed by its guidelines
for interoperability in functional interface identification, logical connections
and data flows, communications, and digital information management [594].
The IEEE 2030 standards help to maintain communications and information
technologies progress, for improved integration for DERs and the evolving loads
of the electrical power system [593].
• IEC TR 62357 Seamless Integration Architecture (SIA) aims to provide a
framework for energy-related ICT implementations that use IEC TC 57. For
this reason, IEC TR 62357 and IEC TC 57 are often combined to create
(specific) reference architectures. In such a way, they help to identify and resolve
inconsistencies and create seamless frameworks.
• IEC 61970 Common Information Model (CIM) specifies a domain ontology. In
other words, it provides a kind of knowledge base with a special vocabulary for
power systems. One goal is to support the integration of new applications in order
to save time and costs. Another is to simply facilitate the exchange of messages
in multi-vendor systems. The IEC offers an integration framework based on a
common architecture and data model. In addition, the architecture is platform
independent. The main application of IEC 61970 is the modeling of topologies.
• IEC 61968 Distribution Management extends IEC 61970 CIM for distribution
management systems (DMS). These extensions relate in particular to the data
model. The main use case is the exchange of XML-based messages in different
DMSs.
88 3 The Development of IoT Within Energy Infrastructure

• IEC 62325 Market Communications is also an extension to IEC 61970 CIM

where the data model and messages are extended. However, the focus here is
on market communication for EU and US-style electricity markets.
• IEC 62351 Security for Smart Grid Applications addresses ICT security for
power system management with the goal of defining a secure communica-
tion infrastructure for energy-management systems with end-to-end security.
This implies that secure communication protocols are specified in IEC 61970,
IEC 61968, and IEC 61850.
• IEC 61850 Substation Automation and Distributed Energy Resource (DER)
Communication focuses on communication and interoperability at the device
level. The focal topics are:
– The exchange of information for protection
– The monitoring, control, and measurement
– The provision of a digital interface for primary data
– A configuration language for systems and devices
This is implemented by:
– A hierarchical data model
– Abstractly defined services
– Mappings of these services to current technologies
– An XML-based configuration language for the functional description of
devices and systems
• IEC 62559 Use Case Management deals with the steadily increasing system
complexity associated with eIoT. In such a complex system, use cases help to
structure and organize all relevant information for a technical solution. Therefore,
in IEC 62559, five phases are identified for the development of use cases and the
identification of requirements. Furthermore, a description template containing a
narrative and visual representation of the use case is also provided.
Despite these many efforts in the development of eIoT architectures and stan-
dards, interoperability remains a formidable technical challenge to widespread eIoT
implementation. In that regard, it is clear that the IEC, IEEE, and NIST will need to
continue their efforts to enhance eIoT interoperability.

3.5 Socio-Technical Implications of eIoT

The previous sections have described the development of IoT within energy infras-
tructure in terms of network-enabled physical devices, communication networks,
distributed decision-making algorithms, and architectures and standards. When
taken together, it is clear that eIoT fundamentally transforms the relationship that
“energy things” have with the information that describes them. The proliferation of
sensing technology (described in Sect. 3.1) means that the quantity of information
3.5 Socio-Technical Implications of eIoT 89

available to describe energy infrastructure will reach unprecedented levels. Beyond

the quantity of information, the type of data will also diversify. Reconsider Fig. 3.2
on page 29.
Whereas much the electric power grid’s data was associated with primary
variables in the transmission system, Sect. 3.1.4 showed that this information will
grow to include primary variables in the distribution system through smart meters.
Furthermore, Sects. 3.1.3 and 3.1.5 showed that this information will grow to
include secondary variables on both the supply and demand sides. These large
and heterogeneous sources of data are also owned, generated, and transmitted by
an unprecedented number of stakeholders. Reconsider Fig. 3.13 on page 55. The
simultaneous presence of home area, neighborhood area, and wide-area networks
implies that consumers will complement the role of utilities and grid operators as
generators of data. As data is generated, natural questions will emerge as to the
ownership of these data.
Finally, the extensive discussion on communication networks presented in
Sect. 3.2 shows that the transmission of data will come to include telecommu-
nication companies and private owners. Because eIoT fundamentally changes the
role of information in energy infrastructure, there are two important socio-technical
implications: privacy and cybersecurity. Both of these concerns are complex topics
in and of themselves and cannot be extensively treated in the context of this work.
Rather, this section seeks to provide an entry point from which more interested
readers can more deeply investigate these topics.

3.5.1 eIoT Privacy

The proliferation of nearly ubiquitous eIoT data, particularly on the consumer side,
raises important concern about consumer privacy. Reconsider Fig. 3.9 on page 45
which was mentioned in the context of home energy monitors that are able to infer
the usage of individual home appliances based upon their electrical “signatures.”
While such information is very useful to a homeowner in the context of changing
their own electricity consumption behavior, it can easily be used by other parties to
infer a detailed picture of the homeowner’s daily life including eating, sleeping, and
leisure habits [595].
Beyond home energy monitors that point “inwards,” smart meters are able to
provide similar information (albeit at a lower sampling rate) directly to electric
utilities. Naturally, many privacy concerns have erupted over this consistent flow
of real-time data back to the utility because it can be mined with sophisticated
data analytics algorithms to gain market power and potentially exploit the end-user.
While the single example of smart meter real-time data flows is an important privacy
concern, similar concerns can be found all over the eIoT landscape. The introduction
of telecommunication and energy service companies as additional eIoT stakeholders
further complicates privacy concerns and motivates the need for sensible policies
that inform the rights and responsibilities of data generators, owners, transmitters,
and users. The interested reader is referred to further works on eIoT Privacy [596–
599].
90 3 The Development of IoT Within Energy Infrastructure

3.5.2 eIoT Cybersecurity

The privacy concerns highlighted above gain further prominence in the context of
cybersecurity. Returning back to Fig. 3.1 on page 3.1, every communication channel
described in Sect. 3.2 has the potential to be compromised by an unintended or
nefarious party. In some cases, such a party can gather data for potential gain outside
of the grid. For example, a hacked smart meter could expose access to pricing
information and communication networks in the home [276, 595]. In addition to
the harm to end-users, the cost to the utility would be twofold. Not only could the
utility be defrauded but it would also have to invest in fixing the problem [595].
In other cases, the unintended party can interject their data “upwards” to the
control layer so that their associated algorithms have an incorrect picture of the
physical world. For example, significant attention has been given to the impact
of cyber-vulnerabilities of SCADA systems on the state estimators in operations
control centers [600–602]. Similarly, nefarious parties can interject their data
“downward” to the physical layer so that devices behave incorrectly. In both cases,
the cybersecurity concerns become cyber-physical ones. For example, the automatic
generation control feedback signal shown in Fig. 3.6 can be compromised so that
the full control loop is no longer stable, consequently, placing the entire power
generation facility at risk of failure [245].
These cybersecurity concerns become even more challenging in the context
of the discussion in Sect. 3.2. Not only will eIoT communication networks be
owned and operated by grid operators and utilities but they will also pertain to
telecommunication companies and private end-users. While telecommunication
networks have significant expertise in combating cybersecurity threats, private
area networks are significantly more vulnerable. Consequently, significant attention
will have to be given to the grid periphery to ensure that end-users are equipped
with easy-to-implement cybersecurity solutions. The interested reader is referred to
further works on eIoT cybersecurity [603–606].

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Chapter 4
Transactive Energy Applications of eIoT

The previous chapters have situated the development of eIoT within an ongoing
transformation of the electric power grid. In response to several energy-management
change drivers, the grid periphery will be activated with an eIoT composed of
network-enabled physical devices, heterogeneous communication networks, and
distributed control and decision-making algorithms that are organized by well-
designed architectures and standards. When these factors are implemented together
properly, they form an eIoT control loop that effectively manages the technical and
economic performance of the grid. This control loop is most consonant with an
emerging concept of transactive energy (TE).
Definition 4.1 (Transactive Energy [607]) A system of economic and control
mechanisms that allows the dynamic balance of supply and demand across the entire
electrical infrastructure using value as a key operational parameter. 
TE is commonly viewed as a collection of techniques to manage the exchange
of energy in business transactions [47]. A utility, or any other private jurisdiction
can implement TE between its various customers in industrial, commercial, and
residential environments to manage DER technologies. TE applications incorporate
the new eIoT-based activities for utilities, and industrial, commercial, and residential
consumers. The result is better management of resources, successful integration of
renewable energy, and increased efficiency in grid operations [47]. In many ways,
TE is seen as an effective way to manage the technical and economic performance
of various grid operations at all levels of control—commercial, industrial, or
residential. As such, eIoT technologies directly support the implementation of TE
applications.
This chapter discusses how aspects of the eIoT control loop from Chap. 3 are
reflected in various TE applications across different layers of the electricity value
chain:
• Section 4.1 discusses the role of TE in future grid applications and highlights
some of the proposed TE frameworks.
• Section 4.2 presents a few motivational use cases for TE frameworks.

© The Author(s) 2019 91

S. O. Muhanji et al., eIoT, https://doi.org/10.1007/978-3-030-10427-6_4
92 4 Transactive Energy Applications of eIoT

• Section 4.3 addresses the role of the utility and distribution system operators
within the TE framework. This section also recognizes some of the challenges
and opportunities presented by the implementation of TE.
• Section 4.4 examines several customer applications for TE and eIoT in commer-
cial, industrial, and residential settings.

