Every cog in the gargantuan machine of global energy needs digital aids and signposts to some degree. These tools are critical to navigating the snowballing energy trilemma: to meet the Paris Agreement goals, strengthen energy security and boost affordability. Given that the 8.1 billion people on the planet today will be joined by another 1.6 billion souls by 2050, achieving this goal requires an extremely complicated balancing act.  

 

Different technological approaches – AI (artificial intelligence), robotics, digital twins, predictive analytics and many more – aim to make energy markets more efficient, greener, affordable and safer than ever during this time of strain. For example, managing supply-demand energy flows is particularly challenging today amid geopolitical issues and rising demand. Digitalisation can ease the pressure by boosting efficiency and predictability: everything from improving remote resilience in existing energy infrastructure, to more accurate weather predictions to help safeguard the estimated 1.2 billion climate refugees by 2050.  

 

If scaled across industries, digital technologies could deliver up to 20% of the 2050 reduction needed to hit the International Energy Agency’s (IEA) net zero trajectories in the energy, materials and mobility industries – three major contributors to greenhouse gas (GHG) emissions. Astonishingly, these industries could already reduce emissions by up to 10% by quickly adopting digital technologies.   

 

Unsurprisingly, investments are climbing fast in this fortuitously timed ally. Worldwide, grid-related investment in digital technologies has climbed by more than 50% since 2015 and is expected to reach 19% of total grid investment this year. Up to 13 billion connected devices with automated controls and sensors are expected this year, up from fewer than one billion a decade ago and potentially rising to 26 billion by 2030. Plus, one billion smart power meters were used worldwide in 2022 – a 10-fold increase since 2010.   

 

Yet despite the plethora of benefits, there’s a growing unease in this relationship between man and machine.    

 

Adjusting the risk-reward ratio   

The average cost of a data breach hit $4.72mn in the global energy sector last year, according to IBM research. Relatively, this is a tiny cost, but it marked a record high – indicative of a quickening trend. In the UK, the energy industry was the country’s top target for cyberattacks, accounting for 24% of all incidents in 2021, says IBM. Sectors that are critical to stabilising the energy transition are all on the target list, including gas, water and power utilities.  

 

This trust issue is not new; threats have been on the rise significantly since 2017. But the mushrooming persistence and consequence of attacks is grabbing energy and technology stakeholders’ attention. DNV highlighted the impact in its Energy Cyber Priority 2023 report with commentary by Tor Heiberg, an Executive Director of IT at Norwegian renewable energy company Skagerak Energi.   

 

‘One Thursday afternoon, we were suddenly alerted to a potential security vulnerability related to the logging software log4j. We immediately had to go through all our software, our installations, all our backup file – everything. Even though we were not attacked, we had to drop everything and close the vulnerability,’ Heiberg said. ‘It took three full days, including Saturday and Sunday, with all hands on deck, including all our partners and suppliers. Those hours quickly became extremely expensive.’  

 

Questions over how digital tools have increasing influence across energy markets have also been amplified by Russia's invasion of Ukraine last February, with global warnings for companies in key sectors to reinforce their digital protection.    

 

Finding answers   

Amidst these risks, energy stakeholders and consumers want to know how their data – generated by and utilised by digital tools – is being used. For example, the IEA estimates that just 2–4% of data worldwide was effectively leveraged by utilities in 2019, suggesting poor management and gaps in tracking data’s journey. Again, the spotlight falls on trust.   

 

Who has the data? For what purpose? How long for? Is it being shared? How is it being protected? Who has ultimate ownership? Which country has overall control of the data? Is the data being sold to other jurisdictions and if so, what are their rules on protection? Being able to answer these fundamental questions must rapidly become the status quo across the energy ecosystem to help boost users’ confidence and mend the trust issue.   

 

This means regulators, tech and energy stakeholders need to work together to strengthen the framework of traceability and accountability. For example, more detailed regulations and policies for mainstream and exploratory digital tools and data spaces – including standardised gathering, reporting and storage methods – would help reassure energy stakeholders.   

 

Lines between shareable data and delicate intellectual property (IP) also need to be distinctly drawn by energy companies, especially amidst the rise in joint ventures and cross-border ventures. Plans to have in-house digital taskforces (for external engagement) and digital champions (to drive internal cultural buy-in) are easier wins that need to be realised, as well as monthly reports on data scope, threats and responses to threats.   

 

AI is particularly in the crosshairs. It is used widely, with a 24.68% compound annual growth rate (CAGR) in energy and power markets expected between 2021–2028 – soaring from $3.1bn to $14.5bn. But it is also at the core of many energy stakeholders’ concerns over digital integrity.  

 

Just talk of AI one day being able to make is own decisions triggers a ripple of recoil across energy markets. Stakeholders fear machines more ‘intelligent’ than us could hold the digital keys to the engine rooms of our energy security, ie power and water supplies. Using regulations and reporting to change this narrative from caution to confidence requires education, from the top-down.   

 

‘To truly harness the benefits of AI in the energy sector, it is critical this technology is trusted. There are two main challenges in achieving this: information to evaluate the trustworthiness of an AI system and communication to relay evidence, which allows users to trust the systems,’ Hari Vamadevan, Executive Vice President and Regional Director for the UK and Ireland, Energy Systems at DNV said.  

 

Looking in the mirror    

While digitalisation can dramatically facilitate the road to net zero, it also adds to the problem. Therein lies another trust issue. A key selling point of digitalisation is that it can dramatically enhance energy reduction and efficiency, yet 1% of the world’s energy related GHG emissions in 2020 were generated by data centres, data transmission networks and connected devices. Against a backdrop of missed targets in the Paris Agreement and climate disasters filling daily news headlines, each percentage point carries growing scrutiny.  

 

There is also a broader environmental impact, as energy companies complete public environment, social and governance (ESG) reports. For example, 57.4mn tonnes of electronic waste – computers, chargers, cables, sensors, phones and more – discarded in 2021 outweighed the Great Wall of China, according to the World Economic Forum. Projections by Statista also show that annual e-waste generation worldwide alone will have increased by 30% by 2030. The energy market, which employs 65 million people worldwide, needs to proactively address its role in this crisis.  

 

There is no doubt that the journey to net zero would be nigh impossible without digitalisation. But its success is not a foregone conclusion. We must urgently enhance regulations and accountability to narrow the trust gap, helping energy markets avoid a maze of digital problems that could jeopardise net zero later on.  

 

Benefits in action   

Weaving digitalisation into energy infrastructure carries vast upside. The Sun4Cast solar power forecasting system, for example, integrates machine learning and other advanced data techniques to better the accuracy of local solar power forecasts. The results are shared with utilities for real-time decision-making, reducing companies’ reliance on spot purchases, thus increasing commercial viability and the roll-out of solar PV – multiple wins via one digital model.  

  

Another illustration of strengthening energy systems is SolarEdge Home, which offers households with rooftop PV installations a variety of smart energy solutions, including smart inverters, and an app for managing smart home devices. Customers can maximise their solar power production, storage and consumption, which supports energy security, awareness and efficiency.  

 

In the UK, a cloud-based monitoring system created by Hark Systems aggregates data on energy use from existing heating, cooling, ventilation and air conditioning systems to help businesses monitor and streamline their energy use. In Sainsbury’s stores, of which there are 1,410 in the UK, this platform has helped detect anomalies and brought about a 4.5% saving in lighting costs – an especially meaningful sum amidst the country’s energy crisis.  The list of potential goes on and on.