Energy, IoT & 5G

Everything is connected

Marcus Törnqvist
Lead Engagement Manager Internet of Things
Ericsson, Technology & Emerging Business
Marcus.x.tornqvist@Ericsson.com
+46725746763 2018-05-17
Digitalization & disruption all around

- World’s largest taxi company owns no taxis (UBER)

- Largest accommodation provider owns no real estate (AIRBNB)
- Largest phone companies own no telco infrastructure (SKYPE, WECHAT)
- World’s most valuable retailer has no inventory (ALIBABA)
- Most popular media owner creates no content (FACEBOOK)
- Fastest growing banks have no actual money (SOCIETYONE)
5G enabled digitalization revenues for ICT players
CAGR 19´-26´ Financial services
+113%
Energy & Utilities
Automotive +122%
6%
+134%
8% 20%

Media & Entertainment 10%

+126%

1 233* Manufacturing
USDbn
10% 19% +115%

Public transport
+128%
13%
13%

Healthcare
Public safety
+115%
+125%
Ericsson | 2018-05-17 — Source: Ericsson, Arthur D. Little
— Note; *) Year 2026
Content
1 Energy & Utility industry on the verge of disruption

2 IoT & 5G – What is the fuss all about?

3 When everything is connected

Energy & Utility industry on
the verge of disruption
 Rapid growth of power generation from renewables in EU

4 000 120

CO2 emission in EU, total, Index (1990 = 100) Declining demand

Power generated in EU (TWh)

3 000 90
1%
17%

2 000 60

1 000 30

0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Renewables, excl. hydro Nuclear Coal

Hydro Gas Oil Based on Worldbank statistics
 Utility industry is in a financial stress
140
Declining revenue 14,0%

120 12,0%

100 10,0%
Index (2008 = 100)

80 8,0% Revenues

Day ahead system spot Nordpool

60 6,0%
EBIT%

ROA%
40 4,0%

20 2,0%

0 0,0%
2008 2009 2010 2011 2012 2013 2014 2015 2016

-20 -2,0%

Ericsson | 2018-05-17
 GDP growth without increased use of electricity nor energy

300

250

Index 200
1990=100

150

100

50

0
1990 1995 2000 2005 2010 2015
Energy use (kg of oil equivalent per capita) (IND1990) CO2 emissions (metric tons per capita) (IND1990)

Electric power consumption (kWh per capita) (IND1990) GDP per capita (current US$) (IND1990)
Based on Worldbank statistics
Utility industry shows symptoms of being
on the verge of disruption

1 Your products and services are widely desired, but largely unaffordable

2 Customer trust and satisfaction are in steep decline

3 A highly concentrated business model with high fixed costs

4 A high degree of hidden assets outside organizational boundaries

5 A lack of assets needed to meet changing customer needs

6 A lack of awareness and/or capabilities necessary to learn customers’ true needs

Ericsson | 2018-05-17 Source: former Harvard Business School professor Shoshana Zuboff,
“Creating Value in the Age of Distributed Capitalism.” McKinsey Insights, Sept. 2010.
New disrupted value chain with “asset-less” business models
Aim is transparency and speed “Connectivity, combined with electrification and
Day a head (Days) decentralisation, holds the potential to create a highly
Trading Intra day (Hours) interconnected system, transforming the way electricity
Markets FRR A/M (15min) is supplied and consumed.”
FCR-N (Minutes)
FCR-D (Seconds) IEA – Energy & Digitalization (2017)

Supply Customer
Storage & Aggregation Demand Customer
Customer
Aim is sustainable Aim is new Aim is flexibility
& emission free business models

ESCOs

Data hub

Asset owners
Grid
infrastructure
Open
Transmission Distribution Competitive
Market
Aim is security of supply, accessibility and power quality
Regulated
Ericsson | 2018-05-17 Monopoly
 IoT & 5G
What is the fuss all about?
Converging technology trends

Strong growth but

fragmented landscape IoT 5G
Technology evolution
enabling new use cases

Intelligence is moving
Cloud
closer to the edge

Disrupting value chains and enabling new business models

Technical expectations of 5G
Peak Data Connection 10k - 1m 99.999%
1 - 20 Gbps Reliability
Rate Density devices / km2 (of packets)