4.1 Transactive Energy

Transactive energy (TE) was a concept introduced by the GridWise Architecture

Council (GWAC) to unite demand-side influences with wholesale markets, retail
markets, and system operations [14]. GWAC is an organization that seeks to guide
policy and facilitate the exchange of information in order to integrate information
technology and e-commerce with distributed intelligent networks and devices [607].
A careful inspection of GWAC’s definition of TE reveals that it is entirely consonant
with the eIoT control loop. Not only does TE encourage dynamic demand-side
energy activities based on economic incentives, it also ensures that the economic
signals are in line with operational goals to ensure system reliability without
resorting to override control [14]. It is this techno-economic nature of TE that makes
it suitable to deal with the growing number of DERs and the current dynamic nature
of consumer demand and energy market operations [14, 607].
TE is expected to offer increased efficiency to the power system and help
maintain much needed reliability and security [607]. TE is, further, enhanced by
its ability to engage both the technical and economic objectives of the grid in order
to solve multi-objective control and optimization challenges [607].
As the grid evolves to accommodate more DERs, traditional grid control
approaches must change to engage new grid stakeholders with more interactive
control. DERs such as intelligent loads, storage, and distributed generation require
more sophisticated control approaches than conventionally non-networked loads
[607]. As more DER assets and their owners participate in the operational,
economical, and semantic aspects of the grid [607], their activities must be optimally
coordinated to align values and incentives among all stakeholders [607].
TE frameworks provide a systematic alignment of these incentives to favorably
achieve grid objectives throughout central operations and peripheral additions. As a
design rule, TE architectures must also account for the heterogeneity in the nature
of transactions by providing the necessary definitions and guidelines. Recognizing
the heterogeneous nature of operations provides the option to expand both the
number and types of applications that can be added or removed from TE platforms.
Consequently, heterogeneous operation includes making economic decisions that
depend on local factors such as the levels of smart metering integration and DER
penetration in the region [608]. Future TE development will rely on clear definitions
of the transacting parties, the type of information to be exchanged, the transaction
terms, what is being transacted, and the transaction mechanisms used by the system
[607].
4.1 Transactive Energy 93

Recognizing that there is no “one size fits all” solution for interactions between
the participants of the grid’s techno-economic control loops [609], various groups
have come forward to provide guidance in designing TE systems. The Transactive
Systems Program (TSP) by the US Department of Energy aims to develop TE
designs that offer “systematic, scalable, and equitable approaches for managing
energy system operations [610].” The goal of TSP was to test existing TE designs to
find an approach that is best-fit for the grid’s multi-objective optimization problem.
The program provides test cases and data sets for evaluating TE applications. It
also outlines the criteria and procedures for measuring the performance of TE
systems focusing on critical system behaviors such as scalability, optimality, and
convergence [610]. Transactive mechanisms are key building blocks to energy
exchanges, since each mechanism describes a value-based negotiation for energy
flow between entities [610].
Recognizing the inter-timescale and multi-layer couplings of various grid opera-
tions, TSP analyzes mechanisms across varying timescales and layers of the energy
system [610]. In addition, this program emphasizes the importance of creating the
necessary interfaces to allow for communication, and interactions between various
TE platforms as well as distributed control platforms [610]. It also stresses the need
to clearly define any given TE platform to facilitate the transparent identification
and comparison of TE frameworks [610]. TSP serves the key role of ensuring
that TE platforms are assessed based on their value and overall contribution to the
performance of the energy industry.
Another TE framework is the transactive energy market information exchange
(TeMIX). TeMIX is a non-hierarchical methodology to support automation in
energy transactions and decentralized control for the smart grid [47]. It is a subset of
the Organization for Advancement of Structured Information Standards’ (OASIS)
for TE [47]. Essentially, TeMIX is a general marketplace for parties to interface in
energy and energy transport transactions, with call and put options for both. Uniform
information exchanges across DER component types occur in a TeMIX network for
quotes, tenders, and transactions [47]. TeMIX allows for involved parties to carry
out transactions without the intervention of any central authority thus removing any
hierarchies. Transactions of energy and energy transport can occur between parties
in retail and wholesale markets as well as between parties in different wholesale
markets, a factor that is enabled by the standardized information exchange among all
parties [47]. This simplifies interactions significantly by allowing exchanges across
all parts of the electricity value chain. It is important to note that TeMIX is most
useful in a smart grid context where customers are assumed to have smart meters,
smart HVAC, and smart PEV charges [47].
Overall, TeMIX is a framework for automated interactions with the grid-
periphery, consumer devices with distribution grids, transmission networks, and
central generation and storage [47]. It simplifies the billing and settlement process
for all consumer classes and DERs. Frameworks, like TSP and TeMIX, are
important when planning transactions, since any modification to existing structures
should undergo scrutiny from the perspective of holistic grid functions [609].
94 4 Transactive Energy Applications of eIoT

In addition to these TE frameworks, there have been several implementations

and demonstrations of TE at the grid periphery in the past few years that have
helped validate the TE framework for smart grid control. These demonstra-
tions include the Olympic Peninsula Project, the American Electric Power (AEP)
Ohio gridSMART R
project, and the Pacific Northwest Smart Grid Demonstration
(PNWSGD).
The Olympic Peninsula Project (OPP) was initiated in 2004 by the Pacific
Northwest National Laboratory (PNNL) to test distributed dispatch, based on energy
and demand price signals with automated, two-way communication between the
grid and DERs [611]. This project implemented the GridWise concept which is a
TE term coined by PNNL to describe a future-looking grid management system that
uses smart devices and real-time communication [611]. GridWise technologies are a
part of “non-wires solutions” (NWS) that are meant to provide alternative solutions
to energy infrastructure issues due to growing load without having to build new
transmission [612].
The Olympic Peninsula Project was carried out in Clallam County, the City
of Port Angeles, and Portland, and served municipal, commercial, and residential
loads. The project controlled a 150-kW water pump capacity between two stations,
175 and 600-kW generators, and 112 DR homes with two-way communication
support in electric water and space heating [611]. Monetary incentives were used
to control the DG suppliers and DR households. PNNL observed the DERs in this
system through a dashboard that combined the resources as a common virtual feeder
[611].
The main goal of the Olympic Peninsula Project was to assert the importance of
intelligence at end use; that is to show that activating the grid periphery improves
both the operational and economic efficiency of the grid [611]. This goal was guided
by several sub-goals that include [611]:
• Show that DERs can provide multiple benefits through economic dispatch
delivered by a shared communication network,
• Understand the individual and collective performance of DERs in near real time,
• Analyze the incentives and incentive structure for DER control and customer
participation.
These goals not only helped study the value of active DER participation in energy
markets but they were also a test of the effectiveness of current market practices
[611]. Data from the system was collected for about a year (from early 2006 to
March 2007) and were fundamental to the project’s findings. The data provided
unambiguous evidence that DERs could bid into the electricity market as a non-
wire solution, and that these technologies could be applied at a larger scale [611].
Besides ascertaining the willingness of consumers to participate in DR given price
incentives, this project provided a few key lessons for large-scale implementation
of TE. In terms of increasing the number of participants, this project demonstrated
that user-friendliness of the DR program or ease of participation were imperative for
DR. As for grid operators, the ease of use relied on the availability of visualization
dashboards that were developed and tested throughout the project.
4.1 Transactive Energy 95

The second project is the American Electric Power (AEP) Ohio gridSMART
project. It focused on the deployment of advanced DR infrastructure in Columbus,
Ohio [613]. The project embarked on infrastructural renewal by deploying advanced
equipment such as smart meters, distribution automation circuit reconfiguration
(DACR), voltage control and optimization from volt VAR optimization (VVR),
and enhanced communication for consumer programs [613]. The project spanned
3000 miles of distribution lines, 16 substations, 100,000 residential consumers, and
10,000 commercial and industrial customers [613].
Given that no AMI meters had been installed in the region prior to the
project, 110,000 m had to be installed to allow two-way communication between
participants [613]. In addition to AMI, this project included cyber-security and
interoperability requirements that involved comprehensive system improvement for
both new and legacy systems [613]. The benefits of this program were numerous
and provided a lot of insight for DR programs and grid operators. First, the
AMI systems allowed for faster connections, remote-service usage, and improved
billing accuracy. Second, automated circuit reconfigurations and smart metering
infrastructure reduced the number of outages which in turn reduced field visits and
manual meter readings. Furthermore, AMI could locate potential equipment failures
to preempt outages and make the maintenance process more proactive.
The most notable benefits of this project were in consumer and pricing programs.
In addition to smart meter installations, the project offered six programs that
provided consumers with data on their energy usage and allowed consumers to
respond to real-time price signals [613]. The real-time pricing with double auction
(RTPda) was an experimental pricing program that was especially successful at
allowing consumers to shift energy consumption according to fluctuating energy
prices. Approximately, 250 consumers successfully participated in this program.
Another noteworthy benefit of this project was in the cyber-security and inter-
operability efforts. As a result of these efforts, multiple advancements were made
to improve the security and interoperability of smart grid devices. The Cyber
Security Operations Center (CSOC) was created to monitor and test the AMI
system. Threat information was also shared with peer utilities and governments
[613]. The CSOC was able to secure and validate the two-way communications
from utility-owned networks through to the consumer home-area networks using
penetration and interface testing [613]. Additionally, consumer data was protected
with extensive and dedicated resources at a high level of security [613]. The CSOC
continues to pursue efforts to ensure system security as well as interoperability in
future deployments.
Like most projects, this demonstration was not without its challenges, and
modifications will be required for any future deployments. The key challenge
was in the deployment of new equipment. It was often costly, involved multiple
maintenance team trips, and suffered equipment and communication system failures
[613]. Despite these challenges, the program was an overall success; especially in
creating awareness through community outreach programs and education [613]. The
state of Ohio hopes draw from the lessons learned in Phase 1 and move to Phase 2
96 4 Transactive Energy Applications of eIoT

deployment where communication modules will be added to smart meters to enable

DR and enhanced market participation [613].
The Pacific Northwest Smart Grid Demonstration (PNWSGD) by Battelle was
arguably the world’s first transactive coordination system [614]. This project was
deployed in December 2009 and ended in 2015, funded by the DOE [614]. This
project, in particular, exceeded the other two in both extent and complexity. It
spanned multiple states and utilities, and included at least 55 smart grid systems
[614]. Additionally, 25 out of 55 of the participating smart grid systems contained
DERs of both supply and demand [614]. The cost and amount of electricity was
negotiated to meet local and regional objectives, address renewable generation
intermittency, and shape consumer loads [614]. Regional response was coordinated
across 11 utilities, and a highlight of the project was the wide-scale connectivity
between transmission, distribution, and home-area network systems. The demon-
stration successfully collaborated with dynamic endpoint responses to achieve
conservation, reliability, responsiveness, and efficiency goals [614].
The tests in the PNWSGD were organized into three categories meant to bolster
grid functionality [614]. First, several installations were made to contribute to
improved energy conservation and efficiency [614]. Second, transactive assets were
installed to respond to signals from the project’s transactive system [614]. Third,
these systems were tested for improved reliability in the distribution system [614].
These objectives of conservation, transactive response, and reliability were often
investigated simultaneously at test sites [614]. A primary objective of the PNWSGD
was to create a foundation for future smart grid advancements [614]. This objective
was to be accomplished by creating an interoperable infrastructure to manage DR
programs, DERs, and distribution automation in a system that could be validated
through analysis [614]. This infrastructure combined generation, transmission,
distribution, and load assets that were owned by utilities and customers across a
five-state area [614].
An important focus for the project was data collection and analysis of the
demonstration’s costs and benefits for customers, utilities, and regulators [614]. The
findings from the data provided potentially influencing testimonies for standards
and methodologies for TE systems [614]. The project worked towards a future
smart grid that is secure, scalable, and interoperable in regulated and non-regulated
environments across the nation [614]. The transactive system was successful in
connecting diverse, dynamic endpoint assets to the transmission system [614]. The
report also noted that future applications of this system may further distribute its
automated control responsibilities among distributed smart grid actors and devices
[614].
Despite these successes, significant problems occurred with the consistent and
accurate reporting of data [614]. Battelle expressed concern for utilities’ ability
to handle the large quantities of data that are produced by a smart grid system
[614]. Future TE applications require better tools for confirming data accuracy.
Furthermore, these applications must proactively identify and correct faulty sensing
equipment that can introduce bad data into the system [614].
4.2 Potential eIoT Energy-Management Use Cases 97

