How AI and Cloud Technologies are Powering the Energy Transition

In the latest episode of Tom Raftery TV , I had the pleasure of hosting Bilal Khursheed , the Worldwide Leader for Power & Utilities at 微软 . We talked about the digital transformation of the energy sector and how technologies like cloud computing and AI are playing a pivotal role in this shift. Bilal brought a wealth of experience from his time at Hydro One and now with Microsoft, and his insights provide a valuable look into the strategies that are reshaping the utility industry in a time of immense change.

But before diving into the specific highlights of our conversation, it's worth setting some context about what exactly is happening in the energy industry right now, and why cloud and AI technologies are so crucial to this transition.

The Utility Sector: A Time of Transformation

The utility industry, for decades, was defined by stability. Power generation was centrally managed, and distribution was highly predictable, which allowed utility companies to follow long-standing business models with few disruptions. However, this stability has evaporated over the last decade and a half, with sweeping changes driven by both technological advancement and the pressing need to address climate change. The model of generating power centrally from massive plants is being replaced by more distributed, renewable sources like wind farms, solar panels, and local battery storage.

These changes require an adaptable energy grid, capable of handling two-way energy flows—consumers are no longer just consuming power; they are also generating and feeding it back into the grid. This decentralised model brings an increased need for efficiency, reliability, and real-time data handling, areas where cloud and AI technologies shine.

How Cloud and AI Help Meet the Challenge

One of the recurring themes in my conversation with Bilal was how the growing complexity of managing a more decentralised energy system demands a new level of technological intervention—something that legacy, on-premise systems just can't handle. Utility operators today need situational awareness across an increasingly dynamic grid, which means capturing and contextualising vast amounts of data from sources such as smart meters, edge devices, and weather systems. Traditional data infrastructure is simply not built for this kind of challenge.

Cloud computing becomes a foundational layer here, allowing utilities to scale their operations to ingest and process the vast quantities of data being generated. Bilal mentioned the immense growth in data points, which are now arriving in near real-time—from fifteen-minute intervals to as fast as subsecond granularity. This explosion in data volume can only be handled through scalable cloud infrastructure that is capable of collecting, storing, and analysing data without the need for significant upfront capital expenditure.

Meanwhile, AI technologies are helping utility companies extract insights from this data in real time. Take, for instance, the example of predictive maintenance. Predictive analytics models help utilities anticipate equipment failures before they happen, allowing preemptive maintenance to avoid costly breakdowns. This means that utility companies can move from reactive responses to proactive planning, drastically improving grid resilience.

A noteworthy example mentioned by Bilal was E.ON in Germany, which has been using drone inspections combined with AI models to manage their infrastructure more efficiently. Such digital-first strategies are crucial for improving the safety, reliability, and overall efficiency of energy systems—a necessity as utilities strive to integrate renewables into the grid.

Tackling the Challenges of Cloud Adoption

Despite the evident benefits, the journey to widespread cloud adoption for utilities has not been without its challenges. Bilal highlighted two major hurdles that have held back cloud adoption: regulatory frameworks and financial treatment. Regulatory policies in many jurisdictions are still based on outdated assumptions that complicate how cloud investments are accounted for compared to traditional infrastructure investments. For example, the old model favours capital expenditures, while cloud services fall under operational costs, leading to regulatory barriers for adopting a cloud-based approach.

However, there are signs of change. We see utility commissions in places like Alabama and Idaho adopting reforms that allow for the deferment and capitalisation of cloud costs—a promising shift that could pave the way for broader cloud adoption. These reforms are critical, as the industry needs to focus on the real value cloud brings—improving reliability, resilience, and customer satisfaction—rather than getting bogged down by outdated regulatory frameworks.

AI, Cloud, and the Future of the Energy Grid

AI and cloud are not just about making existing processes more efficient; they are enabling utilities to fundamentally rethink how they operate. One concept that really stuck with me from my conversation with Bilal was that of Virtual Power Plants (VPPs). The idea is simple but profound: aggregate distributed energy resources like solar panels, battery storage (either stationary storage, or from electric vehicles using Vehicle to Grid (V2G) technologies), and wind turbines, and manage them as a unified energy provider using cloud and AI technologies. It is, as I pointed out to Bilal, akin to cloud computing—but for energy generation.

The cloud is also proving essential for real-time grid stabilisation, especially in scenarios where renewables are involved. With the unpredictability of wind and solar power, grid operators need to balance supply and demand dynamically. AI models, powered by the cloud, can integrate weather data, historical usage patterns, and real-time demand information to make precise adjustments and avoid outages. This level of adaptability and intelligence is vital as we move towards a greener, more distributed energy landscape.

One surprising statistic that Bilal shared with us was that 39% of all critical infrastructure cyberattacks are directed at the energy industry. This highlights another benefit of cloud migration—cybersecurity. Given the scale of investment that cloud providers like Microsoft put into securing their infrastructure, utilities are better protected against evolving threats compared to relying solely on their on-premise capabilities. Cybersecurity, then, becomes another compelling reason for utility companies to accelerate their cloud journey.

Final Thoughts and Call to Action

AI and cloud technologies are transforming the utility sector at a time when change is not just necessary but inevitable. These technologies are providing the agility, security, and insights needed to build an energy system fit for the challenges of today and tomorrow. From distributed generation to predictive maintenance, and from enhancing cybersecurity to enabling Virtual Power Plants, the applications are vast and the potential transformative.

If you’re intrigued by these topics and want to delve deeper into how AI and cloud are shaping the future of the utility industry, I invite you to watch the full interview with Bilal Khursheed on Tom Raftery TV. Bilal shares more insights about the complexities of cloud adoption, the shift in industry culture, and how utilities can lead the energy transition.

Watch the full interview on Tom Raftery TV and join us in exploring how digital technologies are paving the way for a more sustainable future.

Photo credit?Nick Blackmer on Flickr