User Network
Position
Experienced 10 -100 Mbps Energy ×1 - ×100 10m - <1m
accuracy
Data Rate Efficiency

Strong subscriber
Spectral
×1 - ×3 Area Traffic 0.1 - 10 authentication, user
Efficiency Security
Capacity Mbps / m2 privacy and network
security

350 - 500 99.999%

Mobility Availability
km/h (of time)

Latency 1 - 10 ms Battery life 10 years*

*For low power IoT devices

Ericsson | 2018-05-17
Source: ITU-R, NGMN, 3GPP
Massive IoT is already here in transition from 4G to 5G
Features using cellular technologies

90% 10+ +20dB

Module cost Years of Better
reduction battery life coverage

Cat-M1 and NB-IoT Extended Long DRX Extended Coverage

devices support Power Saving Mode (PSM)
Transformation from M2M to IoT
- Horizontal platform for
vertical applications
- Open environments
- Data centricity
- Easy access as a
Service
- Business focused
M2M IoT innovation

Vertical Domains Interoperability Cross-industry

Technology Innovation Business

Single-purpose Infrastructure Multi-purpose

Ericsson | 2018-05-17
Current IoT ecosystem

Enterprises

Device Application
Manufacturers Developers

Service
Providers
Traditional IoT Platform approaches
Applications Applications
Applications

Application Device Specific Platform Generic IoT Application

Platform & Services Platform

Connectivity
Management Connectivity Connectivity
Management Management

Network Network Network

Connectivity Connectivity Connectivity

Devices Devices Devices

IoT Value Chain Device Platform Generic Platform

Challenges with current ecosystem
Developer Developer Developer
Fragmented ecosystem

Fragmentation of data

APIs APIs APIs

Lack of connectivity insights

IoT Platform IoT Platform IoT Platform

Limited speed & scalability

Lack of monetization & settlement

High entry barrier for Massive IoT

Devices Devices Devices

Ericsson | 2018-05-17
Device standardization
Open Mobile Alliance & IP Smart Objects

IPSO smart obj. Devices

STANDARDIZATION

LWM2M

CoAP Modules
Gemalto
UDP/IP
Qualcomm Intel
NB-IoT Chipsets &
Technology Arm Sequans

Standardization – The engine for scale

Ericsson | 2018-05-17
When everything is connected
 Ericsson “5G business potential” study

Phase 1 1
Digitalization
2
5G enabled
3
5G operator addressable
”The 5G revenues for ICT players digitalization revenues digitalization revenues
business
potential”

Phase 2 5G use case clusters — What are the most relevant 5G use case clusters to address?
“The guide to 4 potential — 9 horizontal use case clusters with use cases and evolution
capture the 5G of 5G
industry
digitalization
business IoT business models — What are current examples of successful
potential” 5 business models?
— 8 IoT case studies exemplifying the potential and road to 5G

Next steps — What first steps to realize the 5G enabled value?

6 for operators — Key learnings from the case studies and cluster analysis

Ericsson | 2018-05-17
IoT use cases evolution with supporting technology
Case study examples Current On the road to 5G 5G experience

Condition-based maintenance Bandwidth

Predictive Smart, prescriptive Visual sensory supported
Device
maintenance maintenance maintenance density
Hazard and maintenance
sensing

Commercial drone solutions Multi-drone flight

One pilot – one drone Latency
Autonomous / sensor Mass autonomous flight
mission planning Throughput
based flight & actions
Autonomous robotics

Connected venues Massive multi user Bandwidth

Enhanced in-venue AR enhanced, replay enabled
experience outside the Device
experience venue experience density
venues
Enhanced video services

Example technologies
Ericsson | 2018-05-17
— Multi-standard network
— Gigabit LTE
— Cat-M1/NB-IoT — 5G NR
— Massive MIMO
— Virtualized RAN
— Cloud based IoT platform — Network slicing
— Federated network slicing
— IoT monetization — Dynamic service orchestration
— Distributed cloud
— Predictive analytics
— Identity management — Real-time machine learning/AI
— Data federation
— Cloud-optimized network functions — Cross industry monetization
— Security management
— Virtualized network function orchestration
 Industry Use case categories