Together, these three TE demonstration projects have provided key insights into
the opportunities and challenges of developing and deploying TE platforms. First,
it is clear that TE systems must engage secure physical and cyber technologies
to enable transactions. Second, these technologies must be interoperable so that
devices with different functional characteristics can connect and communicate.
Given that TE engages a diversity of systems, interoperable interfaces must allow
transactive systems to operate across multiple timescales and enable event-driven
operations [607]. Standardized interfaces must be constructed at the intersection
of exchange mechanisms regardless of whether individual devices choose to play
a transactive role [610]. Third, physical devices such as metering and telemetry
devices must have the capabilities to accurately record and attribute energy flow
measurements for the appropriate DR compensations [609]. In accounting devices,
wholesale and retail services must be compatible to interoperate, yet also separable
to prevent double counting for participants in multiple DR programs [609].
Since these TE demonstration projects, “blockchain” has emerged as a new
internet encryption technology that enables distributed pricing [615]. Blockchain is
a distributed cyber tool for communicating unique information publicly and securely
[615]. Distributed, shared data repositories are protected from interference through
encryption so that there is no need for extraneous bodies to enforce security [615].
At its core, a blockchain creates a “distributed ledger” as an immutable public record
of transactions in a computer network [615] and entirely eliminates the need for a
middleman. Transaction rates are determined by the size of distributed data sets,
or “blocks,” and the time interval for which the chain of data sets is periodically
synchronized [616].
TE frameworks and enabling technologies are a force of decentralization that
empowers DER management across energy customers. As a technology, blockchain
shows great promise in enabling decentralized and distributed exchanges in TE
applications. At the moment, blockchain protocols face scalability constraints that
may slow transaction rates [616]. Nevertheless, blockchain has emerged as a
technology that is integral to future TE applications.
In conclusion, TE platforms and applications are at the core of eIoT deployment
and adoption. In the next subsection, the techno-economic control of TE is discussed
in reference to its applications in industrial, commercial, and residential domains.
The components of eIoT systems complement the high-level discussion of TE
applications.

4.2 Potential eIoT Energy-Management Use Cases

The potential impact of TE can perhaps be best illustrated in two theoretical use
cases. In one case, members of a community collaborate to lower costs by changing
a utility’s point of sensing. In the other case, larger loads or producers bypass utility
involvement through direct participation in wholesale electricity markets. In both
cases, energy consumers are able to make money by altering their relationship
98 4 Transactive Energy Applications of eIoT

with utilities. These two eIoT TE use cases demonstrate how peripheral actors
can engage in energy arbitrage with the help of present and future technologies.
Opportunities for generators and consumers at the edge of the grid are presenting
themselves in areas where price does not accurately represent the balance of supply
and demand. Technological advancements in IoT enable peripheral actors to take
action and exploit these imbalances in energy market prices. With eIoT, consumers
and prosumers willing to form an aggregation can be set up to engage in energy
arbitrage.
As first discussed in Sect. 1.3 and illustrated by the “duck curve” in Fig. 1.6 (on
page 10), distributed power generation is expected, in the not too-distant future, to
drive a surplus of energy compared to consumption during the same time [4]. Solar
generation, in particular, is driving this trend, since its generation is limited by the
hours of sunlight [4]. A glut in energy production during peak daylight hours does
not necessarily coincide with consumers’ energy demand [4]. The energy available
on the grid during the surplus is sold at a low price, and sometimes at no cost.
Hence, as prosumers inject their electricity into the grid, the value of this electricity
falls, and so does the compensation received from utilities. If an oversupply occurs,
utilities may curtail generation or bar the electricity from entering the grid. In
most systems today, the retail price of electricity to consumers does not reflect the
turbulent pattern of electricity supply [43, 44]. However, with implementation of TE
systems, consumers can take advantage of lower energy prices.
Several assumptions are made to best present these use cases and to help guide
the discussion:
1. It is assumed that eIoT technologies will be installed to the extent that sensing
networks may adequately measure and process local consumption in real time.
2. A flow of pricing information from the electricity market to the periphery is
available for consumers to react appropriately.
3. A connection to the market for energy flow and exchange is measured.
4. A platform to coordinate power data with pricing data is available to synthesize
prosumer revenues and costs.
The eIoT technology trends described in Chap. 3 make these assumptions
reasonable for the near future.

4.2.1 An eIoT Transactive Energy Aggregation Use Case

One interesting eIoT TE use case is based on the premise of changing consumers’
relationship with a utility through aggregation. Consider Fig. 4.1. On the left, a
conventional apartment building with rooftop solar consists of several apartments
whose tenants act individually as conventional consumers to the local electric
utility. Electricity consumption in each apartment is individually monitored with
smart (residential) meters and the utility bills consumers accordingly. On the right,
two important changes are made. First, the tenants of the apartment building
4.2 Potential eIoT Energy-Management Use Cases 99

Conventional Transactive Energy Enabled

Apt 4: Apt 4:
Consumer Prosumer

Apt 3: Apt 3:
Consumer Consumer

Apt 2: Utility Apt 2: Utility

Consumer Prosumer

Apt 1: Apt 1:
Consumer Prosumer

Fig. 4.1 A use case comparison between a conventional and an eIoT transactive energy-enabled
apartment building

now act collectively as a single commercial prosumer to the local electric utility.
Consequently, the many smart (residential) meters are replaced by a single smart
commercial meter. Second, each prosumer purchases a TE-enabled smart home hub
that allows each tenant to buy and sell electricity from other building tenants in real
time.
The financial impacts on the utility and the tenants can be calculated. If the
building as a whole consumes 2000 kWh at a rate of 0.1$/kWh and it generates from
solar 1200 kWh which are sold back to the grid at $0.08/kWh, then the utility’s total
revenue for the conventional case is

Utility Revenue = (2000 kWh) ∗ (0.1$/kWh)

− (1200 kWh) ∗ (0.08$/kWh) = $104 (4.1)
= $200 − $96 = $104 (4.2)

Collectively, the tenants spend $200 on electricity consumption and receive a

$96 credit for their solar generation. In contrast, in the transactive energy case,
the tenants with rooftop solar offer their solar generation at an average rate of
$0.09 kWh to encourage their neighbors to shift their electricity consumption to
daylight hours. Consequently, no solar generation is exported back to the grid. The
utility’s total revenue for the transactive energy case is
100 4 Transactive Energy Applications of eIoT

Utility Revenue = (800 kWh) ∗ (0.1$/kWh) = $80 (4.3)

Consequently, the transactive energy case shows a $24 reduction in the utility’s
revenue! Even more interestingly, the tenants now spend only $188 as opposed to
$200:

Tenant Payment = (1200 kWh) ∗ (0.09$/kWh) (4.4)

+ (800 kWh) ∗ (0.1$/kWh) = $188 (4.5)

Finally, the tenants with rooftop solar now receive $108 as opposed to $96:

Solar Tenant Credit = (1200 kWh) ∗ (0.09$/kWh) = $108. (4.6)

While this specific case may appear ideal, it is illustrative. In the TE case, the
presence of solar generation provides an incentive for greater competition that
ultimately benefits all the participating prosumers while simultaneously eroding
the utility’s billable energy. Because the tenants have collectively agreed to interact
with the electric utility through a single commercial meter, the utility simply sees a
decrease in the total amount of electricity purchased.
The eIoT TE aggregation use case above shows net social benefits due to several
enabling factors:
1. The presence of prosumers with local solar generation that is, at times, inad-
equately compensated by utilities encourages the emergence of a transactive
energy marketplace.
2. The solar generator’s value proposition leaves local consumers at times over-
billed by utilities.
3. The transactive energy marketplace is likely to be strengthened if there is a strong
sense of community within the apartment building.
4. There exist nearly ubiquitous measurement, communication, and decision-
making capabilities within the building to support the transactions. It pro-
vides price and quantity information for rational decision-making. The user-
friendliness of these information technologies encourages greater adoption.
5. There exists a sparsity of measurement, communication, and decision-making
capabilities between the building and the utility.
Naturally, if any of these factors is undermined, then the value proposition of the
use case weakens. Of the five, only the last is directly within the utility’s scope.
Utilities and their associated regulators, for example, may choose to offer real-time
retail electricity prices as a means of encouraging greater competition. In such a
case, they would be encouraging TE at the distribution system level and not just at
the building level. The alternative is that other TE buildings can emerge at the grid
periphery. Furthermore, if such a trend were to take root, then large communities
such as compounds and bounded neighborhoods might choose to do the same. In
that case, a large enough TE microgrid could effectively form which bypasses a
utility’s services whenever it is convenient.
4.2 Potential eIoT Energy-Management Use Cases 101

The application of the eIoT TE aggregation use case is already well suited
for residential areas. Collaborations, such as the Brooklyn Microgrid project,
embody aspects of this example and, in many ways, showcase the viability of
peer-to-peer energy transactions [617, 618]. The Brooklyn Microgrid is a project
that has brought consumers and prosumers to a virtual trading platform powered
by blockchain to carry out energy transactions among themselves [619, 620].
This project, launched by LO3 Energy, provides a platform for consumers and
prosumers to trade among themselves with the help of smart meters and blockchain
technologies. A similar application is Power Ledger, a startup that was started in
Australia, allows consumers to buy and sell renewable energy among themselves
using blockchain [621]. In addition, Power Ledger intends to launch an asset-backed
crypto token that will enable consumers or groups of consumers to share in the
benefits of having renewable energy assets through trading in this token [621]. This
approach would open the renewable energy market to a diversity of consumers
and investors, hence, encouraging the growth of renewable energy systems [621].
Around the world, more and more people are starting to recognize the potential of
peer-to-peer (P2P) energy transactions with some notable successes in Bangladesh,
Germany, and New Zealand [619, 620, 622–624]. Beyond peer-to-peer applications,
blockchain technology continues to support a growing number of applications in the
energy industry. Recent studies have shown potential applications in cyber-security
[625–627], multiple IoT applications [628–632], data privacy and security [633],
and as a storage system for critical data [634]. Going forward, favorable regulatory
measures might help advance peer-to-peer energy transactions such as those of the
Brooklyn Microgrid. In customer applications such as this, TE implementation is
primarily motivated by monetary incentives and the individual motivation to be
more sustainable. Besides aggregation, energy usage can be modified at the source
by adjusting times of use and consumption patterns.

