How digital transformation can empower renewable energy industry?

At present there are two important revolutions that are underway, one is AI revolution (Rode, 2023) and other is clean energy revolution (Cleanenergy, 2023). These two revolutions are changing the world as we know them. On one-hand the AI revolution is changing how we use internet, how we work, etc., on the other hand the clean energy revolution is transforming the fossil fuel-based energy system to a greener renewable energy-based system like wind, solar, battery etc. When you think of digital transformation/AI revolution the industries that spring to mind are consumer/online retail, banking, tech industry, media, finance etc. Energy industry or the renewable energy sector is not associated with digital transformation. This is because energy companies like that of utilities, O&G producers, renewable energy generators are known to be slow adapters of technology as they are often held back by regulation, governance, safety concerns, culture etc. Also, these companies place more emphasis on engineering technology rather than information technology, communication etc. (Forth et al., 2021).

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The current analysis by various industry experts has placed energy industry at a very low maturity level in terms of digital transformation and digital disruption as show in Figure 1. However, the digital potential of the energy industry, in particular the renewable energy industry is huge (Scharl and Praktiknjo, 2019) as it is one of the fastest growing sectors (Birol, 2023) where digital disruption is yet to happen. In addition, the push for digitalization of the energy industry is growing, because digital transformation of energy industry is deemed as critical step for achieving NetZero. The same is reflected in UK government’s digitalization strategy of energy sector (Government, 2021, Post, 2021). These strategies and policies are aimed to create a self-balancing smart energy grid/system as shown in Figure 2.

Demystifying digital transformation and technology around it….

Digital transformation in its most basic form is defined as the process in which a company/organization embeds digital technology across their business to drive efficiency, increase value, and increase agility. This reimagining of business to suite the digital age is digital transformation (Accenture, 2023, Salesforce, 2023).?

Navigating the tech toolkit….

There are several technologies that are used for digital transformation in renewable energy industry like Artificial intelligence (AI), block chain, Internet of things (IoT), robotics, big data, machine learning, digital twin, smart grid, smart metering, Automation etc. (Maroufkhani et al., 2022). It is important to understand what they mean and how it could be applied in practice.

AI being one of most important and influential across all industries including renewables it is important to understand it further. One of the definitions of AI is, it is the science and engineering of creating an intelligent machine/intelligent computer program. It is same as using computer to understand the human intelligence, but AI is not confined itself to methods that are biologically observable (McCarthy, 2007). ?There are typically two types of AI one is weak AI, which are programs that are specifically trained to do a narrow set of tasks like autonomous driving, weather prediction program, digital assistants like ‘Alexa’, today we are surrounded by such kind of AI which makes life easier by improving efficiency, automating repetitive task etc. The other type of AI is strong AI which are as intelligent as human beings or in some cases even surpass human intelligence. This type of Strong AI is still being researched and might be used in the future (Flowers, 2019, IBM, 2023).

Next is machine learning (ML), it is the technology used to develop computer algorithms that are used to emulate human intelligence. With the recent rise in the amount of data, ML is key to process and extract relevant insights from these large data sets. There are several methods of ML like supervised, unsupervised, self-training, deep learning etc. each one has its own application and algorithms’ (Bell, 2022, Mahesh, 2020). Internet of things (IoT) is things/devices that are connected in a network wirelessly using smart sensors (Li et al., 2015, Pretz, 2013). IoT enables a smart infrastructure in industries like military, energy, transport etc., it increases efficiency, connectivity, monitoring and enables data collection. Another technology that is key for digital transformation is blockchain, which is essentially the design underpinning the technology behind the peer-to-peer transactions of the digital currency bitcoin. The decentralized blockchain uses distributed CPU power to solve the math behind the block where all the transactions are recorded. This technology enables peer-to-peer transactions. This tech could be applied for digital payments, contracts, database & record management (Ammous, 2016, Nakamoto, 2008). ?Another important bit of technology that needs understanding is digital twin, it is technology that is used to mirror the physical process/machine/ asset in the digital world so that process/machine/asset could be better monitored, understood, and optimized. This improves efficiency, innovation, and productivity of physical assets. It is considered as one of the key enablers for industry 4.0 (Batty, 2018, El Saddik, 2018, VanDerHorn and Mahadevan, 2021).?

