What does digitization mean for the energy industry?

With the flourishing development of general technologies such as IoT, 5G communication, and big data science, the bottlenecks limiting the energy internet are being gradually broken. The standardized norms in fields like smart homes, big data algorithms, and smart grids also facilitate the application of cutting-edge technologies. Alongside the wave of digitization, energy and resources are intelligently distributed, efficiency is unprecedentedly enhanced, and energy consumption costs are significantly reduced. In Germany, “energy transition” is the largest national-level IT project in history: the digital transformation of the energy industry is a component of the “energy transition.” How to cultivate a digital mindset is the key to determining the survival of future energy enterprises; seizing the initiative in this digital war is crucial for enterprises to gain market dominance. Digital technology will change the business thinking of energy industry enterprises(sources from medcom.com.pl).

At the core of digitization is data processing. Currently, the energy industry is closely focusing on managing the massive data flows from electricity supply, smart metering, and grid operations. To establish efficient, fast, and automated data processing workflows, energy companies must become true data experts. Only then can they understand customer needs and provide corresponding products and services.

The digitization process also helps companies optimize internal processes, with text mining of business process being the most direct method. Efficient internal processes are also necessary to meet the constantly changing needs of customers. Even in the digital world, there will be no change in the attributes of power products. What changes are the distribution channels and customer demands. Customers are transitioning from mere demanders to market participants who can directly influence market activities. Their demands become more personalized and diverse. In terms of sales, digital channel platforms can have excellent promotional effects. Companies can bind with customers in various forms: online, mobile, call centers, and field sales, among others. At the same time, this binding, in the context of digitization, also provides the underlying basis for in-depth analysis for the company.

Breaking Industry Boundaries

Digital transformation also breaks the boundaries of value creation: at least in the energy industry, this is entirely possible. Data has no physical limitations; it can be comprehensively collected, processed, and analyzed to produce products and services. Meanwhile, the boundaries of the industrial chain are gradually becoming blurred during the digitization process. New participants can cross boundaries to access more resources and form new models. For example, electric vehicles appearing in several value chains of the energy industry also to some extent give birth to new “industries.”

Innovation in Corporate Culture

Digitization also poses corresponding requirements for the development of corporate culture, where agile collaboration methods and digital communication technologies play a core role. On one hand, they help employees better integrate into the digital work environment, and on the other hand, they assist companies in efficiently allocating human resources.

Digitization will change related industrial fields:

Transportation

Digital technology helps improve energy efficiency and reduce maintenance costs. In the aviation sector, big data analysis optimizes route planning, assists pilots in making flight decisions, and reduces fuel consumption. In shipping, digital technology can help crew members plan the optimal route, while advancements in satellite communication technology achieve greater connectivity. Currently, the most revolutionary changes brought by digital technology may occur in road transportation. Ubiquitous interconnectivity and automation technology may fundamentally change the way people and goods are transported.

Automated, connected, electric, and shared (ACES) technologies will have profound effects on energy consumption and carbon emissions in the future transportation industry. Autonomous driving technology, through advanced sensing and intelligent decision-making capabilities, can improve driving safety and convenience, thereby assisting or replacing human control. However, the impact of ACES technology on energy and emissions is uncertain and depends on the combined result of consumer behavior, policy interventions, and changes in vehicle technology. For example, in the long term, with the development of automation and shared vehicles, if fuel efficiency can be improved, energy consumption could be halved; conversely, if efficiency is not improved and automation has negative impacts (triggering more transportation behaviors), energy consumption could double.

Building Sector

Building intelligent technologies, including smart thermostats and lighting, are expected to significantly reduce energy consumption in residential and commercial buildings from 2017 to 2040. By 2040, cumulative energy savings are expected to reach 65 trillion kWh, equivalent to the total final energy consumption of non-OECD countries in 2015.

Industrial Sector

In the future, as industrial production in emerging economies continues to expand, the value of digital technology in improving energy and material efficiency in the industrial sector will only increase. In industry, many companies use digital technology to improve production safety and increase traditional production. Through advanced process control, combined with intelligent sensors and data analysis to predict equipment failures, the goal of energy conservation and consumption reduction is achieved. Digital technology also affects the way products are manufactured. Industrial robots and 3D printing technologies are becoming standard configurations in some industrial sectors, helping to improve manufacturing accuracy and reduce industrial waste.

Data science can enhance energy efficiency and reliability

Oil and Gas Industry

The industry has a historical tradition of using digital technology, especially in the upstream, where digital technology has great value potential. For example, introducing microsensors and fiber optic sensors into production systems can increase production or overall oil and gas recovery rates; using automated drilling rigs and robots to inspect and repair underwater infrastructure, monitor pipelines, and oil tanks. In the future, more wearable devices, smart robots, and artificial intelligence technologies will be applied to the oil and gas industry. The widespread application of digital technology can reduce production costs in the oil and gas industry by 10%-20% and increase recoverable oil and gas resources by about 5%.

Coal

Digital technologies such as semi-automated or fully automated systems, robotic mining, mine modeling and simulation, global positioning systems, and geographic information system tools are being fully integrated into various areas of the coal supply chain to enhance production efficiency. Low-cost sensors and computer-aided simulations bring new opportunities to the coal industry. For instance, sensors can provide real-time accurate statuses of critical equipment components and compare and analyze the “best-case scenarios” of actual configurations and designs to optimize processes. The coal industry is increasingly adopting digital technologies, data analytics, and automation to improve productivity, safety, and environmental protection. However, overall, the impact of digital technology on the coal sector may be lower compared to other industries.

Electricity Industry

Digital technology can reduce electricity system costs through four aspects: saving operation and maintenance costs, enhancing generation and grid efficiency, reducing unplanned downtime, and extending facility lifespans. Adopting digital technology could lower annual electricity generation costs by $80 billion from 2016 to 2040, equivalent to 5% of the total global generation costs(quotes from medcom).

Energy transition will develop new vitality through the digitization process. What kind of business models will dominate the energy market in the future? Only enterprises with efficiency, courage, and creativity can seize the initiative therein.