4.2.2 An eIoT Economic Demand Response in Wholesale

Electricity Markets Use Case

The second eIoT use case is based upon economic demand response (DR) as it
is currently implemented in wholesale electricity markets. Consider Fig. 4.2. On
the left is the same conventional apartment building. On the right is the same TE-
enabled building which now acts as a single economic DR participant.
The building’s conventional load profile is shown in Fig. 4.3a. For simplicity,
assume that the building is relatively small compared to the peak load of the
wholesale electricity market. Consequently, the building acts as a price taker
because its bids have little effect on the locational marginal prices (LMPs) that clear
the wholesale electricity market. Figure 4.3b shows the hourly LMPs for the full
day. They are assumed to closely follow the trend of the “duck curve” mentioned
earlier in Sect. 1.2.
102 4 Transactive Energy Applications of eIoT

Conventional Economic Demand Response

Apt 4: Apt 4:
Consumer Prosumer

Apt 3: Apt 3: ISO

Consumer Consumer

Apt 2: Utility Apt 2: Utility

Consumer Prosumer

Apt 1: Apt 1:
Consumer Prosumer

Fig. 4.2 A use case comparison between a conventional and an eIoT economic DR apartment
building

(a) Daily Load Profile (b) Hourly Prices

38 25

37
20

36
15
Price, cents/kWh
Load Profile, kW

35
10
34

5
33

0
32

31 -5
00:00 04:00 08:00 12:00 16:00 20:00 00:00 06:00 12:00 18:00 00:00
Hour of the day Jun 23, 2016 Hour of the day Jun 23, 2016

Fig. 4.3 eIoT Economic DR in wholesale electricity markets use case data: (a) On the left, the
daily net load profile of the prior to demand–response incentives. (b) On the right, the hourly
locational marginal prices (LMPs) experienced within the wholesale electricity market

The financial benefits for the transactive energy-enabled building can be calcu-
lated. As stated previously, the building’s tenants pay $200 when exposed to the
retail rate. However, simply by entering the wholesale electricity market, they would
4.2 Potential eIoT Energy-Management Use Cases 103

pay $162 without shifting their behavior. This is because, on average, wholesale
electricity rates are lower than retail rates. In such a case, the tenants have saved
$38 but the utility naturally has lost all $200 because the TE-enabled building has
effectively “cut out the middle-man.” Now, imagine that the TE-enabled building is
able to shift its loads so that it is no longer exposed to evening peak pricing and,
more importantly, it makes use of negative LMPs during peak sunlight hours. A
perfectly flat load curve would mean that the tenants now pay $134 for a savings
of $66. In this case, as well, the utility has no access to the associated revenue.
A flattened load curve could be achieved in multiple ways. Significantly sized
loads, like a fleet of EVs or factory production, may have the required flexibility. In
residences, eIoT-enabled home appliances (for example, dishwashers, washers, and
dryers) can be timed to shift load during the day. In commercial buildings, HVAC
units and hot water heaters can be controlled to curtail energy consumption during
peak hours. Residential and commercial applications may be relatively small scale,
but they have the intended impact with load aggregation. Industrial loads may not
need aggregation, and examples include water pumping, desalination, and factory
production. In all cases, eIoT devices and infrastructure enable the TE applications.
Again, this specific case is illustrative although it may appear ideal. The ability
to aggregate so as to have access to wholesale electricity rates provides a financial
benefit to the building’s end consumers. Furthermore, the ability to participate in that
market through economic DR allows the building to fill the troughs and shave the
peaks of the duck curve. In both cases, this is financially beneficial [635]. Filling the
troughs of the duck curve provides access to cheap and perhaps negative electricity
prices. The peak shaving was not apparent in the case described above because
the building’s impact was small relative to the electric power system peak load.
However, if economic DR were to become prevalent in the wholesale electricity
market, then peak prices could come down and end consumers would benefit
during these times as well. eIoT technology can enhance response to economic
signals, and can ease coordination of production and consumption especially within
an aggregate. The resulting direct participation in wholesale markets may bypass
utilities; at least partially.
In the drive towards decarbonization, eventually carbon, economic, and physical
accounting will align. If negative prices for renewable energy such as solar become
the norm, then there is an economic opportunity to shift patterns of electricity
consumption behavior. As the market adjusts to prices, and demand shifts to meet
the imbalance of supply, duck curves will eventually begin to smooth. While
this prediction relies on future eIoT implementation, it is nevertheless consonant
with existing wholesale market practices. As the electric power system’s market
structures evolve to accommodate TE, it is clear that market facilitators will be
required to coordinate new market procedures and entrants. Looking ahead, the
question of who will take on this role remains an important component in the success
of TE.
104 4 Transactive Energy Applications of eIoT

4.3 Applications for Utilities and Distribution System

Operators

As seen in Chap. 3, the eIoT control loop is an electric power application that has
the potential to transform the landscape of energy services for both consumers and
grid operators. Furthermore, TE applications help create an empowered consumer
base that is capable of making economically informed energy decisions that directly
engage in energy markets. These factors put pressure on utilities to re-evaluate their
approach to handling DERs and more likely reconsider the nature of their role in
consumer applications. The two use cases discussed in Sect. 4.2 illustrate scenarios
where utilities may face a future where consumers bypass their services partially
or potentially altogether. This future scenario is not too hard to imagine especially
with the DER innovations that are pressuring utilities to change their business-as-
usual operations and increasing the accessibility of energy markets to consumers.
The transition to transactive systems provides plenty of opportunities for utilities to
take on energy-management services for customer DERs as well. However, there
is no certain future for the overall transformation of the electrical power system
especially regarding the role of utilities in consumer operations. Several questions
are yet to be fully answered:
1. What will the transformation of utilities look like?
2. Will utilities take on the role of implementing TE?
3. What energy-management solutions for consumers will persist?
Concern for utility viability is not unique to today. The term “Death Spiral”
once described the circuitous pattern utilities experienced in the 1980s of raising
prices to cover costs, only to lose demand and make less profit [636–638]. Concerns
about losing customers to distributed generation has revived the term, in that raising
energy rates would lose profits for utilities by providing incentives for customers
to generate their own electricity [637, 638]. While financial investors have found
that this serious concern may be exaggerated, disruptive DER technologies and
increased competition in energy markets have diminished utilities’ abilities to seek
rate increase in response to adverse economic environments [636, 638]. As a result,
utilities may need to change their long-term strategy, as they did in the 1980s to
deal with this potential “Death Spiral.” The challenge of adjusting to disruptive
eIoT technologies while simultaneously re-imagining their position in increasingly
competitive markets makes the task for utilities much greater [637, 638].
The change drivers originally discussed in Sect. 2.1 are manifesting themselves
into timely and pressing calls for action on the part of regulators and grid operators.
For example, utilities in California are facing regulatory pressures to transform
their businesses to accommodate DERs [4]. In the summer of 2016, the California
Independent System Operator (CAISO) received federal approval for a Distributed
Energy Resource Provider (DERP) tariff that allows aggregation between 500 kW
and 10 MW of distributed energy to be submitted to the day-ahead and real-time
energy markets as well as the ancillary services markets [639, 640]. This initiative
4.3 Applications for Utilities and Distribution System Operators 105

not only poses technical challenges to CAISO but also calls for greater collaboration
with utilities and any new market players willing to take on the role of managing
DERs.
At present, CAISO has access to the transmission–distribution interface, while
utilities own and control data between consumer-level metering and the distribution
system [639]. As a result of this information gap, CAISO’s DERP plan requires
active collaboration with utilities. In addition, CAISO requires extensive network
upgrades to address any operational concerns that may arise from this integration.
If not planned carefully, it is possible that DER participation may not lead to
reliable operation of the distribution system. Furthermore, without distribution data,
CAISO may have to worry about larger effects aggregating up into the transmission
system [639]. It is clear that the challenges described above span the technical
and economic layers of grid operations. With the right investments, utilities could
embrace new approaches that encourage the dynamic development of the grid and
increase revenue in the process.
DERs create many new responsibilities for “distribution system operators”
(DSOs) such as managing consumer data, and deploying new infrastructure such
as advanced metering infrastructure, distributed storage systems, and EV-charging
infrastructure [30]. With DERs, the role of utilities in operating the distribution grid
becomes more complex because new suppliers and demand aggregators can emerge.
Naturally, favorable regulations and tariffs are needed to promote the growth and
adoption of DER technologies throughout the electric grid [30].
In addition to the production and investment credits for renewables, there have
been new regulations favoring effective DER integration in market operations.
In April 2016, the Federal Energy Regulatory Commission (FERC) put forward
a Notice of Proposed Rule-making (NOPR) that required regional transmission
organizations/independent system operators (RTO/ISOs) to revise their market rules
to allow effective integration of electric energy storage into wholesale markets and
the recognition of distributed energy aggregators as wholesale market participants
[69].
The NOPR recognized that it was important to accommodate the operational
characteristics of these DERs to allow them to participate competitively in whole-
sale markets [69]. This proposition was put in place in order to improve competition
and encourage fairness in market rates by removing any potential barriers that
hindered the effective integration of DERs [69]. As is currently the case, DERs
may be hindered from participating in electricity markets due to the fact that the
current market rules were specifically designed for larger more controllable thermal
generating plants. Allowing the aggregation of DERs to participate in markets is a
step closer to promoting DER development.
North American grid operators can also draw upon the approaches taken by
European electricity markets as recommended by the Smart Energy Demand
Coalition (SEDC) [30, 641]. The SEDC noted that favorable regulation and market
rules, in addition to promoting DR programs, were key to the successful integration
of variable energy resources in the European electric power industry [30, 641].
106 4 Transactive Energy Applications of eIoT

