The Unprecedented Rate of Disruption
Originally published in Smart Energy International magazine (October 2019)
Disruption is happening at an unprecedented pace, Jaan vanValkenburgh writes from the World Energy Congress. Digital disruption is just one of the many enablers for a new energy future
Despite myriad exhibition-friendly solutions featured at the triennial World Energy Congress (WEC) in Abu Dhabi, UAE, no single technology took centre stage. Instead, holistic approaches were repeatedly called for to meet global energy requirements in an increasingly urban and electrified world and to stem associated environmental decay.
It’s a tough ask, and informal surveys (show of hands) during WEC sessions showed many attendees were skeptical. It could require:
- seeing competitors as potential partners
- creating vast, even worldwide energy and trade policy
- redefining revenue sources
- building new investment models
- learning new industries such as transportation
- sharing research discoveries, and sharing data.
In short, it would require embracing digital disruption, in a way not yet seen. Sharing data is the most obvious, immediate source of potential value-add and collaboration, but it remains a hurdle. It goes against the belief that knowledge is power and should therefore be guarded.
However, the data exists. That’s thanks to the gradual digitalisation of the industry – and of so many industries that use energy. With data comes the potential for greater precision in efficiencies, operational maintenance, and decarbonisation. As explained by Lisa Davis, Siemens’ CEO for Gas and Power: “With technologies for increasing electrification, automation, and digitisation, we can significantly decarbonise oil and gas.
“Just as an example: We electrified offshore production rigs with Equinor using HVAC and HVDC step-outs. These rigs now run mainly on hydro power supplied from land. This allows for phasing out midsize gas turbines in the offshore and has helped the company reduce emissions by more than 1.3 million tons annually.”
Digitalisation is also an enabler for the incorporation and improved management of solar and other renewables.
“We’re really looking for it [renewables] to be applied throughout all energy sectors – power, heating, mobility and so on. Electrification, for one, will be a core element in linking these sectors with renewable energy,” Davis said.
“Smart infrastructures are connecting all parts of the ecosystem; proactive consumers are able to flexibly provide load or even storage capacities.
“The batteries of your Tesla may come to mind, for example. But it also works with power-to-heat: hot water is a medium that stores energy very well. By integrating energy sectors this way, the fluctuations of wind and solar power are compensated by using their own electricity surpluses.”
Often what looks like an industry advancement is also a new challenge. The adoption of electric vehicles is one example, as explained by H.E. Subhash Chandra Garg, Secretary of Power for the Government of India.
“The big uncertain element is the electric car… We are embarking on a lot of incentives for electric cars,” Garg said. “You are aware that India has a lot of dependence on coal…We would like the electrical mobility to be based more on renewables than on coal. That is why we are very much looking at what happens on storage.”
Garg is also watching to see if greater efficiencies can lead to lower energy requirements. “We should see the impact of digitalisation (on) … demand,” he said.
Knowing where the next efficiency or fruitful coordination will come from can be difficult, but it comes down to analyzing the data. Programmes powered by artificial intelligence (AI) are proving helpful in this, as well as in other operational applications. The opportunities for AI are huge, but an element of creativity is required.
“Sometimes we struggle with the right question to ask,” US Department of Energy (DOE) Deputy Secretary Dan Brouillette said on WEC’s opening day. The US DOE, in September, created its own Artificial Intelligence and Technology Office (AITO) to research how AI can bring value to the energy industry and others. He emphasized that relevant research is shared among departments representing other industries.
Previous AI work initiated at the US DOE has been used to “strengthen US national security and cybersecurity, improve grid resilience, increase environmental sustainability, enable smarter cities, (and) improve water resource management,” according to a department statement.
“The issue around AI is the regulations,” UAE Minister of Energy and Industry H.E. Suhail Mohamed Al Mazrouei said. New policy will be needed to bring AI to its full potential, especially when public sector data is involved. Policies defining ownership and access rights must work in tangent with cybersecurity systems limiting access to data. That goes for all data, regardless of the system and/or people using it.
However, “everyone in every industry is going to be benefitting from this revolution… machine learning and the internet of things, … digitalization, smart cities are coming and coming at a [fast] pace,” he said. Al Mazrouei added that a key enabler will be 5G, as increasing the speed of telecommunications will allow greater utilisation of digital platforms.
Investment as an enabler
“Electrification of the world, our societies … [will require] digitalisation. More and more investments will go there,” said Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA).
But to which countries and which solutions? In North America and the European Union, energy consumption can be reduced,as populations are stable. That’s where investors should focus: demand-side solutions. Central Asian markets (including India), however, expect huge GDP growth. In a report by the World Energy Council released during the Congress, it is estimated that half the world’s energy investment is needed in Asia. The report Exploring Innovation Pathways to 2040 was created in collaboration with Accenture Strategy and the Paul Scherrer Institute. The World Energy Council is an accredited global energy body with more than 3,000 member organizations in over 90 countries.
Digitalisation dollars will be spent across all facets of energy, including traditional oil and gas. H.E. Sultan Ahmed Al Jaber, UAE Minister of State and Group CEO of the Abu Dhabi National Oil Company (ADNOC), said that the oil and gas industry requires an injection of $11 trillion to fund various new technologies and production projects around the world. At the same time, over the next 20 years, $80-$100 trillion is required to fund energy infrastructure worldwide, said Muqsit Ashraf, Senior Managing Director and Global Head of Energy Practice for Accenture Strategy.
It’s clear more funds are required than are immediately available. On the bright side, there is an emerging understanding and acceptance of public-private partnerships in the energy sector. Additionally, digitized energy projects are offering calculable value which can make investments more palatable, said Dr. Angela Wilkinson, the newly appointed Secretary General of the World Energy Council.
Inside the industry, digitalisation is also helping to create service-oriented energy business models such as product-as-a-service and capacity-as-a-service for the emerging consumer-centric energy systems.
“We are reinventing the world not only in energy, but in the world around energy,” said Ged Davis, Executive Chair, Scenarios for the World Energy Council.
“The energy transition offers an opportunity for growth … and to have a social license to operate,” Ashraf said. “Everyone in the industry ought to be looking at what [should] be done. … to adapt, [and] respond to [the] different … outcomes” that are outlined in Exploring Innovation Pathways to 2040.
According to the report, “What is changing most dramatically is the speed and disruptive nature of change itself … Digitalisation is impacting the whole energy value chain and enabling huge improvements in energy efficiency within existing production and delivery, as well as for wider and new energy uses.”
Note: My second article from the World Energy Congress will be published in the first quarter of 2020.