Each year, the energy sector becomes more dependent on the newest technological achievements. In fact, it’s transforming more into a software business, as the innovative technology solutions shape the landscape of the energy and utilities expanding capabilities. With its increasing role in the energy business, software has to answer its biggest challenge – the energy transition.
Energy transformation stimulates investments
Since the early 2000s, global market trends have been showing significant growth of investments within the energy and utilities industry. A considerable number of it is focused around two areas.
The first one is renewable energy. In one of the International Renewable Energy Academy’s showcases, recent investments in clean energy are broken down into various energy categories: marine, geothermal, small hydropower, liquid biofuels, biomass & waste-to-energy, wind, and solar. The investments are dominated by solar and wind energy in recent years.
Energy companies focus on incorporating renewables as a stable, strong force for global energy demand and accelerating energy transformation, which brings them benefits and enables reaching sustainable development goals.
The last one brings us to the second area of energy industry investments, digital technology. Digitalization of Energy Systems, a report prepared by Bloomberg New Energy Finance (BNEF), shows that the market for digital technologies used in the energy sector is growing simultaneously to the investments in renewable energy, and the numbers are only going to increase. Digitization concentrates on smart metering, distribution automation, and solutions for home energy management systems, that are more popular year-to-year.
Energy as a software business
Recent investment trends indicate progressing reallocation of the center of gravity within the energy industry from hardware and materials to software. Optimized software is capable of boosting the efficiency of an energy system much more quickly than the newest hardware technology. This focus shifting from materials to intelligence solutions and computing power opens the energy sector to new possibilities in reaching digital sustainability, such as enhanced capabilities.
In the beginnings of renewable energy, technology had little impact on the efficiency of energy systems. Now it’s basically the driver of innovation and efficiency. Currently, software solutions enable comprehensive control over the whole energy process: generation, storage, distribution, and consumption. From the management of photovoltaic panels or wind turbines, through smart batteries and prioritizing usage of clean energy, to the control over DREs – grid cooperation, software is responsible for monitoring performance and health of hardware, data-storing, analyzing, and overall management of energy systems.
Energy systems control is changing too. Energy transformation opened the market for small renewable energy suppliers, like households with photovoltaics and storage systems, enabling them to share collected energy with the grid. Distributed energy resources (DERs) are currently one of the fastest expanding areas of the energy sector. Networks they create with the grid are easily manageable by digital platforms that allow creating reliable and sustainable energy sources and backup for the grid. Hyperconnectivity software solutions, like cloud and IoT, aggregate DERs and ensure the increase of energy efficiency and significant cost reductions due to their scalability. Small DER sets are easy to manage and scale. Joined together, they are capable of creating larger ones, like super-battery, that provides more storage than a single large unit.
The unprecedented flexibility is one of the most useful advantages that software can provide for energy systems. DERs sets are easy to adjust to changing demands without the necessity of rebuilding the whole system. So are other sources of sustainable energy, like wind or solar farms and hydropower. Advanced technology solutions ensure that innovation is available and included, as the rapid evolution of software pushes forward the growth of the entire industry. Digital technology dematerializes transition to clean energy, simplifying it for energy suppliers and consumers to switch to sustainable energy resourced from renewables.
Energy transition is becoming a software challenge
This enhancement of availability and capabilities is also the biggest challenge for the energy industry driving force, especially when market demands change so rapidly. Upgrading energy capabilities is and will be a challenge addressed by technology since no other industry evolves so fast.
Software solutions already outrivaled hardware technology development, simply because materials and hardware need much more time to upgrade and have a tendency to get more expensive over time while computing power gets cheaper. Software is a more cost-effective option in this set. That makes it also available to use and work on the energy industry advantage much quicker, boosting efficiency and reducing the costs.
Not only time and low costs work on the benefit of the efficiency enhanced by software. Innovation can be spread a lot quicker in small installations than in grid-scale systems. That speaks in favor of DERs as the essential components of energy networks.
To become more flexible, efficient, and competitive, grids have to embrace digitization and software as their way to minimize risks and gain the capability of rapid adaptation to the increasing needs of the market. This evolution should proceed on many levels simultaneously, such as using monitoring and automation to speed up processes, advanced analytics, and big data to verify and increase the efficiency, and using hyperconnectivity solutions to strengthen grids with additional power sources, like DERs. Their aggregation within digital platforms supports the grid with stable, reliable sources of backup power and helps to incorporate significant amounts of clean energy into general demand.
Technology already meets and will meet energy market needs
Technology doesn’t leave those challenges unanswered. Tech market has been developing at a tremendous speed in the last decades. This process will only speed up, as the new tech achievements unlock more and more capabilities.
In fact, it has already started. Energy and utilities companies harness technology capabilities, such as predictive analytics, real-time tracking and monitoring, automation, big data, IoT solutions, or AI and machine learning, to meet the needs of the global market. Software boosts energy business, transforming it into the modern enterprise sector. The efficiency is being increased, clean energy – populated, and the sustainability goals are getting closer to achieve. But technology needs to have its frame. In this case – a human factor.
What energy industry has to face
As the development of the energy sector revolves around technology solutions, energy and utilities companies have to face four common problems on their way of building efficient and sustainable solutions.
The most common is a proper technology team capable of building good software but also qualified in terms of energy industry specifics. Most energy/utilities companies have insufficient software engineering resources or they don’t have a software team skilled in solutions dedicated to their sector. There’s not enough human power to work out, implement, and support technology development within their organizations.
The second factor is the energy industry expertise. This highly specialized industry knowledge is the key element for building cutting-edge technology solutions, capable of increasing efficiency and supporting sustainability at the same time. That brings up the next two challenges, which are the lack of technology/architecture leadership with the energy expertise and experimenting in building an energy software solution without proper expertise and experience in that area.
To make the energy transition real and efficient, contemporary energy business needs experts skilled in both: cutting-edge technologies and energy sector specifics. This combination provides the best resources to build the bridge between the old, obsolete energy model and the needed new one. Founded on sustainability, innovation, and expertise.
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