North American utilities have a chance to take on the additional roles created
by DERs to maximize their returns as well as ease the integration of DERs.
Traditionally, the interaction between utilities and consumers has been limited to
maintaining the distribution service, responding to the occasional call whenever
supply is interrupted and providing metering/billing services [30]. However, as more
DERs are installed on the distribution system, utilities have the chance to expand
their services beyond network upgrades and potentially assume the role of a DSO
and control services such as DR and curtailment. Furthermore, DERs offer many
flexibilities that could be leveraged by utilities to reduce system and operational
costs [30]. For example, an increase in distributed solar PV systems could result
in operational challenges that could be mitigated by enabling inverter control to
regulate both the quality and quantity of PV power sent to the distribution feeders
[30]. Additionally, distributed energy storage could support solar PV production,
thus significantly reducing the need for system and network upgrades [30].
However, it is important to note that at current battery costs, network upgrades
might be more affordable compared to installing new energy storage infrastructure.
As for assuming the role of DSOs, favorable regulation is necessary to ensure a level
playing field for all DERs and enable any new stakeholders [30, 69]. A revision
of market rules to allow DERs to participate in markets competitively would be
necessary as well as ensuring transparency in the ownership and control of DER
operations [30].
Of course, the effective control of DERs requires strictly laid out guide-
lines on the eligibility, metering, telemetry, and operational coordination between
RTO/ISO’s, DER aggregators, and distribution utilities [609]. It is likely that
new stakeholders will step up and assume the role of controlling and easing
the integration of DERs. At the moment, however, distribution utilities are well
placed to undertake these additional responsibilities given their awareness of both
generation and the consumption flexibility of consumers and DERs [642].
Proper management of DERs and TE frameworks would result in a dynamic
distribution system that is centered on energy products, regulation products, and
time-responsive prices that help stabilize the grid through the provision of energy
balancing, line congestion management, and voltage control [30, 643]. As in the case
of European power markets, utilities may need to assume the role of the DSO. This
would constitute a tremendous change in the utility business models and current
regulatory structures [30].
The question of whether utilities need to be deregulated to allow for this
transition must also be considered. For a long time, utilities have enjoyed a natural
monopoly status that needs to be unbundled to allow for competition in the markets
and encourage the presence of DER aggregators at the distribution level [643].
Assuming utilities take on the role of a DSO, their relationship with consumers
must transform into a partnership where the utilities, such as DSOs, engage with
prosumers to achieve the common goal of the partial supply of services [643].
This symbiotic relationship between consumers and utilities is best summarized in
Fig. 4.4, where a smart home with several DERs interfaces with the grid to provide
and receive services as necessary. As a DSO, a utility can serve as an intermediary
4.3 Applications for Utilities and Distribution System Operators 107

CLOUD
Maintenance
FAN Hourly Price Signals
ISO Signals
DSO Signals
Building Contract
External Data

DHW Appliances &

Lightning

Smart Thermostat

STORAGE

HOT CYCLE
CHP
COLD CYCLE
Distribution Grid

Fig. 4.4 An example eIoT-enabled smart home: DERs are connected to the grid through a cloud-
based framework (adapted from [30])

to balance the supply and demand of power while correcting for any surpluses and
stability issues quickly and reliably [643].
The transformation of the grid is already underway and it puts pressure on
utilities to adapt to the competition and become an integral part of the future
grid. Competition at the distribution level is set to increase with the presence of
DR aggregators and peer-to-peer electricity trading platforms [644]. Although the
distribution system has not been as observable as the transmission system, smart
meters and remote terminal units (RTUs) are quickly closing this gap [107, 645].
As a result, the role of utilities is set to transform to a more active one that is very
similar to the role of transmission system operators (TSO) [646, 647]. Utilities, such
as DSOs, would potentially serve as neutral market facilitators to guarantee system
stability and power quality while ensuring technical efficiency and fair prices for all
parties involved [646].
The adoption of eIoT and TE management platforms for grid monitoring and
control will result in large quantities of data that requires management [645, 648].
Needless to say, neutrality, transparency, and non-discriminatory data management
are highly necessary to ensure a level playing field for all market participants [648].
The European Union serves as a great example for the creation of DSOs and the
adoption of eIoT. Organizations such as the SEDC [641] and EURELECTRIC
108 4 Transactive Energy Applications of eIoT

have played key roles in identifying the potential challenges of integrating variable
energy resources and the eIoT. Many of these lessons have applications to the
North American electric grid. The strategic direction and role of electric utilities
in this new landscape remains unclear and depends on the answers to several open
questions:
1. Which agent will evaluate and deploy aggregated DERs? The utility? The
aggregator? The RTO/ISO?
2. Which entity will manage and prioritize DER dispatch?
3. How will stakeholders address concerns about possible double compensation?
4. What level of visibility will distribution utilities and RTOs/ISOs need into the
operations of aggregated DERs to reliably manage those assets?
5. Which entity pays for distribution system upgrades needed to facilitate DER
participation in wholesale markets?
6. How will utilities recover costs to enable DER aggregation within their territo-
ries?
7. How will the evolving technological landscape of eIoT affect the answers to these
questions?
8. How will FERC-level regulations affect the answers to these questions?

4.4 Customer Applications

4.4.1 Industrial Applications

The industrial sector consumes approximately 42% of all the electricity produced in
the world [649]. Apart from being energy intensive, some manufacturing processes,
such as with electrical drives and motors, demand high-quality electricity [650].
In addition, the industrial sector is facing high pressure to decarbonize from both
regulation [651, 652] and corporate social responsibility [653, 654]. As a result,
most industrial facilities have integrated on-site DERs and are rapidly undertaking
energy efficiency measures to minimize their carbon footprint [655].
In most cases, the energy requirements of industrial facilities cannot be served
by only a local utility. Hence, these facilities sometimes directly connect to the
transmission lines and participate in the wholesale electricity markets. Typically,
industrial electric loads are consistent, large scale, and centralized [649], making
them good candidates for DR programs. In some countries, industrial base loads
have been used by system operators for the provision of various ancillary services
[649]. As it happens, it is much easier to control a few large industrial loads than
numerous small residential loads. Furthermore, recognizing the higher (economic)
utility of consumed electricity for industrial processes, it can be expected that
production systems will be more willing to respond to price signals in DSM schemes
to ensure steady and continuous supply.
4.4 Customer Applications 109

The nature of industrial loads provides an easy opportunity to apply DSM

to industrial energy systems [649]. The ability to reschedule or “shift” loads is
particularly important as more solar and wind resources are added to the grid. At
present, DSM applications compensate consumers based on their load reduction
from a predefined baseline. However, studies have shown that the process of
determining the baseline is prone to errors likely to cost more and result in other
system imbalances that could propagate through various layers of power system
control [250, 656, 657]. The industrial sector, however, provides many opportunities
for load shifting that if scheduled and coordinated properly could improve DSM
applications. Not only does load shifting increase demand flexibility, it also ensures
that power quality is maintained [649]. That said, industrial processes that are not
time constrained can be scheduled so that they can shift demand to help balance the
electricity grid under certain demand constraints.
In the same way, constrained industrial processes could store intermediate power
for use during periods of high demand. Currently, storage is being used in industry
in the form of pumped hydro, compressed air, hydrogen, batteries, flywheels,
superconducting magnetic energy storage, and super-capacitors [649] to support
various applications. While storage increases flexibility, there is a decrease in
efficiency, since transferring electricity to and from storage devices is not 100%
efficient [649].
The concept of IoT is not new to industrial applications. IoT has been supporting
industrial and manufacturing processes for over a decade now, with applications
in business continuity management, anomaly detection as well as supply-chain
management [658]. These IoT applications provide a control platform that could
be used to carry out various DR functions. Obviously, equipment upgrades may be
necessary to provide the connection and coordination capabilities for eIoT devices.
As discussed in Sect. 3.1.5, the main barrier to the adoption of eIoT lies in
the cost of sensors, especially for small-scale consumers of electricity. However,
industrial consumers are able to diffuse the energy cost management across various
layers due to economies of scale for the required improvements. Additionally, most
industries already monitor load data in real time and possess the necessary smart
metering and data exchange equipment that will eventually reduce the investment
cost in eIoT infrastructure [649]. These factors significantly simplify the adoption
and application of eIoT in industrial energy-management applications. In fact, this
makes the industrial consumer well suited for the use case discussed in Sect. 4.2.2.
As stated in Sect. 3.2.4.6, IIoT and eIoT devices are overlapping and complementary
rather than mutually exclusive. Therefore, the development of eIoT within industrial
applications will go hand in hand with the current IIoT implementations.

4.4.2 Commercial Applications

The majority of electricity consumed in the USA goes to commercial and residential
building energy systems [607]. According to the US Energy Information Adminis-
110 4 Transactive Energy Applications of eIoT

tration (EIA), 77.46% of electricity generated in January 2018 was consumed by

commercial and residential buildings [659]. Traditionally, commercial buildings
have included hospitals, hotels, stores, and offices [660]. Commercial buildings
come in a variety of sizes, and depending on the services the business provides,
are less flexible to participate in DSM programs. For example, a hospital requires
access to energy 24/7 and would be less willing to participate in an interruptible
program [660].
In recent times, decabornization and sustainability concerns have driven most
commercial enterprises to seek cleaner alternative sources of energy such as wind
and solar. For some, this sustainable transition has been composed of a mix of
energy efficiency measures and investment in renewable energy resources. Compa-
nies with large servers have shown great commitment to decarbonizing with some
like Google vowing to source 100% of their energy from renewable sources by 2017
[661, 662]. As signatories of the Department of Energy’s Better Buildings Initiative,
various commercial corporations such as Walmart have committed to reduce over
20% of their energy consumption and as of 2018 they sourced approximately 28%
of their total electricity from renewable sources [663].
eIoT is going to play a key role in ensuring grid reliability especially as more
and more commercial enterprises assume the role of prosumers. In time, commercial
enterprises such as Google and Walmart will become energy independent. Naturally,
this implies more flexibility and freedom to directly participate in electricity
wholesale markets. Without demand-side options that offer the equivalent (if not
better) rewards for these corporations to trade and manage their energy, commercial
enterprises will most certainly bypass utilities altogether. TE applications have
an active role to play in creating platforms that engage commercial consumers
at this level of the electric grid value chain. Most commercial buildings possess
various eIoT capabilities in energy load management applications such as HVAC,
and lighting [664]. For some commercial consumers such as grocery stores,
sophisticated dynamic energy-management capabilities are necessary to maintain
steady operation of their facilities. For example, department stores would prefer
a positive pressure differential so that the air leakage happens outward instead of
inward.
The implementation of eIoT for commercial customers will take many shapes
depending on the services and type of the commercial entity. However, certain
energy-management solutions such as smart metering, and price incentives could be
used to advance the energy supply and control for these consumers. Net metering is
expected to become a common practice in both commercial and residential buildings
that want to be incorporated into utility planning and price structures. So far, 43 out
of 50 US states have established net metering policies to support such engagements
[665].
Unlike residential buildings, commercial building owners have a fixed decision-
making structure that is most ideal for participation in demand-side programs.
Usually, owners of commercial buildings are more sensitive to price incentives and
most commonly have a single owner to expedite decision-making. Price incentives
have encouraged the adoption of smart building management systems, where build-
4.4 Customer Applications 111

