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Digital Transformation in Energy Sector

Technology has been increasingly adopted by all major industry sectors over the last several years—and the energy industry is no exception. The energy sector has been an early adopter of digital technologies. In the 1970s, power utilities were digital pioneers, using emerging technologies to facilitate grid management and operation. 

Years ago, companies started by switching the use of analog meters to digital meters, smart meters, etc., in order to improve energy efficiency. Oil and gas companies have long used digital technologies to improve decision-making for exploration and production assets, including reservoirs and pipelines.

The demand for energy is increasing rapidly. The energy sector is now in a great transition towards a very important energy transformation, and digitalization is one of the key facilitators to ensure that it is fulfilled.

Digitalization acts as a lever in the sector to combat climate change and optimize power generation processes to reduce emissions and meet the objective of decarbonization of the energy model. Industry 4.0 is a notion that is known well in the world of manufacturing. This “fourth industrial revolution” incorporates automation and data that is used for the optimization of production, enhanced flexibility, and efficiency within a smart factory environment. 

The digital revolution—referred to as Energy 4.0—involves advance tech such as IoT, digital twin, etc., to build smart grids, manage renewable energy, and distributed generation. The global IoT market is expected to reach a value of USD 1,386.06 billion by 2026 from USD 761.4 billion in 2020 at a CAGR of 10.53%, during the forecast period (2021-2026).

In mining, oil, and gas industries, IoT solutions incorporate machines and data analysis to achieve the requirements to operational efficiency, set forth by energy businesses. Actionable data helps to improve decision-making, reduce vulnerabilities and risk factors. New IoT trends in manufacturing have emerged in the last 6 years. 

Drones and IoT sensors are used to inspect facilities and lines. Smart grid meters provide up-to-the-minute data regarding the demand for oil, gas, water, and electricity. IoT devices also can monitor changes in temperature, moisture, and vibrations, making it possible to prevent equipment failures and increase human safety. By deploying IoT technologies, smart cities are intended to increase the quality of life while lowering energy consumption. Businesses, policymakers, and entrepreneurs in cities will work together to see that urban areas play their part in the energy revolution.

Digital twin technology ranks among the top strategic trends and has been adopted by an ever-widening range of industries since its original development by NASA. A digital twin is an advanced duplicate that models a real-life object or process without replacing it. The digital twin, by using information gathered from IoT systems attached to its physical twin, allows an organization to monitor KPIs. The goal is to feed the data into machine learning systems that can then alert operators to potential issues, expects costs, and the advantages of available options for fixing the situation.

Digital twins can be used to replicate the physical and operational characteristics of a power generation plant or another utility asset prior to construction and also to help improve operations and maintenance over the useful life of the physical installation. 

As of now, with costs decreasing and technologies growing at an exponential pace, digitalization presents opportunities for Energy 4.0 companies to establish new business models and sustainable strategies for producing and delivering energy. Digitalization can facilitate positive change, but only if policymakers undertake efforts to understand, channel, and harness digitalization’s impacts and minimize its risks.

While there is no simple roadmap to show how an increasingly digitalized energy world will look in the future, the IEA recommends ten no-regrets policy actions that governments can take to prepare. It is hoped it will foster further discussion among governments, companies, and other stakeholders.

  1.     Build digital expertise within their staff
  2.     Ensure appropriate access to timely, robust, and verifiable data
  3.     Build flexibility into policies to accommodate new technologies and developments
  4.     Experiment, including through “learning by doing” pilot projects
  5.     Participate in broader inter-agency discussions on digitalization
  6.     Focus on the broader, overall system benefits
  7.     Monitor the energy impacts of digitalization on overall energy demand
  8.     Incorporate digital resilience by design into research, development, and product manufacturing
  9.     Provide a level playing field to allow a variety of companies to compete and serve consumers better
  10.     Learn from others, including both positive case studies as well as more cautionary tales

The world has begun to shift towards renewable resources, a trend where digital can be of great service in monitoring and delivering optimal outcomes. A well-planned digital transformation in the renewable energy sector will provide numerous benefits:

  1.     Digitalization tools and platforms help build renewable energy plants with automated processes, for informed decision making. In addition, the interconnections they propose are the basis for a more decentralized generation, thus avoiding isolated ‘energy islands.’
  2.     These platforms reduce downtime by offering alerts based on predictive maintenance, anticipating asset maintenance. The modernization of production plants is necessary to make them more efficient.
  3.     They allow a more accurate forecast of the weather and market conditions, which helps to maximize renewable production, by offering a deep analysis of all information received in real-time, to be able to make decisions and offer stability in demand.
  4.     The use of artificial intelligence and machine learning to optimize the engineering and construction of new renewable sources and plants reduces time to market, anticipating the benefits of free C02 generation and increasing production.
  5.     The use of digital tools will allow increasing the productivity of employees, making maintenance much more efficient. The digital transformation in the renewables sector allows automating different work processes, such as the control of photovoltaic and wind farms remotely.

The level of digitalization of the electrical industry is already very high, more than 10 years ago that the production has incorporated it, for example, the automation of hydroelectric power plants and wind farms, everything is done from the control centers, and has a direct consequence in employment and efficiency. But not only the Digital transformation influence on production and maintenance processes. It also influences the relationships with customers.

The traditional energy companies are facing competition from every corner, from margins to competition and price fluctuations. Digital transformation is a crucial ingredient in the energy transition, allowing the integration of more and more renewable energies throughout the electrical system, increasing network reliability, and helping to better manage energy demand.