The Internet of Things is a compelling concept, especially where industrial applications are involved. Electrical power generation and distribution is one of those applications. But there are also other practical apps within the energy sector.
According to the latest market study by ABI Research, spending on big data and analytics in the energy industry will amount to $7 billion in 2014, representing over 15 percent of the overall cross-industry spending.
In 2019, the spending on energy analytics will exceed $21 billion, following a CAGR of 25 percent.
As a sector, energy has traditionally been very conservative -- slow to change and unimaginative -- in adopting new forms of business technology, but the resistance to change has already started softening.
"Greater shareholder pressure is pushing many energy groups to improve their returns after having it easy in the past. In such a highly asset-intensive field, huge cost savings are possible by making the operations more driven by data," said Aapo Markkanen, principal analyst at ABI Research.
Catalyst for Energy Sector Innovations
In 2014, 63 percent of the spending is expected within upstream operations, where big data is bound to revolutionize the exploration and production of resources.
Meanwhile, the downstream accounts for 31 percent of the total, reflecting the growing use of data in refining and the smart grid. Finally, the midstream represents 6 percent of the sum, spent mostly on optimizing logistics.
ABI believes that energy is an industry that has expensive problems, but can afford premium solutions. For instance, in the core analytics part of the value chain, newer suppliers -- like Ayata and Ayasdi -- are pushing the state of the art when it comes to modernizing the upstream.
But there are also opportunities for entrants tackling other parts of the value chain. Rethinking data storage to accommodate the growing influx of sensor data is one example. In this domain, pay attention to the innovative vendors such as Infobright, SpaceCurve, and TempoDB.