ings are actively managing energy consumption. This means that building owners
may soon become participants in real-time energy markets [666]. Requirements
for this future development in energy management include automatic operational
control capabilities for building subsystems, such as HVAC and lighting, and real-
time communication with the grid [666].
Whether implementing DSM or individually engaging in energy pricing arbi-
trage, a variety of data coordination with system operators or utilities is necessary.
Third parties such as energy aggregators and energy service companies are expected
to use eIoT to improve energy-conservation savings [667]. This can be achieved
through the installation of sensors that can monitor progress, and platforms for
building management systems [668].
Recent studies have predicted a steady growth in the deployment of building
energy-management systems (BEMS) for commercial as well as residential build-
ings. BEMS have attracted a lot of funding (more specifically $1.4B between
2000–2014) and are set to revolutionize the operations and control of commercial
and residential buildings [669]. The US Department of Energy estimates that by
2020, BEMS applications will comprise 77% of the $2.14 billion US market
[670, 671]. This implies an increase in sensors and internet-connected devices to
manage and control building energy consumption.
Internet connectivity results in security concerns that are hopefully addressed
by having cloud-hosted BEMS to relieve consumers of the need to secure their own
devices or web-enabled services [672]. With time, the overall awareness and control
for operators, consumers and owners will significantly improve and thus simplify
the integration of renewable energy resources, energy storage, and electric vehicles.
BEMS provide a key opportunity for TE-based frameworks to control, coordinate,
and negotiate transactions among connected devices. For commercial customers,
eIoT could be leveraged to reduce the overall energy consumption as well as
improve the operation of these energy-intensive systems. As more commercial
consumers adopt eIoT, they will be well placed to employ either of the two use
cases described in Sect. 4.2.

4.4.3 Residential Applications

Another key TE application area is in the energy-management solutions for residen-

tial customers. Unlike commercial and industrial customers, residential consumers
consume smaller loads and their energy decisions are very much comfort driven.
In addition, heterogeneity in home infrastructures poses difficulties in smart energy
management, since communication is required between the system, customer users,
energy devices, and system operators [673]. Given the high cost of sensors, most
residential customers may be reluctant to adopt new and improved sensors.
That said, the overall public opinion is shifting towards cleaner and more
sustainable energy solutions. A significant percentage of the population is either
producing their own electricity or opting to purchase only renewable energy.
112 4 Transactive Energy Applications of eIoT

As more residents become prosumers and sustainable, an increase in residential

microgrids is expected. Naturally, TE platforms could assume the role of negotiating
transactions for such microgrids as addressed in the first use case or through direct
participation in wholesale energy markets in the second use case.
TE platforms for residential customers must provide an enhanced user experience
and incentives that influence consumer behaviors. Consumer behaviors can be influ-
enced through techniques such as real-time consumption monitoring, ubiquitous
sensing, or contextual comparisons with neighbors [673]. However, this ubiquitous
influence raises privacy and security concerns, which need to be carefully addressed
especially if the data collected is to be used to gather insight on consumer behavior,
build intelligent modeling tools, and support automatic grid operations [673].
As the number of smart devices in the home rises, platforms that allow
interoperability among smart devices and provide a hub for consumers to customize
their devices are necessary. So far, consumer apps such as Stringify and If This,
Then That (IFTTT) offer options to connect similarly used devices and to create
conditional statements for controlling remote devices, respectively. A key device in
a residential home that is easily controlled through such applications is the smart
thermostat.
As of September 2017, there were over two million smart thermostats, and a
recent Navigant report predicts a four million rise by 2024 [608]. Several models
have emerged for the control integration of smart thermostats including through
utilities, by self-install, or in Bring Your Own Thermostat (BYOT) programs [608].
Another approach is the direct control of thermostats, which currently has an opt-
out rate of 21% [608]. High opt-out rates as well as recruiting new customers,
maintaining old customers, and device interoperability are key challenges [608] that
still face the implementation of TE-based platforms in residential homes.
Given the high preference for comfort, privacy, and convenience, a single plat-
form for DR and device control would work best for residential homes. Currently,
utilities lack a single, all-encompassing program for DSM. About 16% of utilities
offer water heater programs and 24% offer thermostat control programs, while only
9% provide behavioral programs to their residential customers [608]. However, due
to reliability concerns, only half of these programs were actually called upon to
provide DR in 2016 [608]. In addition, a wide range of DR options is necessary
to enable more consumers to participate. As these programs evolve with real-time
eIoT, DSM programs must shift from their current annual load shaping perspectives
to less-than-a-minute perspectives for the provision of ancillary services. “Shape,
Shift, Shed, Shimmy” is a framework built in California that incorporates timescales
to better understand how to use DR.
Electric load from electric vehicles (EVs) is set to significantly increase residen-
tial loads requiring a framework to manage and control the power consumption of
EVs. The power consumed by EVs is expected to reach 400 TWh annually by 2040
[608]. TE DR platforms for EVs are essential to manage this disruptive technology.
Studies have shown that EVs could be used as flexible loads for the provision of
4.4 Customer Applications 113

ancillary services if managed properly. Currently, 19% of utilities are offering EV

DR programs, while 79% are either planning or researching the DR potential of EVs
[608].
Managed charging, either through utilities, load-balancing authorities, or aggre-
gators, allows EVs to be used as storage to absorb excess renewable energy
generation and smooth adverse effects on the net load [79–88]. From a technology
point of view, TE platforms will require investments in infrastructure to support
communication signals sent between a vehicle, other vehicles, home systems, and
grid operators. Although behavioral programs could be used to affect charging
times or quantity, technical integration is necessary to extract other potential grid
service values in capacity, emergency load reduction, reserves, and renewable
energy absorption [608]. All in all, electric vehicles offer great potential for DR
that could be leveraged in a number of ways to support grid operations.
Residential TE applications stand to benefit from using behavioral DR to curb
peaks, increase consumer participation and savings, and reduce the cost of engaging
the large residential consumer base. Although implementation of these applications
still faces many challenges, optimizing how a customer is contacted, determining
how far in advance to notify a customer of an event, communicating why an event is
called, how the program works and how a customer can participate, and strategically
planning event calls will go a long way to ensure customer retention. Due to its
analytical benefits, eIoT is likely to be instrumental in deploying behavioral demand
response programs.

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Chapter 5
eIoT Transforms the Future Electric Grid

In conclusion, the development of eIoT is an integral part of the transformation to

the future electricity grid.
• Chapter 1 discussed five energy-management change drivers that are bringing
about this transformation:
– Rising demand for electricity [34–36]
– Emergence of renewable energy resources [37–40]
– Emergence of electrified transportation [41, 42]
– Deregulation of power markets [43, 44]
– Innovations in smart grid technology [45, 46]
• Chapter 2 explained that the impact of these energy-management change drivers
will appear primarily at the grid’s periphery. Distributed generation in the form
of solar photovoltaics (PV) and small-scale wind will be joined by a plethora of
internet-enabled appliances and devices to transform the grid’s periphery to one
with two-way flows of power and information [45, 46]. The resulting activation
of the grid periphery gives rise to an energy internet of things composed of
network-enabled physical devices, heterogeneous communication networks, and
distributed control and decision-making algorithms.
• Chapter 3 organized the discussion of these elements into an eIoT control loop
built upon well-established standards and architectures.
• Chapter 4 showed that such an eIoT control loop is most consonant with the
emerging concept of TE and then proceeded to discuss how it may be applied
within utilities–distribution system operators and industrial, commercial, and
residential customers.
In summary, eIoT is set to transform all aspects of grid operations and control.
This transformation spans both technical and economic layers and leads to new
applications, stakeholders, and energy system management solutions. This chapter
serves to summarize the conclusions of the work: 1. eIoT will become ubiquitous,
2. eIoT will enable new automated energy-management platforms, and 3. eIoT will

© The Author(s) 2019 115

S. O. Muhanji et al., eIoT, https://doi.org/10.1007/978-3-030-10427-6_5
116 5 eIoT Transforms the Future Electric Grid

enable distributed techno-economic decision making. This chapter also serves to

highlight two open challenges and opportunities for future work: the convergence of
cyber, physical, and economic performance, and the re-envisioning of the strategic
business model for the utility of the future. These conclusions and open challenges
are now discussed in turn.

