- Written by Vlad-Adrian Iancu
The energy industry is known for big leaps, maybe not as frequent as in other domains, but big leaps nonetheless. One thing is certain; it cannot and will not operate as a separate industry, or against the tide. The digital age is here to stay. But what does this mean for our struggling industry? It means that we have to start accepting that the way we see business could be outdated. Maybe it’s time for a change, a revamp, a new and integrated way of operating this well oiled machine. In short: an efficient way. This is on the mind of every major industry player. How can I make my business more profitable and keep it afloat? Go digital, go efficient. Or go home. It’s that simple. A new and unique tool is at our disposal. It would be an error to miss this opportunity.
Happily, the people who call the shots know the stakes. Digitization was a hot topic at the 23rd World Energy Congress and for good reason. The top brass went as far as claiming that digitization will be the single most important tool in handling the challenges that await in the future of the industry. The discussion was entertained by top executives from leading energy authorities and companies around the world such as, but not limited to IEA, WWF, Siemens, GE, ENGIE and Koç Holding. Apart from the well known targets of meeting the COP 21 climate change goals and discovering and using technological breakthroughs, a third vital cog in the machine was mentioned: digital transformation. This will of course lead to improved efficiency, which was compared to a great but untapped resource. The industry has a big potential for digitization, according to Steve Bolze - CEO and President of GE Power, and right now it’s only in the early phase. But there is a downside. In order to achieve this digital future the energy players will have to survive a decrease in the cost of electricity and reinvent their technologies, strategies and business plans. Convergence will also be critical, as all the players will have to abide the same rules. This transformation towards a cleaner and more diversified energy economy will apparently have to start with the OECD countries, the biggest carbon producers. According to Willi Meixner - CEO Power and Gas Division, Siemens, the real benefit of a digitalised industry is that it can connect the resources, the existing assets and the customers in one big efficiency cycle. This will be critical in keeping global warming under the 2°C increase. Happily solar and wind energy is still riding the wave and further evolution will lead to price reductions.
According to the three scenarios (Modern Jazz, Unfinished Symphony, Hard Rock) presented by the World Energy Council, by 2030 we will reach peak energy demand per capita and the demand for electricity will be doubled by 2060. Seeing as the rise of solar and wind energy will continue, electricity generation will be dominated by non-fossil energy sources with wind and solar energy amounting to 39% by 2060. In the worst case scenario the final energy consumption will go up to 46% and the primary energy demand up to 34% by 2060. If things go in the right direction and we realize an innovative and market driven world with a sustainable economic growth, these numbers will be greatly reduced, with a final energy consumption of 22% and primary energy demand at a mere 10% by 2060. Everything is in the numbers and the numbers are in our hands. But in order to realize this future we will have to take great actions starting right now. New technologies coupled with digitization will hopefully lead to unprecedented efficiencies. All this will have to be coordinated with stringent energy policies which will no doubt face objections. The demand will have to be met with cleaner energy sources which will in turn require great investments in infrastructure and integrated systems. Nobody said it will be easy but a transition of this magnitude is worth the cost. Since the means are at our disposal it is imperative that we at least try. The energy industry will be better for it, win or lose.