Public Energy & Financial Media &

Manufacturing Automotive Public safety Healthcare
transport utilities services entertainment
Monitoring,
Industrial Urban and Lending,
Autonomous communication Patient
control and Smart grid infrastructur payments and Entertainment
driving and analytics applications
automation e security investment
systems

Planning Passenger
Connected Smart energy ID Hospital
and design information Insurance Advertising
services management management applications
systems systems

Safety and
Smart
Field traffic Cyber Medical data
ticketing
devices efficiency security management
systems
services

Other Other Other Other Other Other Other Other

Ericsson | 2018-05-17
5G-IoT use case clusters
+200 use cases in 10 industries

Media & Public Financial

Automotive Healthcare
Entertainment transport services

Energy and
Agriculture Retail Public safety Manufacturing
utilities

Application based cluster methodology

Go-to-market challenges Deployment challenges

— Business and monetization — Technical performance
model 96 73 101 47 35 criteria
— Value chain positioning — Enterprise networks/Indoor
— Role in ecosystem Enhanced Monitoring Real time Smart Autonomous — Device, network, computing
— Partnership development video services and tracking automation surveillance robotics and service enablers

57 24 69 41
Hazard and Augmented Connected Remote
maintenance reality vehicle operations
sensing Source: Ericsson and Arthur D Little
Ericsson | 2018-05-17
Emerging IoT & 5G clusters
High

Autonomous Robotics
Smart Surveillance
Go to market challenge

Real-time Automation Remote operations

Augmented reality

Hazard and maintenance sensing Enhanced video services

Connected vehicle
Monitoring and tracking
Low

Easy to
Deployment challenges Difficult to deploy
deploy Source: Ericsson and Arthur D Little

Ericsson | 2018-05-17
Three IoT & 5G use case clusters are especially
relevant for Energy & Utilities
Industry breakdown per cluster

32%
47% 56% 47%

Enhanced video services Real-time automation Monitoring and tracking Connected vehicle

33% 51% 45%

52% 51%

Autonomous robotics Hazard and maintenance Smart surveillance Remote operations Augmented reality
sensing
Manufacturing Energy & utilities Public safety Public transport Healthcare Media and Automotive Financial services Retail Agriculture
entertainment Source: Ericsson and Arthur D Little

Ericsson | 2018-05-17
Smart grids
– 5G evolution

What NW req.

Smart meters Smart grid Power generation and distribution

— Smart meters — Distributed energy resource1 automation
— Electronic communication management in a secure — Large scale distributed generation
platform fashion facilities, forming a “virtual critical
— Distribution automation infrastructure”
5G Requirements

— E-billing
— Management of edge-of-grid — Real-time load balancing
generation (including micro
generation)

Current On the road to 5G 5G experience

5G experience
Source: Electric power research institute, GE, European commission, Ericsson and Arthur D Little
1. Distributed energy resources (DER) are smaller power sources that can be aggregated to provide power necessary to meet regular demand. Cluster - Real-time automation
Ericsson | 2018-05-17
Smart grids
– 5G KPI

What NW req.

99.999% Reliability & Availability

Position accuracy <1m Security

Data rate 20Gbps 10 Years Battery life

Connection density 10K-1m

devices/km2 1ms Latency

500km/h
Mobility

5G Experience

Cluster - Real-time automation Source: Ericsson and Arthur D Little

Ericsson | 2018-05-17
IEA’s “No-regrets [policy] recommendations”
Energy & Digitalization (2017)

1 Build expertise 2 Ensure appropriate access to data

3 Build flexibility into policies 4 Experiment

5 Participate in broad inter-agency discussions 6 Focus on overall system benefits

Monitor the energy impacts of digitalization

7 on overall energy demand 8 Incorporate security by design

9 Provide a level playing field 10 Learn from others

Marcus Törnqvist
Lead Engagement Manager Internet of Things
Ericsson, Technology & Emerging Business
Marcus.x.tornqvist@Ericsson.com
+46725746763