5.1 Conclusions

5.1.1 eIoT Will Become Ubiquitous

As discussed previously in Sect. 3, the number of sensors and actuators deployed

at all levels of the electric grid is set to dramatically increase. These sensors and
actuators will enable the transformation of both the distribution and transmission
network aiding in the measurement and actuation of primary and secondary electric
power variables. The transformation is going to be characterized by improvement
in the quality of data measured and a significant increase in the diversity of
measurements taken. The speed and granularity of measured variables in the
transmission system will be enhanced through widespread adoption of PMUs,
and an upgrade of the SCADA system as addressed in Sect. 3.1.2.1. Monitoring
of secondary variables such as wind speed and solar irradiance will significantly
improve the forecasting accuracy and capability, and promote the overall reliability
of the supply of wind and solar power.
The steady supply of natural gas is critical to ensuring electric power supply
reliability especially with major base load retirements. This motivates the need for
secondary measurements by eIoT to ensure reliable and cost-effective operation of
the electric and natural gas supply systems as covered in Sect. 3.1.3. As for transmis-
sion system actuation, the adoption of decentralized or distributed approaches for
AGC and AVR applications is imperative to effectively control distributed energy
resources. Naturally, current FACTS devices must also become smarter to enable
faster, efficient, and accurate measurement and actuation of transmission variables
as discussed in Sect. 3.1.2.2.
Advanced metering infrastructure with AMR and AMM capability provides
access to consumer data and enables two-way communication between consumer
devices and utilities. Smart sensing devices will also motivate consumers to
upgrade their homes for faster and efficient energy management. Energy monitors,
smart switches, outlets, lights, and HVAC will provide better actuation abilities
for consumers while allowing for secondary measurements that would ultimately
improve the efficiency of DR programs.
The mere presence of sensors and actuation devices triggers innovations and
advancements in the communication networks that connect them. Communication
such as SCADA networks and wide area monitoring systems are expected to con-
tinue to play an integral role in utility and grid operator communication networks.
5.1 Conclusions 117

Low power wide area networks will allow communication over long ranges while
minimizing the energy consumption of devices. Communication devices that go
beyond the purview of either utility or grid operators will be needed to enable the
inclusion of all interacting parties. Telecommunication networks may need to take
on the role previously carried out by utility and grid networks. Local area networks
will play a key role in ensuring the full automation of residential, industrial, and
commercial premises. Together, these networks will create a web of interacting
devices that will work collaboratively to ensure the reliability of the electric power
supply system. Furthermore, this network of interacting devices will enable the
emergence of TE platforms that will revolutionize the exchange of energy products
and services.

5.1.2 eIoT Will Enable New Automated Energy-Management

Platforms

eIoT will create a network of interacting devices that measure, store, and actuate
data in real-time. These devices also bring about many opportunities for the
improvement of current electric power system operations. Most of these oppor-
tunities are observed at the grid periphery where millions or even billions of
interacting devices will emerge in turn to create numerous control points for the
distribution grid. The once passive consumer base will become active participants
in their own energy supply and consumption. While some consumers will become
prosumers, others will have the opportunity to participate in electricity markets or
carry out transactions with their neighbors. In addition, the grid periphery will be
characterized by a proliferation of DERs such as rooftop solar and electric vehicles
that need management.
The transformation of the grid periphery calls for several changes to status quo.
The distribution network will require an upgrade and depending on the issue, non-
wire solutions such as engaging consumers through DR may be necessary. This
calls for better energy-management platforms that help engage the consumer base.
As DERs begin to participate directly in electricity markets, aggregation platforms
or companies will be necessary to avoid any reliability issues. A change in the
regulatory or market structure may be required to aid in the smooth participation
of DERs and efficient DR programs.
Depending on the willingness of utilities to step up to these new challenges, this
could result in the transformation of the utilities business model or the emergence of
new stakeholders to take on these new roles. Either way, the effective deployment of
eIoT will require new energy-management platforms whether they are for managing
energy transactions or for managing the large quantities of data collected in real-
time. TE and blockchain-powered platforms are starting to emerge as potential
energy-management platforms. Additionally, various cloud-based commercial IoT
118 5 eIoT Transforms the Future Electric Grid

platforms such Amazon, Microsoft, SAP, and OpenFog are emerging to support the
millions of interacting IoT devices. With time, these platforms will also evolve to
specifically cater to the energy industry.

5.1.3 eIoT Will Enable Distributed Techno-Economic Decision

Making

In order to control the millions or even billions of interacting devices, scalable

and distributed techno-economic decision making will be needed. Whether it is
in the transmission system with distributed AGC and AVR or in the control of
smart devices at the grid periphery, distributed control will play a key role in the
effective deployment of eIoT devices. Through TE, eIoT will enable distributed
decision making of physical and economic power supply variables. The eIoT control
loop is centered around sensing, communication, actuation, and distributed control
algorithms that creates an effective decision-making framework. This framework
informs and executes complex decisions that are spawned by distributed technical
and economic information from all over the electric power supply and distribu-
tion system. The distributed economic decision making will greatly benefit DR
applications through peer-to-peer trading platforms and smart energy-management
programs.

5.2 Challenges and Opportunities

5.2.1 The Convergence of Cyber, Physical, and Economic

Performance

eIoT is not without its challenges. With every challenge, comes an opportunity
to advance the electric power system. eIoT causes a convergences of the cyber,
physical, and economic performance of the electricity grid.
• Most eIoT devices will have and/or require an internet connection.
• eIoT devices need to work together to perform different functions across the
electric supply and demand value chain.
• New market participants such as aggregators, prosumers, DERs, and microgrids
will emerge.
• A large quantity of data will be generated and stored or processed in real-time.
Connecting eIoT devices to the internet creates a cybersecurity concern for grid
operators and all parties involved. This requires investment in technologies to ensure
the integrity and security of all devices in the network.
5.2 Challenges and Opportunities 119

Additionally, careful vetting of interacting devices may be necessary to prevent

infections from spreading through rogue devices or connections. Data sent to the
cloud must also be vetted to avoid exposing sensitive data to security issues.
This may require equipping devices with enough processing capabilities to carry
out some computations without involving the cloud. The electric grid architecture
is increasingly transforming, more specifically, to one with two-way flows of
power and information. This architecture creates a cyber–physical requirement
where both physical devices and informatic components must accommodate this
architectural need. With changing architectural requirements, the cyber–physical–
economic aspects of the grid must be designed in such a way as to ensure
interoperability. This provides an opportunity for the development of standards for
ensuring interoperability.
The emergence of new market participants creates the need for more devices,
platforms, and economic structures not to mention regulatory changes to manage
and control their participation in electricity markets.
A mechanism to store, manage, and secure the data collected in real-time is
necessary to protect the interests of all stakeholders. Although the convergence of
the cyber, physical, and economic aspects of grid operations poses a challenge, it
provides an opportunity for collaboration across various layers of the electricity
grid and jurisdictions to enhance system reliability.

5.2.2 Re-envisioning the Strategic Business Model for the

Utility of the Future

The biggest transformation will occur on the distribution side at the grid periphery.
In addition to the millions of interacting devices, the rise in the number of active
consumers and DERs poses a major challenge to the utility business model. Utilities
must re-evaluate their approach to how they manage their system. For example,
instead of defaulting to network upgrades to accommodate DERs, utilities may
consider the potential of non-wire solutions.
In order to engage the active consumer base, utilities must develop proper
compensation mechanisms that:
1. Motivate consumers to shift and/or lower consumption
2. Are fair and offer value to the consumer
3. Provide a diversity of options that cater to varying consumer needs.
This may require either a complete transformation of the utility business model or
open collaboration with aggregators and emerging stakeholders. The distribution
market structure may transform to be similar to that of the wholesale electricity
markets observed at the ISO/RTO level. This, in turn, may require regulatory
measures that foster fair and competitive markets to equally engage all participants.
120 5 eIoT Transforms the Future Electric Grid

The deployment of eIoT poses numerous challenges that span the cyber, physical,
economic, and regulatory structure of the electricity supply and demand value
chain. A holistic approach is necessary to effectively deal with these challenges.
Consequently, stakeholders at various jurisdictional layers must engage with each
other to work out a favorable solution that benefits most if not all. The success of
this collaboration highly depends on the existence of favorable regulatory and policy
structures as well as standards that serve as guidelines for stakeholders.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons licence and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons licence, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons licence and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
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Index

A technological developments, 56
Advanced Message Queuing Protocol WAMS, 64
(AMQP), 76 wired communications, 62–63
Advanced metering infrastructure (AMI), Wi-SUN, 66
42–43 LANs, 61
Amazon Web Services (AWS), 85–86 Bluetooth protocol, 72–73
American Electric Power (AEP), 94, 95 definition, 55
American Recovery and Reinvestment Act Ethernet, 71
(ARRA), 43 industrial networks, 73
Area control error (ACE), 35 perspectives, 73–74
Auto ID Centre, 11 WiFi networks, 71–72
Automated energy management platforms, Zigbee, 72
117–118 Z-Wave, 72
Automated meter management (AMM), 42 messaging protocols, 74
Automatic generation control (AGC), 34, 35 AMQP, 76
Automatic meter reading (AMR), 42 CoAP, 76
Automatic voltage regulation (AVR), 34–36 DDS, 75
MQTT, 75
XMPP, 76
B
network areas, 54–55
Blockchain, 97
telecommunication network, 60
Bring Your Own Thermostat (BYOT)
bandwidth for, 69–70
programs, 112
cellular data networks, 68–69
Brooklyn Microgrid project, 101
definition, 54
Building energy-management systems
DSL, 67
(BEMS), 111
evaluation of, 68
mobile-cellular subscriptions, 70
C potential challenges, 70
California Independent System Operator quality of service, 70
(CAISO), 104, 105 WiMAX, 69
Commercial applications, 109–111 wireless solutions, 68
Communication networks Constrained Application Protocol (CoAP), 76
grid operator and utility networks, 56–58 Customer applications
LPWAN networks, 64–66 commercial, 109–111
perspectives, 67 industrial, 108–109
SCADA, 63–64 residential, 111–113

© The Author(s) 2019 155

S. O. Muhanji et al., eIoT, https://doi.org/10.1007/978-3-030-10427-6
156 Index

Cyber, physical, and economic performance, device-to-device connectivity, 12

119–120 digital energy network, 12
Cyber-security, 20 electrical power system management, 1, 2,
Cyber Security Operations Center (CSOC), 95 13
electric distribution system, 10, 11
electricity, 2, 3
D electrified transportation, 6–7
Data acquisition, 18 intelligent products, 11, 12
Data Distribution Service (DDS), 75 renewable energy resources
Death Spiral, 104 decarbonization, 5
Decarbonization, 5 GHG emissions, 5
Demand response (DR), 9, 101–103 legislation and regulations, 3–4
Demand-side management (DSM), 24 solar cell, 3–5
Digital video recorders (DVRs), 46 widespread adoption, 2–3
Distributed Energy Resource Provider (DERP), wind, 3–5
104 smart grid technology, 9
Distributed energy resources (DERs), 9, 23 solar PV and wind generation, 9, 10
Distributed generation (DG), xxv, 9, 17, 18 supply-chain management, 11–12
Distribution-management system (DMS), 19 Energy-water nexus, 38
Distribution system operators (DSOs) eXtensible Messaging and Presence Protocol
CAISO, 104, 105 (XMPP), 76
cloud-based framework, 106, 107
consumer operations, 104
Death Spiral, 104 F
DERs, 105, 106 Federal Energy Regulatory Commission
grid monitoring and control, 107 (FERC), 5, 35
NOPR, 105 Feed-in tariff (FIT) program, 4
SEDC, 105 Field area networks (FANs), 66
strategic direction and role, 108 Flexible alternating current transmission
Driver-in-the-loop control paradigm, 51 system (FACTS), 36–37

