Internet of Energy (IoE) is defined as and integrated dynamic network infrastructure based on standard and interoperable communication protocols that interconnect the energy network with the Internet allowing units of energy (locally generated, stored, and forwarded) to be dispatched when and where it is needed. The related information / data follows the energy flows thus implementing the necessary information exchange together with the energy transfer.

Technology giants such as General Electric, IBM and Cisco are building Internet of Things (IoT) capabilities into everything from jet engines to parking meters, with the common goal of monitoring and managing each device remotely. In the energy sector, the increasing implementation of smart buildings, smart grids, renewable energy, and most recently energy storage, has created the environment required to enable an IoE.

New integrated systems will increase the need for information and communication technology (ICT) in the energy sector. There are three major factors that underpin why the energy sector needs to become a more intelligent and efficient supply system.

The first factor is fossil fuels, namely their finite nature and their polluting properties. In the face of impending strains on and shortcomings of the energy system coupled with the concurrently growing global demand for energy, we urgently need to make significant improvements to achieve greater efficiency in energy usage and supply.

The second factor is today’s regulatory environment, which places greater demands on the energy system’s data networks. Following the decoupling of power generation, transmission, and distribution, different players along the value chain have communicated and interacted using shared interfaces. Furthermore, increased metering, and consumer transparency also generate large amounts of data, which necessitate intelligent, automated processes.

The third factor comes from technical developments, creating commercial viability of renewable energy, smart building and energy storage technology. More power from renewable energy sources will have to be fed into the power grid in the future, both from an increasingly decentralized supply structure and from a central supply structure that will continue to exist in tandem. This requires a much greater degree of flexibility in the areas of voltage maintenance and efficient load flow control than the present system is designed to handle.

These three driving factors are occurring alongside, and as a result of considerable development in several major energy markets around the world. Almost half of the installed power plant capacity in Germany, for example, must be replaced or modernized in the upcoming years, along with a massive expansion of the smart grid. Consequently, new energy-saving technology and communication devices will be increasingly used during the necessary overhaul.

Considering this wholesale restructuring, there lies a unique opportunity to promote a transition from the current system to an IoE. The IoE will generate optimal energy efficiency from energy resources through intelligent coordination from generation to consumption. With the recent developments in energy storage, many believe all the necessary technologies for the intelligent and efficient renewal of the energy system are available today.

However, we still have some way to go before harnessing the full potential offered by combining, and integrating, the available technology to optimize energy systems. It is, therefore, crucial for industry and government to collaborate and provide the direction and support needed to make this a reality.

As part of the EU-funded Artemis IoE project, researchers at Siemens studied how electric automobiles could be integrated into a future energy infrastructure. The results were presented at a conference in Erlangen in late September 2014. “We define the Internet of Energy as the networking of relatively autonomous electricity producers and consumers, who determine and cover the energy demand among themselves,” explains the energy expert Randolf Mock from Siemens’ central research department Corporate Technology.

The key element is the integration of building management systems, which balances the vehicles’ and the buildings’ energy needs with the energy supply. At the conference, the researchers also showed how various smart charging stations for alternating and direct current can be integrated into the energy management system of a large functional building.

Increased usage of power supply systems that are optimized through smart building and smart metering will give residential customers, public agencies, as well as small and medium sized enterprises the chance to reduce their energy consumption or avoid using energy during peak load times, thus preventing bottleneck situations from arising.

Improved energy management systems on the transmission and distribution levels will enable the optimal use of decentralized generation and renewable energy sources on a large scale, without affecting the stability and quality of the system. Yet, the biggest challenge will be to create a level of integration between management applications and the physical grid that will enable complex IT components distributed across heterogeneous grids and company borders to communicate with each other.

The transition from the current energy system to an IoE will present a good opportunity for a multitude of new business models to be created. In the future, power grid operators will be able to increasingly evolve into information service providers (ISPs); new services, such as energy management at the customer’s premises, will emerge. New players will enter the market, such as operators of virtual power plants for balancing energy. By integrating electric vehicles adapted to the energy supply, it will also be possible for the transportation sector to be actively involved in optimizing the energy networks.

The US government's energy innovation arm, ARPA-E, which helped create the foundation of the Internet, has also been working on the IoE. Regarding the IoE, acting director, Dr. Cheryl Martin commented "Looking back 50 years from now, I'm hopeful that those who judge it, will see the same level of impact [as the internet]".