The Internet of Everything could be huge boost for U.S. productivity, but we’ll need more data and investment to unlock it

Blog Post | November 11, 2014 - 4:55 pm

History teaches us that technological advances often lead to new opportunities to reach greater heights. A precipitous decline in the cost of computing power and data storage, and dramatic improvements in programming science, have resulted in the potential for every device to become a connected, “smart” device. Such devices can collect and process enormous amounts of data, making possible many kinds of analysis and higher levels of performance that were unachievable just a decade ago.

One result is increased energy efficiency, the delivery of greater levels of service using fewer energy resources. In a new ACEEE report, we’ve looked at this expanded use of information and communication technologies (ICT) and found that it could become a leading catalyst to boost greater economic productivity while saving money and reducing environmental impacts.

The impact of ICT is being felt across all sectors. Equipment and systems used in buildings, transportation, and manufacturing are becoming adaptive, anticipatory, and networked to one another, both within a facility and across a supply chain. These networked devices can be made even smarter by adding capabilities like context awareness, increased processing power, and independent energy resources. As the devices are interconnected, and managed by the use of multi-objective analytics, what we now refer to as the Internet of Things, or the Industrial Internet, can become an optimized network of networks, sometimes called the Internet of Everything.

We believe that by redirecting larger investments into ICT-enabled networks, the nation’s efficiency and economic productivity can be enhanced. However, to learn how to properly reap those benefits we will need more data, and neither U.S. businesses nor our official economic accounts provide enough. We have case studies and a number of ad hoc estimates, but we do not maintain a consistent tracking of necessary data that can really inform the business community or public-policy decision makers.

To try and look over that barrier, we’ve created a series of thought experiments that indicate the near-term economic impacts that might follow from an accelerated deployment of ICT-enabled networks and services. We examine the economic gains in major economic arenas, and as shown below, we estimate a prospective $600 billion in foregone economic activity otherwise reported in 2013. As the pie chart below shows, the larger productivity benefits could increase U.S. gross domestic product (GDP) by roughly $600 billion by producing a more productive infrastructure, reducing health costs and traffic congestion, and increasing the nation’s share of smart buildings and industrial processes. The larger productivity benefits are driven in part by a 1.1 billion barrel energy efficiency gain that could reduce the nation’s annual energy bill by about $79 billion.

ICT's potential $600 billion boost to GDP

Our initial assessment concludes with a set of recommendations on next steps, including better mining of “big data” and probabilities-based analysis. Finally, we recommend integrating more of the social rather than the purely economically rational perspective in order to understand how smart appliances and ICT-enabled networks might contribute to a more resilient and economic sustainable future. Efforts to engage individuals on energy, economic, and climate issues need to be concerned with how people feel about the issues, and not just about how they think about them. We recommend that the second phase of the study include data and insights from the social sciences as well as from the economic and physical elements of the market.

Properly utilized ICT technology has the potential to help us leap over our often-wasteful business-as-usual energy use into a smarter, cleaner, and more efficient future. But before we can take advantage of this new opportunity, we’ll need to decide to commit the proper resources toward understanding how to unlock it.

If you’d like to more learn more about the intersection between ICT and energy efficiency, join the conversation at ACEEE’s first Intelligent Efficiency Conference from November 16th-18th in San Francisco, California