Energy consumption has been increasing in developing countries in recent years. But energy consumption in advanced countries such as the US and Europe, which together account for 40% of global demand, has fallen dramatically.
According to a study by the International Energy Agency (IEA) last December, global energy demand in 2020 will have fallen by around 2%. This is the largest annual decline since the mid-20th century, and it is not just due to the pandemic.
Climate change brings us milder temperatures all year round, and the growth of decarbonised electrification, as well as renewable energies, are a consequence of the common responsibility to rationalise energy and the decentralisation of alternative energies.
In this post, we tell you why digital transformation is necessary in the electricity industry and where the industry is right now in terms of digitisation.
The evolution of the electricity industry
Electricity has been the engine of industrial and social transformation in the world for more than a century and has become a basic commodity for society. In the fight against climate change, electricity is emerging as the main energy carrier, as it facilitates efficient use compared to other renewable energy sources.
But to meet the transformation of buildings, cities, and production or industrial processes, the industry is having to change by force, relying on digital technologies to ensure maximum efficiency in the use of energy.
Digitalisation of the electricity industry in Spain
Spain is a world example of optimising the management of these renewable energies. Digital technology and the possibilities of communication between systems have made it possible to achieve a centralised management capacity, through Red Eléctrica, of distributed renewable generation.
The use of advanced analytical techniques allows the electricity industry to predict, with very high accuracy, both the demand for electricity and the possibility of generating new electricity from renewable sources. Red Eléctrica’s control centre is therefore one of the most advanced centres in the world in this activity.
Digitisation of the electricity industry worldwide
S However, according to PwC’s 2021 Digital Energy Operations Study, “Only 2% of utilities in EMEA (Europe, Middle East and Africa) can be considered leaders in digitalisation. And 45% are digital novices.”
This shows that the industry remains incredibly complex and that digitisation is not without risks and constraints for the companies involved. We summarise the most relevant ones below:
- Aversion to change: not facing up to the risks involved in modernising industry can mean missing the digitalisation train. Many organisations adopt technologies such as data Analytics or cloud computing, but fail to exploit the value of Big Data or Artificial Intelligence solutions.
- Speed of change: digitisation is not just about adopting technologies, but must take place in an organised way and include profound changes in both production and society. In addition, digitalisation requires employees with new skills and knowledge that cannot be achieved overnight.
- High regulation: the electricity industry in most countries has always been highly regulated, so companies have followed a linear approach to processes. Advancing digitalisation will require new regulatory principles that simplify bureaucratic processes and provide a stable, clear and ethical legal framework.
- Cybersecurity risks: Cyber risks will skyrocket as automation and connectivity in the industry increase. The vulnerability of smart devices can put the privacy of millions of data and the robustness of electricity infrastructures at stake.
As a consequence of these facts, the state of maturity of the electricity industry in terms of digitalisation still has a long way to go. And although we have seen great progress in the last year, this industry still lags behind other large industrial industry such as water or ceramics.
The benefits of digitalisation for the electricity industry
While digitalisation is not the most important factor in decarbonising the planet, it is key in automating and interconnecting generators, consumers and devices to achieve more efficient and sustainable energy use.
This translates into numerous benefits for all parties, the most important of which are highlighted below:
- The progressive leading role of the end customer: the implementation of smart devices gives the customer a more active role in which to obtain information with which to make consumption management and cost optimisation decisions.
- Products and services with added value: thanks to the massive analysis of information, it is possible to offer new products with greater added value to consumers, including complementary services, such as energy efficiency incentives.
- Availability and reliability of networks: smart meters, in addition to enabling changes in demand behaviour, are also at the heart of Smart Grids. Through asset management with these technologies, grid availability is maximised and grid reliability is improved, thereby improving access to electricity.
- Higher profit margins: Asset management also ensures greater and better control of costs, both maintenance and operation. Improved operational efficiency and lower operating costs are an opportunity for companies in the industry to increase their profits.
Real examples of digitisation in the electricity industry
The changes are significantly affecting the structure of electricity production, with digital equipment being incorporated on a massive scale into a world that was basically analogue years ago.
Some examples are electricity transmission, where digital systems are appearing to manage energy flows and electricity substations, the distribution and generalisation of smart meters, and commercialisation through the development of commercial platforms on the internet and mobile applications to interact with and learn about consumer behaviour.
New technologies have brought about a paradigm shift in the electricity industry. They have facilitated an exhaustive control of all the assets involved, being able to obtain a total measurement of factors such as energy generated, consumption patterns, distribution, hourly needs, charging points and much more.
Endesa, an example of digital transformation
An example of leadership in digital transformation in the electricity industry is Spain’s Endesa, which operates in the electricity and gas industry, developing activities of generation, distribution and commercialisation of electricity and natural gas.
It took the lead in 2016 with the activation of an ambitious digital transformation plan, and is in the final year (2021) of a strategic digitalisation plan. Of the €1.2 billion investment, approximately 70% is being invested in the grid, with the aim of developing renewable generation.
This investment is enabling the grid to become a smart grid. In addition, among other things, it has been earmarked for the implementation of digital meters, automation of grid management, installation of remote controls for remote operations, and digitisation in the management of facilities and customers.
Becoming a digital leader in the electricity industry
There are three key steps for you, as a business, to complete your transition to digitalisation.
- Prioritise and focus your strategy
- Adopt distinctive digital capabilities.
- Form strategic alliances that bring you technology and know-how.
The Nexus Integra platform has the experience and infrastructure necessary for your company to gain in efficiency and become a leader in your industry. We guide you and provide you with the tools to make the path to digital transformation as flexible and intuitive as possible, adapting to your needs and your industry at all times.