jeffrey

The World Energy Innovation Forum, a two day event that began yesterday at the Tesla Factory in Fremont, California, is ostensibly what is says on the label: a stocktake on the physical, political, and philosophical transformations underway in the energy industry.

To that end, GE CEO Jeffrey Immelt’s 45-minute fireside chat with host Ira Ehrenpreis was long on market analysis. He talked about how a third of GE’s almost $150 billion in consolidated revenue in 2013 touched the energy industry in different ways. He laughed about being in a lucky position, with GE’s global heft allowing it to one up its competition and put bets on multiple renewable energy options at the same time: nuclear and gas, wind and solar.

But a notable takeaway from Immelt’s talk, was just how pivotal the Internet of Things narrative — or “Industrial Internet” as it has refashioned it — is to the company’s energy efficiency considerations. At GE’s end of the food chain, connected devices aren’t simply trifling tools to let consumers control their thermostat remotely. They’re world changers.

As Immelt told a crowd of several hundred, data analytics and the study of the information spinning off the machines GE sells has become just as pivotal to industrial manufacturers as metallurgy and the study of the physical elements was in the last century.

GE began its quest to create an Industrial Internet for its hardware by hiring 1,000 people straight out of Silicon Valley, enticing them with offers to come and redesign the health care and airline industries. “If you give them the room and pick the right idea, you can hire great people with a great mission and you can change a company,” Immelt says.

Not that GE’s efforts haven’t met with resistance. “People say, you’re a hardware company. You’re not allowed to be a software company,” Immelt says. “But we’re an industrial company. You have to flex that muscle. I think that any industrial company that doesn’t feel the need to invest heavily in analytics is going to get beat.”

In a report on the Industrial Internet GE authored at the end of 2012 GE talked up the power of the 1 percent; 1 percent improvements in healthcare, aviation, rail, power and oil and gas industries could bring $276 billion in efficiency savings to the global economy across the next 15 years.

Small gains in efficiency can have huge run on benefits. Immelt said that for GE’s fleet of jet engines a 1 percent increase in fuel performance carries a potentially massive environmental gain and could increase profit for airlines by $3 billion, about how much profit the industry made last year all up. “This is what is next,” he said.

GE is a hardware company that makes things like oil drills and jet planes, machines that Immelt says have about 100 terabytes of data spinning off them. But whether you call it Industrial Internet or Internet of Things, to him the labels miss the point. It is about optimizing how people can run their assets. He says GE wants to help its customers run their products with no unplanned downtime and that that story is more relatable than any buzzword.

“If you’re in the business I’m in, you need the following philosophy, that you’re going to work on the tech around your product, that you have the best ideas to make sure every one of your products operates the best it can. For 100 years that used to be about material science, the best material, the best assembly. Now it’s about data,” Immelt says.

Through the Industrial Internet, Immelt says that GE has been able to give CEOs the same control over a gas turbine or wind turbine, optimizing its performance for temperature and demand, that Nest gave consumers over their thermostats.

It’s been a win-win-win, for GE and for its customers’ bottom line, but the resulting gains in energy efficiency have potentially huge environmental benefits.

[Photo by Ed Schipul]