The road to net-zero is paved with many challenges. How do we increase overall energy output for a growing population while simultaneously integrating green energy and ensuring an affordable, stable supply of electricity for all citizens? As the energy sector moves from a centralised system dependent on fossil fuels to a decentralised renewable grid, regulating energy systems and ensuring available energy resources are used at maximum efficiency will be critical.
In the age of information and technology, the value of data and the insights provided by collecting and analysing patterns of production, distribution, and usage of energy, is finally being realised. With fossil fuels fast falling out of fashion, companies with the biggest troves of oil will no longer dominate the market. In fact, with famously intermittent renewables at the core of energy production, being able to operate at the highest efficiency and effectiveness is what will give those in the energy sector a competitive edge. It seems now that the answer to catalysing and accelerating a sustainable energy transition lies in digitalisation, automation, and data.
Energy Watch, together with Dr Madana Leela Nallappan, Regional Analyst (APAC) at the EIC (Energy Industries Council), explores the important role technology and data will play in the ongoing energy transition.
Advancing the Energy Transition with Digitalisation, Automation and Data
Advancing energy security, sustainability or affordability are relatively straightforward goals. The difficulty comes in because these three aspects of the “energy trilemma” – achieving environmental sustainability, ensuring energy security, and having access to affordable clean energy – are often conflicting challenges. It is even trickier when geopolitical instability is thrown into the mix. For example, the ongoing Russia-Ukraine conflict has compounded the global energy crisis and is forcing governments to weigh their priorities again. Energy security and affordability have risen to the top of the agenda.
“Yes, policymakers insist they are not backtracking on their fight against climate change, but it’s clear that the environment is no longer the absolute priority”, states Dr Madana, “but the silver lining here is that renewable energy makes it possible to both protect the planet and improve security.”
Despite the gargantuan effort that will be needed to pull it off, digitalisation will play a critical role in the entire energy value chain, she explains. Ranging from generation to transport, distribution, supply, and consumption, digitalisation can revamp the power sector by:
- Allowing operators to maintain grid stability and reliability remotely
- Enabling easy monitoring of the grid and identification of points of failure
- Optimising and forecasting energy production
Forecasting wind and solar outputs is a vital opportunity for digital technologies. Current energy systems that have transitioned to renewables have encountered significant difficulties with the intermittent nature of solar and wind energy. Hence, having advanced data analytics in place would enable better renewable energy integration, equipped with better forecasting systems and fossil fuel assets could be used more accurately to regulate supply during peak demand.
A perfect example of this in action is Tenaga Nasional Berhad’s (TNB) planned deployment of big data analytics applications for its large-scale solar facility. In collaboration with Envision Digital, the project will improve energy productivity and operational efficiency of a 50MW solar farm, one of the largest solar farms in Malaysia. Meanwhile, in Vietnam, Siemens Energy has equipped two onshore wind farms with digitally enhanced transmission equipment. Both wind farms have a capacity of 100MW respectively and are equipped with sensors which allow the measurement of important operating parameters and increase of efficiency. The enhancement of these wind farms is part of the country’s plan to further push the integration of renewable energy and enhance power supply.
Thinking Ahead of the Game
On the road to achieving our net-zero future, Dr Madana believes data analytics can be a means to help achieve a variety of energy policy objectives. This includes increased productivity and efficiency in the energy system, improved safety, enhanced revenue collection, and an accelerated pace of innovation stemming from the ability to look at big-picture trends and opportunities.
Yet, technology advances and develops at a breakneck pace. How can the energy sector keep up with the evolutions in technology while providing consumers with modernised and sustainable offerings? For Dr. Madana, the answer lies in forward-thinking leadership.
“Part of the role of a digital leader is to fund new approaches to offset technical debt and build new capabilities through partnerships and collaboration,” she says. “Those who can develop strategies and form collaborations to assemble the right blend of capabilities and access new ones will gain a competitive edge.”
Whether through experimental pilot projects or learning from others (both positive case studies as well as more cautionary tales), companies need to be pragmatic about investing in change. “A thoughtful, structured investment strategy here will help to ensure that innovative ideas are not abandoned or overlooked.”
On top of this, leaders must learn to be efficient to keep up with the pace of developing technology and tap into the most important aspect of technology transitions – people. “Build digital expertise within your own staff,” says Dr. Madana. “Integrate reskilling and upskilling into your training programs and support your employees so that they can learn new skills on their own time as well.” This will foster a workforce that is not only prepared for the changes of the digital transformation, but that can also lead during times of digital disruption instead of fall behind.
Lastly, Dr. Madana stresses the importance of building flexibility into policies to accommodate new technologies and developments. “Innovations mean nothing when not implemented,” she says. “When change comes a-knocking, leaders must be willing to adapt.”
The Transition Goes Beyond the Energy Industry
Rolling out new technology and data analytics to increase the efficiency and capabilities of the energy system is not a standalone challenge. To some extent, data is already being collected in troves, yet is not being analysed and utilised to its full potential. Avoiding this pitfall when deploying more data collection technologies will be important to optimise the use and reduce the wastage of resources. According to Dr. Madana, the answer to this is “data democratisation,” or making data available to decision-makers across several departments in a way that allows everyone to use it meaningfully.
“Opportunities provided by digitalisation to improve energy statistics can only be realised with access to data,” says Dr. Madana. “Ensuring timely and robust, verifiable, and secure access to the necessary data, from business and across government, while protecting privacy, is critical.” To do this, however, requires an overhaul of current policies around the sharing and usage or data. “Policy makers should consider how guidelines and mechanisms can enable sharing of data.”
Besides this, she explains, the energy transition will need to take place across all industries, not just the energy industry, for this change to be a success. For instance, in the transportation sector, under a best-case scenario of improved efficiency through automation and ridesharing, energy use could halve compared with current levels. Conversely, if efficiency improvements do not materialise and rebound effects from automation result in substantially more travel, energy use could more than double. Buildings will also have a significant impact on energy usage and emissions. “Digitalisation could cut energy use by about 10% by using real-time data to improve operational efficiency.”
Across industries, those that can build the flexibility to venture into new capabilities more effectively than their competitors will be the winners in the new digital economy, but, as Dr Madana says, no single firm is an island in a sea of digital disruption. “Just as with a circle of close friends, companies need to build a strong network of external partners that can take them to the next level by helping to deliver a truly digital enterprise strategy.”
Keeping Our Sustainable Future on Track
Our net zero goals have already had an encouraging effect across the world.
For Malaysia, whose energy system is managed by just a few key players, digitalisation can be integrated more efficiently and effectively for the benefit of the entire country. The first steps in the right direction are already underway, with initiatives such as the national utility’s Reimagining TNB mandate, which has set the utility on a course to create the grid of the future through digitisation and automation, with projects such as TNB’s Smart Meter program and partnerships with tech industry leaders like Microsoft.
Our net zero goals have already had an encouraging effect across the world. In the past few years since the Paris Agreement, we are seeing increased political momentum for the deployment of clean energy projects, the phase-out of new fossil-fuel assets, and an increase in financing for clean energy projects. Integrating digital technologies into energy systems is certainly the way forward for our sustainable goals – and the world is already equipped to take on this challenge. With genuine effort towards collaboration and knowledge sharing, transforming our complex energy system will no doubt be easier than we expect.