Paving the way for digitalization in Renewable industry...!

There are several problems that the renewable energy industry is facing like grid integration, infrastructure development, intermittent nature of generation, Technology challenges, Economic & Financial, regulation, nature preservation, volatility in energy market trading etc. Most of these challenges could be addressed to some extent by digital transformation. Implementation of digital technology in any industry presents its own set of unique challenges. These challenges need to be addressed from both a business/organizational stance and technology perspective.?

Steering digitalization: organizational/business viewpoint…

Energy companies are known to have huge inertia for change and are slow to adapt to any change. Renewable energy/ offshore wind companies are no different as they often have the origins from the government organization like privatized utilities. Small digital pilot projects on a particular process or department would often lose the shine and be forgotten. For a successful Digital transformation, the whole digitalization process should be owned and driven by the highest level of authority. Moreover, instead of trying out bite size transformation the whole business process must be rethought, and digital tools and process has to be integrated in every step of the business process (Heavin and Power, 2018, Booth et al., 2020). One of the approaches to transform the whole business is to form an ambidextrous organization as shown in Figure 3 and sponsor a project or program through this new organizational branch. But this organization would need to be tightly coordinated at senior executive level as it ensures access to resources and finances for the implementation of transformation. Being a separate unit would not disturb business as usual activities. This type of change management is deemed to be 9 time more successful (O Reilly and Tushman, 2004).?

Realization of the transformation...!

The roadmap for digital transformation must deal with the trifactor of creating value for business, dealing with technology solution, and changing the organisation culture to adapt digitalisation.

?First to bring out value the whole workflow must redefined, and the end-to-end process must be reimagined with digitalisation in mind. Example, in-case of balancing the demand and generation of renewable electricity the whole process right from controlling/forecasting renewable generation, trading electricity, transmitting electricity, forecasting demand, and metering consumption must be reimaged with digital solution in mind. Then a minimum viable product (MVP) using an integrated digital solution shall be deployed. Once successful this solution shall be further hardened for scaling up across the businesses. There after a sustained digital enterprise platform shall be created. This marks the end of change initiative and beginning of business as usual creating continuous value to the company.

The other factor is technology and data, it is essential to understand the existing base technology and data in the business to build on it as it not necessary to reinvent everything from scratch. For instance, in an electricity grid business it is essential to understand the existing control and monitoring system. Understanding and building a digital solution that utilises the existing infrastructure would save cost and increase value for the business. On the other hand, it is essential to identify the gaps in the current digital technology and procure new technologies to fill in those gaps and maximise digital efficiency. ?

Finally, to drive the cultural aspect of implementation of digital transformation in the business it is essential for executives to identify their star performers who could be digital champions. This because utilities/energy companies usually have a strong culture which are held by long standing engineers and technicians. So, it is crucial to leverage influence of digital champions to sway the veterinarians. Another important factor is that these champions cannot be fully dedicated to the transformational projects, so it is better to cross pollinate them between the regular projects and the digitally integrated ones eventually amalgamating of both the type of projects.?

A roadmap for offshore windfarm digitalization: Technology outlook…

Offshore wind farms are considered as key to achieve NetZero (CarbonTrust, 2022) so it would be interesting to understand the roadmap for digitalisation of offshore wind projects. At the initial phase of the project there are several factors and vast amounts of survey data to consider: like seabed, biodiversity, wind, marine life, shipping, fishing, water depth etc. These data are essential for planning, permitting, consenting, design and development of the windfarm. They are so critical that they determine the shape, size, design, and capital expenditure (CAPEX) of the project. To forge an efficient windfarm design by considering all these data an appropriate cloud storage integrated with technology like machine learning, AI etc., would be needed. The AI based system could be used to drive efficiency in decision making, consenting, design and feasibility assessment of the windfarm development (Wu et al., 2013).

