By Phil Scanlon
The energy sector is one industry that has been greatly affected by the global need to decarbonise. With growing concern among investors, shareholders, activists and consumers, energy industry executives are facing increasing pressure to transition towards renewable sources and reduce their carbon emissions. To play its part in mitigating climate change to the degree required by governments and regulators, the sector must reduce its emissions by at least 3.4 gigatons of carbon-dioxide equivalent (GtCO2e) a year by 2050, which amounts to a 90 percent reduction in current emissions.
This would be easy if we could simply reduce our usage of oil and gas. The reality, however, is that energy demand will only increase in the coming years with the increasing industrialisation of markets, and digital transformation across industries. Whilst a transition to renewables is an overall way of decarbonising, the most viable near term method for energy companies to reduce emissions is through their own operations. These are termed Scope 1 emissions and refer to emissions released as a direct result of one’s own current operations.
To do this, energy companies are being forced to innovate like never before, uncovering opportunities to adopt renewable energy sources, streamline operations, and improve tracking and measuring of emissions.
While countries in Southeast Asia have collectively agreed to generate 23% of its energy from renewable sources by 2025, there are still many hurdles preventing companies in the region from operating more sustainably and unlocking better business and process optimisation.
What’s Holding Energy Companies Back from Operating More Efficiently?
The biggest challenge that energy companies face are data silos complicated by organizational boundaries, which cause lost productivity, inefficiencies, and missed insights. The origins of data silos within the industry are complex, but company infrastructure and lack of technological adoption at an early stage were key contributing factors. Traditional systems were not designed to support the open, transparent flow of information, resulting in data being inaccessible across the organisation.
Further complicating things is the lack of data transparency, which has hindered companies from unlocking value from their own data and leveraging externally-sourced data. Data-sharing has proven beneficial for nurturing new innovations; for example, at the start of the COVID-19 pandemic, researchers and healthcare companies were able to accelerate the development of vaccines due to pooling and sharing clinical data.
Data sharing also allows for analytics, which drives innovation. A recent study shows that 45% of businesses in the energy sector see analytics and innovation as critical tools, and Singapore’s Second Minister for Trade and Industry Tan See Leng also underscored the importance of energy cooperation among companies to further advance clean energy transitions in South East Asia. The region has untapped renewable energy potential, and ASEAN countries can stand to benefit from this through intra-regional collaborations. Singapore, for example, has been and continues to work closely with the US on energy security, clean energy transitions and regional energy interconnectivity.
As the sector transitions towards renewable energy sources, data transparency and real-time data sharing will be critical to ensure reliability, flexibility, and further innovation. With the entire industry tapping on data-sharing to accelerate their digital transformation and enable better business and process optimisation, pragmatic climate action strategies are likely to come to fruition much faster.
Finally, there is also the issue of power reliability – renewable energy sources, such as solar and wind energy, are intermittent, and high usage rates test the reliability of decarbonised power systems, especially with the onset of climate change which brings about erratic weather conditions. Given the varying levels of readiness between Southeast Asian nations to integrate renewable energy into existing power grids, some countries will struggle to ensure grid reliability. Reliability planning is becoming increasingly complex, and greater investment is needed to ensure that the infrastructure can support such demand. To harness South East Asia’s untapped renewable energy potential, companies must look to deploy flexible technologies to address the intermittency from renewables. One example is energy storage, where power is only provided when required.
The Importance of Real-time Data
Real-time data is information that is delivered immediately after collection, enabling businesses to act at the optimal time. In the energy sector this ranges across a myriad of usages: from an alert around an unusual change in weather condition; the avoidance of an electrical hazard because a digital sensor detected machinery overheating; or detecting electricity wastage when appliances are being switched on longer than intended. These are also known as ‘events’ – interactions that prompt further actions or responses.
Connecting these events across systems and processes allows energy companies to better identify opportunities and reduce risks, and can help improve the company’s ability to innovate, optimise and drive operational efficiency.
Introducing event-driven architecture (EDA) – the underlying architecture that views an organization as a series of events. These events are decoupled from the systems that will ultimately process them, allowing them to be harnessed in real time to help resources companies achieve immediate information insights, putting them in a better position to optimise decarbonisation initiatives.
With a scalable EDA platform for integration, energy companies can manage enormous quantities of events coming in from multiple data streams from different energy sources. This allows them to build resilient systems by aggregating this information and sending instructions to control systems, to accommodate the fluctuations in data volumes, which prevents power outages brought about by extreme weather events or conditions.
To make this a reality, innovative resources companies are deploying an event mesh, an architectural layer that enables EDA in practice to become a reality and drive higher capabilities. With an event mesh, companies can facilitate real-time integration of equipment, people, processes and systems across its distributed operations and geographies, breaking down data silos and enabling them to leverage AI, machine learning, analytics and operational technology (OT) for better efficiency and control. Existing processes can also be optimised, allowing new and cleaner processes to be implemented easier. With greater data transparency through real-time data sharing, the event mesh also offers more opportunities for innovation across the energy sector.
Given an event mesh’s capacity to offer huge benefits in scalability, flexibility and agility that companies would not get with traditional integration solutions, it is an opportunity that companies need to consider. Fortunately, more companies are beginning to embrace EDA, with a recent study finding 85% of organisations surveyed see EDA as a critical component to their digital transformation efforts.
What Lies Ahead for the Energy Sector
On 6 August, the US Senate passed the “Inflation Reduction Act” (IRA), which is the single biggest climate action initiative in history. The Act will enhance and create incentives to produce wind, solar and other renewable energies and invest in green technologies – and have significant global repercussions. Large-scale adoption of renewables in the US will spur their production in other countries that export to the US. Higher global production will in turn lead to lower costs of solar, wind, batteries, and other green technologies, which will lead to their greater adoption in other countries.
With these developments, the race is on for energy companies to meet the growing demand for green energy and prepare for uncertainties brought about by the complexities from transitioning to renewable energy sources.
In the race to net-zero, only event-driven businesses that build real-time capabilities will stand to gain a competitive edge and reap the benefits of better customer experience, enhanced operational efficiencies, and more profit for shareholders.
Phil Scanlon is the Senior Vice President for Global Solution Engineering, Solace