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Digital transformation of the energy industry

Digital transformation of the energy industry
2015-06-292015-06-29industryen
Energy. Entire continents need more of it. We waste too much of it and we’re constantly reinventing where we get it from – but just like every other industry, the energy industry is undergoing digital transformation and disruption across infrastructure, operations and even business models.
Published June 29, 2015 by Stewart Baines in industry
digital transformation

Energy. Entire continents need more of it. We waste too much of it and we’re constantly reinventing where we get it from – but just like every other industry, the energy industry is undergoing disruption across infrastructure, operations and even business models as digital transformation takes hold.

“Utilities must become digital or they will cease to exist,” warns Capgemini Vice President, Martin Wells in a survey of digital opportunity on the energy industry.

“They are typically skeptical of the value of new digital trends, sometimes to their detriment. Though aiming to spend wisely, their careful approach may cause them to miss valuable opportunities upon which their more stylish competitors will pounce.”

Here are several examples of how digital transformation is impacting the energy industry.

Infrastructure

Rapid advancement in ICT and embedded systems means energy utilities have the potential to be far smarter than before. From smart meters to smart grids to smart power production, today’s utilities have huge quantities of incoming data and more capacity to manage energy networks effectively.

“The smart grid is a future vision of a delivery infrastructure with improved resilience and efficiency, which integrates consumers into new energy provisioning models enabled by sector digitalization,” reports Gartner.

Coping with energy demands isn’t merely a customer-facing task, it also extends to energy supply. Energy production facilities can be remote, (in the case of gas production incredibly so).

The capability to deploy satellite or alternative broadband connectivity at these hard to reach locations can enable remote machine monitoring and better control of output and supply, enabling energy providers to better meet demand.

Of course, business communication is also boosted as these remote sites can use the same business and communication tools as available in more centrally placed locations, including unified communications, videoconferencing and VoIP calls.

Information is power

IBM and Veolia are developing big data solutions for utility supply.  “Cities generate enormous amounts of data that must be constantly managed,” said Veolia CEO, Antoine Frérot, Chairman and Chief Executive Officer of Veolia. “By combining our deep expertise with IBM’s data-driven insight, Veolia is creating a paradigm shift in urban management which in turn will help cities improve efficiency and deliver better services to citizens.”

Big data insights as to demand and supply can inform utility production to help meet present and anticipated energy need. That’s a big deal. At present around $150 billion is lost per year due to lost productivity from outages and service interruptions in the US, claims the US Department of Energy.

Utilities will soon be gathering more data than ever before. Lux Research predicts smart grid innovations will cause a 900 percent increase in the quantity of data utilities will need to communicate, manage and analyze across the next decade.

Environment

Global consensus that climate change is taking place, changing ecosystems and generating further environmental instability has reached critical mass. China has begun aggressively reducing its own emissions, slashing them by 5 percent so far this year.

The quest for alternative energy supply is intensifying. EU targets demand 20 percent of all Europe’s energy comes from renewables by 2020, while China continues to make huge investments in solar energy at home and abroad. (China recently announced plans to build Africa’s biggest 50MW solar plant in Kenya.) US-based researcher Mercom Capital Group anticipates global solar installations will reach 57.4 GW in 2015.

A move to renewables is only part of the paradigm. Connected intelligence can play a part in waste reduction:

An Ofcom report explains a smart energy grid concept in which utilities monitor the consumption of different devices in the home using M2M sensors, potentially limiting supply to some non-essential devices in order to ensure essential supply is maintained during periods of peak demand. (This excellent Boston Consulting report provides in-depth information on smart grids).

Connected solutions such as sensors in streetlights that automatically reduce luminosity on empty streets can deliver significant savings to city management and reduce energy waste.

Business models

Just as in any other industry digital transformation is impacting back office systems. Hudson Energy adopted a sophisticated cloud-based customer care and billing solution that enabled it to reduce back office costs to around 50 percent of the industry average.

Digital transformation technologies are also transforming customer relationships. Customers are mobile. They use the Internet and social media – even their devices are becoming connected at the dawn of the Internet of Things.

This connectivity means customers seek more customized energy solutions, opening the floodgates for smaller suppliers aiming to make a business from niche consumer segments. New contenders such as OVO Energy or Co-op Energy use digital innovation in service delivery to create solutions customers need, green packages, low-cost packages or even profit sharing.

In each case these more agile suppliers steal a march on their larger rivals by building their business around consumer aspiration, trust, ethics or relationships.

Read more about how Orange Business Services is helping improve working conditions in the oil and gas industry in our magazine, Real Times.

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