?The design and engineering stage of offshore windfarms is currently aided by fragmented pieces of software and design tools. These tools need input data like system parameters, equipment standards, design limits etc. for creating the design and engineering of various elements within the project. This fragmented design approach would usually result in over-designing of main equipment as several safety margins are added on top of each other. Thus, resulting in additional cost and lower the net present value (NPV) of the project. An AI/ML based integrated design/engineering approach would produce a much safer and inherently optimum design leading to lower cost and increased NPV of the project. Furthermore, integration of operational performance data of existing project into the new project would further amplify the optimization effect.

Offshore windfarms are multibillion dollar assets that are widespread across harsh geographical locations. They need specialized operational/maintenance regime to run them for their entire lifetime of about 25~30 years.?For efficient operation, control and monitoring of the assets using IoT technology is key, IoT could be integrated by slightly modifying the current SCADA system (Karad and Thakur, 2021). Currently, manual maintenance dispatch and routine scheduled annual maintenance are being followed. By applying digital technologies like digital twins, AI/ML based failure prediction tool, dispatch of maintenance crew could be automated and predictive maintenance could be carried out instead of scheduled maintenance. This would really leapfrog the efficiency of operational and maintenance regime. Orsted one of the pioneers in the offshore wind generation has partnered with Microsoft and has implemented AI and advanced analytics to maintain its wind turbines. Each of its wind turbines produces a huge amount of data which are stored, analyzed and used to minimizes down times and perform predictive maintenance (Althoff, 2021)

?Energy trading is another area where the AI/ML technology could be applied to maximize revenues and to avoid curtailment of generation. Offshore wind power generation often depends on the weather conditions and could see unforeseen changes in generation output. To moderate this generation and maximize the profit; automation of trading and accurate prediction of wind pattern is necessary, these are already implemented by many energy trading divisions (Mikalef and Parmiggiani, 2022). Furthermore, with customers demanding green energy to achieve their NetZero targets could track their energy purchases and be sure of its origins by using blockchain technology (Wang et al., 2019).

Finally, integration of these technologies and process into a cloud-based platform with cross function learning and intertwining as shown in Figure 5 would create an ultimate digital system that would disrupt the whole offshore wind industry.?

Overcoming hurdles…

It is imminent that the digital transformation in renewable industry will be met with challenges, and they are.

Organizational resistance- This industry is highly regulated & oriented towards physical asserts which require high precision, detailed planning and rigorous health and safety processes and much more before a project hits its execution phase. This engineer driven culture creates resistance. But this resistance could be overcome with internal digital champions who have value and are responsible to drive and influence the people who could initiate cultural shift and remove the inertia (Booth et al., 2020).

Need for collaboration– In renewable industry the data is generated by various disciplines like environmental, geotechnical, mechanical, electrical engineering etc. To develop a database that could tell the story and fuel the transition in the renewable energy industry ?would need a highly collaborative research and development program that brings all these department together (Clifton et al., 2022).

Inflexible technology stack and the need to evolve- time and again a successful digital project/product is built in an iterative way by getting feedback from the customer and performing incremental improvement leading to an MVP that could be deployed. By doing so a continuous agile environment is created that could cope with any number of changes and evolve along with the organization. Lastly, technology stack used should provide flexibility for change and adaptation as the digital technology continuously advance and today’s technology might become obsolete in few years’ (Booth et al., 2020, Kozak-Holland et al., 2020).

Even if all the above challenges are addressed it is not guaranteed that the digital transformation will be successful. Transforming large renewable energy business is especially complex. Few other shortcomings of digital transformation are high cost, cybersecurity threats, data governance, potential job losses, huge risk of failure, potential loss of customer trust etc. Despite all these risks it is worthwhile to embark on the digital transformation journey because when successful the value that digital transformation creates is so enormous with potential to exponentially multiply the profits (Fabian et al., 2021).

Wrapping up the digitalization journey…

Digitalization has already started to revolutionize the renewable energy industry. The integration of smart digital solutions like AI in the process of development, design, engineering, and operation is bound to increase efficiency and profits. As renewable energy companies continue to evolve and transform by deploying digital technology, they are bound to disrupt the industry and accelerate the goal of achieving NetZero and climate neutrality.

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