Driving Transition to a Sustainable future for Energy & Utilities
The recent United Nations sustainable development goals highlighted that, "Global emissions of CO2 have increased by almost 50% since 1990 and the equivalent of almost three planets could be required to sustain current lifestyles by 2050."
What is sustainable transition and the changing energy landscape?
Sustainable transition refers to a shift towards more sustainable and renewable sources of energy, as well as more efficient and eco-friendly use of resources. The shift also encompasses the trend towards a connected network of Distributed Energy Resources (DER’s) and away from traditionally centralised utilities and single sources of power generation.
Factors such as progressive regulations, consumerisation of energy technologies, emphasis on energy security, convergence of industry boundaries and the shift from consumers to prosumers (consumers who are also producers) are driving radical changes in the energy landscape.
The need to accelerate?
Despite the progress in alternative technologies and awareness in the society and governments at large, accelerating the pace of energy transition has become a pressing priority.
According to the IDC, "by 2024 80% of electric, gas and water companies will have implemented sustainable business models by accelerating DX and rearchitecting the core business."
Recent disruptions such as supply chain bottlenecks induced by the pandemic, geopolitical tensions, Europe’s energy crisis, competition from non-utility players and evolving customer expectations pose significant challenges for utilities. Utilities need to reposition themselves, both to improve their resilience and capitalize on the opportunities from the energy transition.
What is the way forward?
As industry lines blur, utilities can help drive sustainability by investing in energy networks of the future, reducing their carbon emissions (both Scope 1 & 2), modernising their operations and enabling operators to efficiently integrate renewables and distributed energy resources (DERs) to the power grid.
The answer lies in leveraging digital transformation to identify sustainable, prosumer-centric business models and creating a partner ecosystem that unlocks opportunities and broadens the horizon of utilities beyond energy.
According to the Gartner, "by 2025, 40% of energy and utilities companies will face a 50% increase in capital demands triggered by resource scarcity and soaring demands."
Utilities must evolve to operate within the complex interactions of a new value chain. To deliver sustainable value and remain relevant, leading Utilities are not only investing in energy-efficient upgrades and clean and renewable energy sources, like solar, water and wind, they are also expanding beyond industry lines and integrating with other businesses such as automobiles to drive sustainable transition.
How are customers and utilities participating in sustainable transition?
While Utilities are transforming their operations, customers have stepped forward and joined the sustainability drive. Following trends highlight this change:
1. Customers buying from Green Suppliers : Customers choose to buy from Green Energy suppliers as they align with their values and help reduce their own environmental impact. They constantly watch supplier’s initiative to reduce waste and minimize the carbon footprint of within their operations as well.
2. Energy suppliers issuing certificates using Blockchain : Energy suppliers are using blockchain to issue certificates that verify the origin and authenticity of their renewable energy sources. These certificates help customers and businesses make informed decisions when choosing energy suppliers.
3. Customers participating in Demand Flexibility sessions : Demand Flexibility is a system where customers are incentivised to shift their energy consumption to off-peak hours. This helps balance the load on the electricity grid during peak hours, reducing the need for additional power plants and transmission lines.
4. Bi-directional electricity flow using Vehicle to Grid (V2G) Technology : Adoption of V2G technology is seen as a game changer in the energy transition as it enables bi-directional flow of electricity. EV’s can charge from cheap renewable sources or low tariff periods and supply it back to the grid during peak hours saving the firing of coal plants to meet the peak hours demand.
5. Smart Meter data to reduce consumption : Water & Energy companies are advising customers to reduce consumption or wastage based on smart meter data. Smart meters are digital devices that measure electricity, gas, or water consumption in near real-time. This helps customers to conserve precious natural resources, save money and contribute to a more sustainable system.
The future of sustainability
While the Energy & Utility industry is undergoing transformation to fight the climate change, achieve net zero target, there is an urgent need to expedite investments and ease government legislations in developing renewable resources infrastructure. Utilities need to accelerate modernisation of Grid, Assets & Workforce, improve operations and customer experience by use of digital technologies, data, AI/ML, digital twins, drones, IoT, 5G, Blockchain and deliver resilient operations.
"By 2024, 55% of Utilities will upgrade their infrastructure to offer smart charging and Vehicle-to-Grid Services, Thus reducing operating cost and unlocking business by up to 5% and 20%, respectively." (IDC)
Humans also play a crucial role in the sustainable energy transition along with technological advancements. This includes making conscious choices to reduce energy consumption, investing in renewable energy sources (for eg solar, batteries) and supporting policies that promote sustainability. Ultimately, the successful transition to sustainable energy requires a collaborative effort between humans and technology, where individuals and communities work together to create a more sustainable future.