The emergence of the “internet of things” (IoT) will help to grow the European demand response (DR) market to £2.6 billion by 2025, according to a new report.

The IoT involves connecting equipment – ranging from central heating boilers and lighting systems through to ovens or refrigerators – to the internet so they can be controlled remotely and can feed back sensor information to computers.

The report by consultancy firm Frost & Sullivan claimed IoT-enabled technology could help the European Union to meet nearly 40% of its 2020 energy saving and emission reduction targets.

Other factors that are expected to drive the growth of the market – which is currently worth some £680 million – include the installation of smart meters, increased competition from new energy service companies and technology-savvy start-ups.

Big role for software

Swagath Navin Manohar, Research Analyst, Energy & Environment, at Frost & Sullivan, said: “As smart cities are mushrooming all over the region, DR systems with big data, predictive analytics, artificial intelligence (AI) and the IoT will inevitably attract greater interest from utilities, aggregators, and other software companies.

“Utilities, aggregators, software solution providers, data analytics firms, and communication vendors are expected to increasingly consolidate to offer best-in-class service to end users.

“Meanwhile, in emerging markets, investments in cost allocations and tariff structures will drive the commercialisation of DR programs, even beyond 2020.”

> Download the report