Digitalization: A Game Changer for Energy Markets
While energy players champion the realization of net-zero energy markets, regulators were concerned with how to operate and regulate such an environment, as customers struggled to understand new processes. Digitalization promises to solve these issues by providing market players with the tools to intelligently run complex operations. New technology solutions and hardware applications promise to continue making energy generation more efficient whilst providing companies with ways to explore new market niches, according to industry experts.
“The fourth industrial revolution is here and the energy sector is once again playing a substantial role,” said Ricardo Delfín, Partner and Leader of Industry and Markets, KPMG.
Until recently, digital innovations were singularly reserved to make hardware technologies more cost effective, so that renewable energy systems could become more widely accessible. This neglected internal processes and consumer requirements. For example, solar and wind technology grow their productive capacity exponentially on a yearly basis whilst becoming increasingly cheaper. These advances have helped to add 162GW, 62 percent of all power generation capacity, to the global energy market in 2020, effectively displacing the cheapest fossil fuel option: coal. Utility-scale solar technology has seen the greatest reduction in costs, falling a dramatic 85 percent in a decade. Now, in most major countries, this technology is cheaper than coal and gas, a fact represented by falling global prices in levelized cost of electricity (LCOE), which fell an additional 13 percent in 2020.
While these advances should be applauded, the market has largely failed to address end-user demand, a shortfall that was recognized by leading market players during the past two years. Created as an inherently innovative market sector, energy players across global economies have been unafraid to adopt digital solutions. Central to this metamorphosis is the emergence of a global data-driven circular economy, which currently produces data faster than energy producers can analyze and utilize it: the so-called data paradox. As the ‘petroleum of the new age’, the energy market stands to benefit substantially from data collection, analysis and standardization. The latter has the most significance, where superseding this problem now stands to avoid the entrenchment of disconnect between market players. “A lot emphasis and technology has been created to utilize data, but very little effort has gone into standardizing the data as it is collected at the source,” said Bharadwaj Vasudevan, Technical Sales, Hitachi Energy North America
Moreover, to reap the greatest benefits, data analysis should be coupled with artificial intelligence and machine learning so that companies can anticipate new market opportunities as they begin to arise. “Today, power generation companies have a massive amount of information available at any given time and place. This drastically improves decision-making,” said Guillermo Bilbao, Director of Energy & Industry Business, Minsait.