E G
Electrical power system management, xxv Global positioning system (GPS), 34, 48
Electricity grid Granular data, 19
AMR and AMM capability, 116 Greenhouse gas (GHG) emissions, 5
automated energy management platforms, Grid periphery, 14
117–118 challenge, 20–24
challenges, xxviii, 118–120 scalable energy-management control loop,
distributed techno-economic decision 24–25
making, 118 transformation, 17–20
opportunities, xxviii, 118–120 GridWise Architecture Council (GWAC), 83,
telecommunication networks, 117 85, 92
Electric Power Research Institute (EPRI),
31–32
Electric vehicles (EVs), 112–113 H
Electrification, 6 Heating, ventilation, and air conditioning
Electrified transportation, 6–7 (HVAC) units, 39
Energy Independence Security Act (EISA), 83
Energy infrastructure, xxvi, xxvii, 14
See also IoT development I
Energy-management change drivers IEEE 1547 standard groups, 41
Auto ID Centre, 11 Independent system operator (ISO), 22
deregulation, 8–9 Industrial applications, 108–109
Index 157

Industrie 4.0, 37 socio-technical implications

Information technology (IT) infrastructure, 42 cybersecurity, 28, 90
Intelligent transportation-energy system eIoT Privacy, 45, 89
(ITES), 53 generators of data, 89
Internet Engineering Task Force (IETF), 76 proliferation of, 88–89
Internet Protocol version 6 (IPv6), 11 stakeholders, 55, 89
Investment tax credit (ITC), 5
IoT development
architectures and standards L
AWS, 85–86 Laboratory for Intelligent Integrated Networks
decentralized architecture, 77, 82 of Engineering Systems (LIINES),
eIoT-enabled heterarchy, 83 78
GWAC, 83, 85 Load-frequency control, 34
IEC 61850 Substation Automation and Local area networks (LANs), 61
Distributed Energy Resource (DER) Bluetooth protocol, 72–73
Communication, 88 definition, 55
IEC 61970 Common Information Ethernet, 71
Model (CIM), 87 industrial networks, 73
IEC 61968 Distribution Management,87 perspectives, 73–74
IEC 62325 Market Communications, 88 WiFi networks, 71–72
IEC 62351 Security for Smart Grid Zigbee, 72
Applications, 88 Z-Wave, 72
IEC TR 62357 Seamless Integration Locational marginal prices (LMPs), 101, 102
Architecture (SIA), 87 Long-range wide-area network (LoRaWAN)
IEC 62559 Use Case Management, 88 radios, 64–65
IEEE 1547 Series, 87 Low power wide-area networks (LPWAN)
IEEE 2030 Series, 87 networks, 64–66
OpenFog reference architecture, 84–86 LTE-Advanced for 4G systems, 69
SGAM, 83–84
two-way flows, 82–83 M
communication networks (see Machine-to-machine (M2M) systems, 20
Communication networks) Master terminal unit (MTU), 63
distributed control Message Queue Telemetry Transport (MQTT),
agent-based and game-theoretic 75
approaches, 79–80 Multi-agent system (MAS), 79–82
centralized optimization algorithms, Multi-agent system competitive electricity
77–78 markets simulator (MASCEM), 80
decentralized optimization algorithms, Multi-agent transport simulation (MATSIM),
78 52
decision making, 79
extended rationale, 78
generic hierarchical control structure, N
77–78 NAN-to-NAN (N2N) communications, 70
market deregulation, 79 Network-enabled actuators, 54
MAS applications, 79–82 AGC, 34, 35
OPF problem, 78 AVR, 34–36
self-interested agents, 79 control loop, 29
VER, 80 demand-side secondary variables
generic control structure, 27–28 connected automation, 50–51
network-enabled actuators (see Network- electrical consumption patterns, 44
enabled actuators) electrification potential, 48
network-enabled sensors (see Network- electrified transportation, 51–52
enabled sensors) energy monitors, 44–45
158 Index

Network-enabled actuators (cont.) probabilistic methods, 31

heating and cooling appliances, 47–48 scheduled maintenance, 31
industrial energy consumption, 49–51 sensor networks, 31
IoT-based ride sharing, 52–53 sourcing power, 32
ITES, 53 substations and distribution feeders,
residential energy consumption, 48 31–32
road intersections, 50–51 underground cable systems, 31
smart switches, outlets, and lights, wide-area measurements, 32
45–47 secondary electric power system variables,
distribution automation, 43 28–29
FACTS, 36–37 situational awareness, 29
miniaturization technologies, 29 smart manufacturing, 37
physical and monetary constraints, 30 smart meter, 42–43
primary electric power system variables, solar and wind resources, 38
28–29 supply chain integration, 37–38
secondary electric power system variables, Non-wires solutions (NWS), 94
28–29 Notice of Proposed Rule-making (NOPR), 105
situational awareness, 29
wind and solar resources, 39–41
Network-enabled sensors, 54 O
control loop, 29 Olympic Peninsula Project (OPP), 94
demand-side secondary variables Optical fiber communication, 62
connected automation, 50–51 Optimal power flow (OPF) problem, 78
electrical consumption patterns, 44 Organization for Advancement of Structured
electrification potential, 48 Information Standards (OASIS), 93
electrified transportation, 51–52 Organization for Economic Cooperation and
energy monitors, 44–45 Development (OECD), 2
heating and cooling appliances, 47–48
industrial energy consumption, 49–51
IoT-based ride sharing, 52–53
ITES, 53 P
residential energy consumption, 48 Pacific Northwest Smart Grid Demonstration
road intersections, 50–51 (PNWSGD), 96
smart switches, outlets, and lights, Phasor data concentrator (PDC), 64
45–47 Phasor measurement units (PMUs)
design and location, 29 automatic generation control, 35
miniaturization technologies, 29 schematic of, 33
natural gas, 39 simulations and field experiences, 33
physical and monetary constraints, 30 synchrophasors, 33–34
PMU Photovoltaic (PV)systems, 41
automatic generation control, 35 Power Ledger, 101
schematic of, 33 Power-line carrier (PLC) communication,
simulations and field experiences, 33 62–63
synchrophasors, 33–34 Prediction models, 23
primary electric power system variables, Private network, 55
28–29 Production tax credit (PTC), 4–5
SCADA Programmable logic controllers (PLCs), 31
dynamic state estimation, 32 Proprietary and non-proprietary solutions, 19
heterogeneity of, 30–31 Proprietary network, 55
line monitoring, 31
North American power system, 30
outside-the-system threats, 31–32 Q
passive components, 33 Quality of service (QoS) requirements, 70
Index 159

R sensor networks, 31
Real-time pricing with double auction sourcing power, 32
(RTPda), 95 substations and distribution feeders, 31–32
Remote devices, 40 underground cable systems, 31
Remote terminal unit (RTU), 63 wide-area measurements, 32
Renewable energy Sustainability, 18
decarbonization, 5
GHG emissions, 5
grid periphery, 17, 18, 20 T
legislation and regulations, 3–4 Telecommunication network, 60
solar cell, 3–5 bandwidth for, 69–70
widespread adoption, 2–3 cellular data networks, 68–69
wind, 3–5 definition, 54
Renewable energy portfolio standards (RPS), 4 DSL, 67
Residential applications, 111–113 evaluation of, 68
mobile-cellular subscriptions, 70
potential challenges, 70
S quality of service, 70
Security-constrained economic dispatch WiMAX, 69
(SCED) decisions., 39 wireless solutions, 68
Security-constrained unit commitment Thyristor controlled series compensator
(SCUC), 39 (TCSC), 36
Smart Energy Demand Coalition (SEDC), 105 Transactive energy (TE), 8, 9, 15
Smart Grid Architecture Model (SGAM), AEP, 95
83–84 aggregation
Smart Grid Investment Grant (SGIG) Program, assumptions, 98
43 Brooklyn Microgrid, 101
Smart grid technology, 9 conventional apartment building, 98, 99
Smart Inverter Working Group (SIWG), 41 electricity consumption, 98–99
Solar resources factors, 100
network-enabled actuators, 39–41 financial impacts, 99
network-enabled sensors utility’s revenue, 99–100
energy-water nexus, 38 AMI systems, 95
prediction and monitoring techniques, blockchain, 97
38 CSOC, 95
solar irradiance, 38 customer applications
weather-based variables, 38 commercial, 109–111
Stakeholder jurisdictions, 120 industrial, 108–109
Static synchronous compensator (STATCOM), residential, 111–113
36 decentralization, 97
Static VAR compensator (SVC), 36 definition, 91–92
Strategic business model, 119–120 demonstration projects, 97
Supervisory control and data acquisition DERs, 92, 94
(SCADA) system, 19–20 economic demand response, 101–103
dynamic state estimation, 32 electricity value chain, xxvii
grid operator and utility networks, 63–64 GWAC, 92
heterogeneity of, 30–31 OPP, 94
line monitoring, 31 PNWSGD, 96
North American power system, 30 residential and commercial applications,
outside-the-system threats, 31–32 103
passive components, 33 smart grid system, 96
probabilistic methods, 31 TeMIX, 93
scheduled maintenance, 31 TSP, 93
160 Index

Transactive energy (TE) (cont.) V

utilities and DSOs Variable energy resources (VERs), 38–39, 80
CAISO, 104, 105 Vehicle-to-vehicle connectivity applications,
cloud-based framework, 106, 107 50
consumer operations, 104
Death Spiral, 104
DERs, 105, 106 W
grid monitoring and control, 107 Wholesale electricity market, 101–103
NOPR, 105 Wide-area monitoring systems (WAMS), 34,
SEDC, 105 64
strategic direction and role, 108 Wind power plants (WPPs), 40
Transactive energy market information Wind resources
exchange (TeMIX), 93 network-enabled actuators, 39–41
Transactive Systems Program (TSP), 93 network-enabled sensors
Transportation-electricity nexus (TEN), 52–53 prediction and monitoring techniques,
38
surface landscape and weather
U conditions, 38
Ultra-high frequency (UHF) radio, 63 weather-based variables, 38
Underwriters Laboratory/American National wind speed, 38
Standards Institute (UL/ANSI) Wireless sensor networks (WSNs), 23
1741, 41 Wireless smart utility (ubiquitous) network
Utility’s business model, 19 (Wi-SUN), 66