How data is shaping the future of the energy industry as the demand to tackle the climate crisis intensifies
While all industries are in a constant state of change, the energy sector faces the greatest dilemma in its history as it strives to meet demand that, according to research referenced in our SAP Energy whitepaper, will rise to 200% of current requirements by 2050 while simultaneously managing the climate crisis that could create over a billion climate refugees in the same time scale. The energy market, consisting of extraction, manufacturing, distribution and retail, will have to rise to the challenge while weathering other disruptive factors such as geopolitical upheaval that limits the accessible energy supply.
To deal with such a dilemma, the energy market needs to be restructured to allow the energy industry to meet growing demands alongside reducing carbon emissions, pollution and by-products from burning fossil fuels that are accelerating the climate crisis. The transformation is likely to include strategies such as increasing reliance on the now affordable energy alternatives wind and solar power. Additionally, there is the opportunity to leverage digitization in order to manage the increasingly complex relationship between providers and customers due to the bi-directional nature of the market.
The biggest advantage the energy sector can leverage to implement the required strategic developments is data flow for enhancement and optimization.
Challenges of the energy sector
Stark predictions by climate scientists and increasing environmental regulations have determined that the energy sector needs to reduce the level of carbon emissions it produces and be truly sustainable right across operations, no matter the scale of the business.
While regulatory pressure is a key motivator for change, reducing carbon emissions is a competitive advantage for energy businesses in the eyes of consumers and in preparation for the future of energy. A more eco-conscious industry can be created by integrating to a higher proportion of renewable energy, ensuring change in the whole supply chain and taking steps to combat waste and emissions through targeted schemes like recycling and electric vehicle fleets.
By overhauling the old approach to energy, companies can explore opportunities to ensure long-term success while reducing carbon emissions. Sensor-based monitoring has already been used by oil and gas companies for decades. Now data analysis will be the key to monitoring and reducing carbon emissions. Data-based digitization enables sustainable development in distribution networks, customer service, solutions for smart cities and planning for the future. As pioneers in strategic digitization, the energy sector needs to continue to rely on it for a sustainable future.
How data is the solution for the changing landscape of energy
It’s undeniable that what happens in the energy industry affects all of us, creating high stakes for companies going through the sustainability transformation. Data-driven technology provides the energy sector with the capabilities to meet these high-performance goals and execute the demand for a non-destructive energy supply. Leveraging advanced technologies, especially in the area of data and AI, will impact the following areas of the energy sector.
Production and delivery
Smart management is already being utilized for optimal results in manufacturing. The same tools and techniques can be used in the revolution of the energy sector to create a network that is efficient, responsive and interconnected due to a high level of intelligence throughout that is constantly refining and optimizing production and delivery processes.
For example, fleets can be efficiently managed with AI-aided remote monitoring and management centers. Automation can be applied to production stages thanks to development in Machine Learning and AI. There are also predictive capabilities supporting maintenance, optimization and planning, particularly in the management of distribution grids. Increasing efficiency reduces waste, therefore, making the production and delivery process much greener.
Improving the relationship between retailers and customers doesn’t only have business benefits but also environmental benefits as energy users can be supported in their efficient use of energy. An elevated customer experience is even more important considering the unpredictability of the energy market which is impacting the bills customers have to pay.
The intervention of data starts with data collection through devices like smart meters to create a picture of energy usage. This can be used on a large scale to advise customers on off-peak times for improved cost-efficiency and reliability. It can also be used to interpret individual usage and give personalized advice to customers about optimization.
Platform and ecosystems
With the rise of the cloud comes the rise of collaborative platforms with composable solutions for operational processes. This increases flexibility making the cloud a tool worth investing in for energy companies, whether retail, production or distribution.
It creates opportunities like the collaborative creation of service offers reducing costs, risks and time to market for all parties involved. Planning can be done more rigorously using digital twins in the cloud to test and optimize. Production assets can be enhanced for better performance, longevity and availability.
With the right architecture, energy companies can use the mass of data available to them to enhance operational efficiency, planning and collaboration, environmental performance and service levels.
The architecture of the future of energy
As a Platinum Partner with SAP, supporting strategic decision-makers worldwide to create practical, efficient and proven SAP-based and data-driven energy ecosystems, NTT DATA has a unique insight into the transformation possible within the energy sector. SAP has a vision for the energy sector which we not only implement but add to. The core principles we are led by are:
- A sustainable energy transition that embraces new ways to deliver power to customers, elimination of carbon at every stage of the value chain and emerging business models by leveraging an integrated management platform.
- Digital operational excellence in production, generation and distribution using SAP Industry 4.0 solutions, based on cloud-enabled S/4HANA, to create data-rich automations for core processes.
- Customer intimacy is enabled by technology-driven automated tools, simple to understand self-service and proactive management delivered with customer satisfaction, not just efficiency in mind.
- Competing as an ecosystem to adapt to the increasingly circular economy of energy and ensure environmental accountability at each stage in the supply chain with the view that collaboration, shared infrastructure and multi-energy conglomerates are part of the solution.
- Use technology to unlock new revenue streams thanks to the integrated capabilities of the singular platform SAP. Data analysis and automation not only increase efficiency and reduce costs in operations at face value but can be used for predictive and proactive intervention to optimize elsewhere.
The way NTT DATA applies SAP provides an integrated data-enabled architecture to enhance, optimize and future-proof energy operations. This architecture has 4 key layers:
- Process management: For the development, monitoring and delivery of core processes from customer experience concerns like billing to operational concerns like planning.
- Applications: Including core SAP, S/4HANA for Utilities and the Industry Cloud as well as partner applications, this layer deals with sustainability and security like systems of records.
- Core technology: The home of enabling tools like Master Data and Real Time Analytics which are used for process orchestration and exception management.
- Hosting: For energy clients that are not yet ready for a wholesale move to the cloud and instead want to host in an NTT DATA or SAP data center or within a secure environment at a hyperscale center to better meet their needs.
Major changes in the energy sector are imminent as the urgency of the climate crisis increases. The application of change and tracking of environmental efficiency relies on data which relies on advanced architecture. The architecture supplied by SAP and implemented by NTT DATA enables the use of specialized software with full integration, fully secure. It simplifies the processes of the business to the extent of giving decision-makers a comprehensive and singular version of the truth in real time. The benefits aren’t only seen internally but with the external delivery of customer service that is agile, efficient and simple to use.
With NTT DATA a SAP-based and complementary supplier-supported solution can be customized to individual business needs, securing a foundation for the future of energy as it and the technology to enable it emerges.
Are you equipped to transition to the future of energy?
Álvaro Campo, NTT DATA SAP global offering lead for Utilities