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Get ready for the next energy fuel: Data

February 7, 2017

Spotlight

It is impossible to talk about innovation in the energy industry without talking about technology. From cow-dung cake to lightbulbs, through to the development of untapped unconventional resources and affordable and clean energy, technology has been at the forefront of all major progress and disruption in the energy sector.

According to “World Energy Scenarios” by the World Energy Council (WEC), as the population grows, the world’s per capita energy demand will peak before 2030. Digital technologies are a fundamental part of it. They generate, store and process vast amounts of data and, in the future, will form the core of the so-called smart grids, smart cars, homes, buildings and cities.

The digital universe is growing fast: its size could reach 44trn gigabytes by 2020 and finding ways to deal with this avalanche of data through advanced manufacturing, automation and telecommuting is key to success.

Competitive and disruptive players are coming to the energy sector, relegating leading companies to an uncertain position. As mentioned in “Future Energy Leaders’ Vision” by the WEC, it is imperative for big players to embrace digital innovation, as no business will survive in the long run without reinventing itself.

As data becomes the new fuel, IT turns into the engine that makes it work. To remain competitive and boost their revenues, energy companies should focus on seven innovative ways:

1. Use publicly available data to help increase client satisfaction
Public and social data can be used to enable multi-channel customer experiences, enhance sales, interaction, and open new distribution channels. Social and public customer data is today available and may be used to better understand end-users and enhance their experience.

Companies can, thus, identify through social media channels the preferences of their typical user and improve customer segmentation. This can, ultimately, allow for more effective and customised offerings. Additionally, energy companies can link internal private consumer data with publicly available habits of consumers to create more targeted and personalised messages, which can eventually increase satisfaction rates.

On the other hand, by implementing these types of online offerings, companies can improve their efficiency, in particular by simplifying IT systems, decreasing call-centre size, increasing client satisfaction, and decreasing client churn.

2. Use connected sensors to increase operational efficiency
Energy companies’ operational processes would deeply benefit from the deployment of sensors to connect all assets, from pipelines and reactors, to transmission lines, valves and wearable devices. These assets can be connected through the Internet of Things and provide critical data to develop advanced analytics and improve operational processes.

Analysts say that, by 2020, there will be between 26 and 100 billion connected devices. Companies can greatly improve their operations by deploying sensors on their assets – which could then help them anticipate malfunctions and potential breakdowns. This would also help them understand demand, give the right signal to trigger responses by utilities’ tariffs, and improve maintenance by using the sensors’ data to predict these interventions.

3. Gather corporate data to enhance enterprise productivity
Energy companies have to invest in, embrace and retain their employees. New operational models will be created at an enterprise level using new digital tools: friendly websites, corporate social networks, idea management and collaboration platforms, smart documentation and content distribution, to name just a few.

Data distribution and organisation will be critical to developing digital processes that improve people’s capabilities and enhance productivity. The concept of creating a data lake, where all data is managed in one place, is imperative.

4. Use digital twinning to enhance digital refineries or digital power plants
Once all energy company assets are automated, we will see the emergence of digital refineries and digital power plants. To do so, energy companies need to create what Jeff Immelt has defined as a “digital twin”. It aims to create, test and build equipment in a virtual environment.

From the moment the digital twin is physically manufactured, companies can compile all information within it through various sensors. Hence, companies can inspect, test and act in real time when and where it is most needed.

5. Create a platform as a service – ‘Uberisation’ to fill new customer needs
The extension of Uber’s or Airbnb’s sharing economy philosophy is also coming to the energy sector. Platforms as services will become the new paradigm. We may also eventually all become energy providers through the creation of platforms for small producers.

This could generate an ecosystem with financing and installation of energy boxes (solar, wind, etc.) used to share energy as a service. Storage is still the main bottleneck, but a point will also come when new platforms will be able to emerge to overcome this issue.

6. Use machine learning and Artificial Intelligence to tap into new niche areas

According to Gartner, by 2018, machines will author 20% of all business content. At their core, machine-learning tools capture vast numbers of complex data sets, learn from them, then apply the concepts to better estimate variables and predict future events.

In the energy industry, AI aims to develop systems that mimic what humans do – decision-making, visual perception, understanding and communicating using natural language – and combine it with computers’ best attributes, such as number-crunching in an accurate and consistent manner.

These tools will be relevant to uncover energy patterns, untapped efficiency opportunities, determine how clients consume energy, etc. This could mean that, in the future, we may be seeing oil-trading robots operated by AI and machine-learning software.

7. Blockchain will increase the pace and disrupt transactions
Blockchain will change consumers and producers in the energy ecosystem. It is a digital contract that allows one involved party to bill transitions to another. It is the technology underlying bitcoin and other cryptocurrencies, and as with several of those e-currencies, it is stored on a decentralised global network, in a tamper-proof manner and, therefore, is verified.

Blockchain is already revolutionising the way we trade energy through smart contracts, and applications in the energy industry should be coming soon. The creation of decentralised energy systems with other energy players in different regions, applicability to e-mobility and management of supply-chain players are just a few examples of its applications.

As companies look at the opportunities resulting from the digital transformation, thousands of innovations in the energy sector will conquer space. While transformation is needed by the players in this market, adapting to the digital revolution requires a change in culture and management style, and a strong focus on innovation, which must start now.

Leaders should stop relying on PowerPoint presentations for new market ideas and try to deploy concepts, embrace new fuels and all the large amounts of available data, in ways that disrupt traditional views. Ultimately, to be successful, energy leaders will have to bring a mix of IT and business skills to support digital innovations and address this new energy landscape.

Filipe Mota PintoRecently nominated Financial Times Top 50 Future Leader Worldwide on Diversity Causes, Filipe Mota Pinto is TATA’s head of new business development across Resources in UK and Ireland. He previously worked as strategy and business development manager in energy and commodities at Infosys and served as Secretary of Future Energy Leaders by the World Energy Council. He is also Chairman of the Young Professionals in Energy, London Chapter.

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