Amidst the COVID-19 pandemic and the conflict in Ukraine, energy security has taken center stage. These events have prompted a shift in our approach to the energy transition. While countries have implemented short-term measures like fuel substitution, market interventions, fiscal policies and voluntary demand reduction to tackle the energy crisis, it’s crucial to recognize that long-term solutions aligned with sustainability, economic growth and justice are essential. These events have put energy security under the microscope. They’ve uncovered the need for long-term solutions that will accelerate the energy transition and instill more stability in our global energy system.

Recently, the World Economic Forum (WEF) and Accenture published a white paper on this topic, “Securing the Energy Transition.” In the paper, they address the critical challenge of transitioning to a low-carbon economy while ensuring social inclusion, resilience and competitiveness. The whitepaper offers a framework “to help foster global common ground on ways forward for the energy sector to support much needed, coordinated stakeholder action at speed and scale. What is now a global crisis could become an opportunity to steer a more direct course towards a secure, sustainable and affordable energy future for everyone.”

The paper recognizes a series of areas where the energy transition can be strengthened in a fair way. The crucial role digitalization will play in accelerating the framework presented by WEF and Accenture – supply security, demand management, system stability and system security – is explained below.

Supply Security

According to WEF and Accenture, it will be important to increase the supply of domestic low-carbon energy mix and diversify fuel and renewable energy systems. The supply chain will also be an important component of securing access to clean energy materials.

Digitalization enables supply chains to support their drive towards net zero for a company by making the best supplier and feedstock decisions leading to the best balance of carbon intensity and profit. The latest generation of digitalization tools for plant supply chain planning helps the planner optimize not only for margin, but also for carbon intensity.

1. Tracking biomaterials through the value chain: Repsol recently launched a pilot project in Madrid with 100% renewable gasoline, obtained from the reuse of used oils and fats at the same price as normal gasoline. This is not possible without managing the supply chain and tracking emissions through the fuel value chain.
2. Optimizing transportation costs in the supply chain: Supply chain software can build optimization models across a circuit of production plants and incorporate inbound and outbound transportation. Sourcing decisions as to which plants should supply which customers will now consider transportation costs, means of transportation and the resulting carbon emissions incurred; and can optimize these to minimize transport-imposed scope three emissions.
3. Addressing supply chain bottlenecks in implementing sustainability technologies: Identifying supply chain challenges that will delay execution of these high-demand new technologies is critical to success. Connecting these digital tools between the various entities involved in these energy transition projects will be essential. The barriers are business-related and not technical.
4. Supporting circularity: Technical modelling software is proving crucial in innovating in such areas as advanced pyrolysis to handle waste plastics chemically and in hydrometallurgy, processes required to recycle EV and other advanced batteries.

Demand Management

According to the paper, demand-side management must now go beyond curtailing consumption by incentivizing a permanent shift toward clean energy. This involves various strategies including promoting energy efficiency, materials efficiency, electrification, behavioral change, digitalization and scaling up demand-response programs.

In the current business landscape, companies typically explore three primary approaches for demand management. The first approach is energy management. This addresses challenges such as high energy intensity, complex utilities management, energy waste from unplanned equipment outages and inefficient heat integration in complex processes. 

Digitalization plays a crucial role in overcoming these challenges. By leveraging digital technologies, companies can achieve energy savings per unit of product, create optimal site-wide energy management plans, predict and prevent equipment failures and reconfigure process designs for maximum energy efficiency. A comprehensive approach that spans design, planning, scheduling, optimization and maintenance can lead to a significant 30% improvement in energy efficiency with a forward-looking focus.

The second approach is via Distributed Energy Resource Management System (DERMS), which focuses on the power and utilities industry. The DERMS efficiently oversees a collection of distributed energy resources (DERs), which can include rooftop photovoltaic solar panels, behind-the-meter batteries or even a fleet of electric vehicles. The DERMS ensures these assets deliver essential grid services while maintaining a delicate balance between demand and supply. Its purpose is to assist utilities in achieving critical operational goals.

Gaining traction is a third approach, the exploration of microgrids. The Department of Energy (DOE) defines microgrids as interconnected loads and distributed energy resources within clearly defined electrical boundaries. Essentially, a microgrid acts as a single controllable entity in relation to the larger grid. It has the flexibility to connect or disconnect from the grid, allowing it to operate either in grid-connected mode or independently as an island. Microgrids can assist companies to achieve their demand management goals in the following ways:

1. Reliability and Security: Microgrids utilize and optimize owned generation to ensure a reliable and secure power supply in the absence of centralized grid power.
2. Net Zero Journey: They support companies’ net-zero goals by enabling managed renewable power generation and storage.
3. Financial Performance: By optimizing the generation mix against demand and selling excess generation through market participation, microgrids maximize financial performance.
4. Strategic Decision Making: Enhanced situational awareness of on-site grid operations through real-time visualization, trending, alarms and controls aids in strategic decision-making.

System Stability

As the WEF and Accenture paper describes, system stability “enables energy systems to withstand operational disturbances, such as grid outages, planned maintenance, extreme weather events or financial shocks (e.g. price volatility). Stability enhancements, which strengthen the reliability and resilience of the system, have never been more important or more challenging. For example, a key enabler of energy security is an increased reliance on distributed solar and wind. However, introducing more wind and solar in turn brings additional requirements for system stability, such as grid modernization, greater energy storage and backup generation capabilities.”

Digitalization can help energy companies improve their system stability in a couple of ways. First is by enabling utilities to monitor the grid and identify points of failure and faults. This can help utilities to determine where there’s pressure and to procure the services and solutions that they need to keep the system running. The second is by optimizing and forecasting energy production, which can help utilities to maintain grid stability and reliability. Digitalization can also give consumers more control over their energy usage, manage distribution, behind-the-meter generation and more.

Leading technology software providers help customers in the global power industry, as well as other end markets, transform and digitize operations to incorporate renewable energy sources and more seamlessly improve energy efficiency and reliability. Their systems provide utility customers with the ability to optimize energy efficiency from generation through delivery, enabling the broader industry goal of renewables integration and grid stability.

System Security

Per WEF and Accenture, “security of energy systems is evolving from a focus on physical security and protection of critical infrastructure towards protection from cyber threats, defense of critical supply chains and resilience to climate risks. Delivering on energy security requires effective risk management across both traditional and emerging priority areas of energy security.”

Digitalization has blended physical infrastructure – including energy assets – into digital networks making it vulnerable to cyberattacks. However, digitalization also provides solutions from digital technology in delivering energy needs and security. Energy industry leaders must embrace cyber resilience as a pillar of the digital energy ecosystem.

Through digitalization and integration of systems, organizations can become more accurate at identifying and remediating risks, responding to incidents quickly, reporting on trends and reducing costs. Digitalization can provide a single source of information and notify various stakeholder groups of trends, incident actions and more. 

Summary

Digitalization can help energy companies with system security by providing solutions from digital technology in delivering energy needs and security and by enabling organizations to become more accurate at identifying and remediating risks, responding to incidents quickly, reporting on trends and reducing costs. There are a variety of strategies the world can consider to enhance energy security amid global risks and the energy transition. Digitalization will be a key lever we rely on to accelerate and scale these strategies to make the biggest impact.