From self-driving zero emissions cars to 3D printing, the use of the Internet of Things (‘IoT’) to reduce our environmental impact is making significant headway. The benefits from its increasingly widespread use are being realised, including in the residential and commercial building energy management space which makes a huge dent in the country’s overall energy consumption. According to the government’s Building Energy Efficiency Survey, just over half of the total floor area in non-domestic buildings in England and Wales was found to be without any energy management resource. 65% of this area is also currently being heated by natural gas.

There is clearly plenty of room for improvement and innovations and IoT can drive this forward. With more investment, research, trials and the appropriate infrastructure, the UK could stand as a global IoT and smart cities leader as part of efforts to achieve the EU’s energy efficiency targets whilst also reversing the UK’s looming energy supply crisis.
The concept of IoT refers to the connection of devices through which real time data are received. That data is then analysed using Artificial Intelligence (‘AI’), a complex web of algorithmic interactions that enable certain outputs through the recognition of data patterns. The application of IoT in building energy management involves AI algorithms being able to control things like lighting, heating, waste management, security and air conditioning (space heating and internal lighting are two of the largest energy end uses in the UK).
Big businesses have already started to take advantage. Google, for example, cut the energy used to cool its data centres by 40% following the acquisition of AI company DeepMind. It is now in talks with the National Grid and has estimated that a partnership could cut the UK’s entire energy bill by 10%. That’s a massive impact from just one player in a growing market that’s abundant with potential.
SMEs and start-ups are leading the way in smart buildings innovations and take up a lion’s share of this market. For example, one of our investee companies, Enmodus, has developed patented technology that enables the monitoring, control and internet connectivity of any mains powered device. According to a DECC report in April last year, the energy saving potential from smart technologies within the SME sector is about £8.6 billion annually. However, despite this potential, securing the investment and commercial expertise required to successfully scale these businesses remains a challenge. Companies like Breed Reply exist to provide capital and operational support to these early stage businesses, but examples of this kind of investor confidence remain few and far between.
From a Government perspective, the potential of IoT and AI in energy efficiency has been recognised. Greg Hands, Minister of State for Trade and Investment, delivered a speech on smart cities last month and Innovate UK has invested nearly £100 million in smart city projects over the last five years. This kind of proactivity is commendable but more attention needs to be paid to creating an environment which would allow for the successful commercialisation of pilot IoT innovations and facilitate interoperability.
The Government has committed to developing open and adaptable infrastructure with priority being given to the widescale rollout of fibre broadband. However, although connectivity is at the top of the Government’s digital strategy, implementation is a matter of urgency if the UK is to stay ahead of the smart buildings innovation curve.
Greater connectivity also means a greater risk of cyberattacks. It’s therefore understandable that there are some evident security concerns around the mass data sharing involved with IoT which can leave us vulnerable. But we should approach this issue like any business idea – where a problem has been identified, create a market full of potential solutions. These should be driven by research and tested through rigorous trials. Rather than seeing security as a block to progress, it should be viewed as an opportunity for new entrants into a sector that has the potential to double annual economic growth rates by 2035.
Arup estimates that the global market for smart cities could be worth $400 billion per year by 2020. With the right support, the UK has the talent and expertise to make up a large share of this. And it can’t afford not to. With urban density growing year on year in the UK, and indeed globally, IoT is inextricably linked to the management of populations and sustainability. The UK is already on its way to be at the forefront of smart buildings technology but in the wake of Brexit, its competitive edge must be maintained through a mix of strategic initiatives to overcome the identified challenges.