Why digitalizing the energy value chain is fundamental to saving our planet
Climate change and population growth are two of the biggest threats to the sustainability of our planet. But they’re at odds with each other. The UN Paris Agreement aims to limit global warming to 1.5˚C by reducing greenhouse gas emissions, primarily by cutting back on our use of fossil fuels. Meanwhile, the earth’s ever-increasing population needs more and more energy, with fossil fuels being today the primary source.
So, we must handle a critical dilemma: how do we provide energy for our planet’s growing population while reducing emissions without jeopardizing social progress?
Improving sustainability demands a move from fossil fuels to renewables and electrification. A recent McKinsey report on ‘The future of energy’ explores how the move in this direction is accelerating.
In this blog post, I explore not only renewables and electrification but also a third element essential to addressing the sustainability challenge: digitalization.
Sustainability is about well-being too
Many areas of society are moving from fossil fuels to electrification to address sustainability. Take transport as an example. The internal combustion engine consumes large amounts of fossil fuel, outputting emissions. These emissions decrease as we move from petrol and diesel to electric vehicles that use energy generated by renewable sources.
However, it is not only about reducing emissions. We need to take well-being and quality of life into account for sustainability that is compatible with societal development. Renewables and electrification can help here too. They are helping raise the quality of life, particularly in emerging countries.
Take cooking, one of the biggest sources of energy consumption. Many households in the developing world cook with biomass, such as firewood, charcoal or even dung. The smoke emitted is not just adding to greenhouse gases; it’s also a substantial health risk.
Install ‘home grids’ that combine solar panels with LED lighting and in-home electric supply, and you give that person a reliable source of energy for light and cooking. That electricity is also a clean fuel, from both a public health and an environmental perspective. It brings even more social benefits, such as allowing the young to study at night or keeping mobiles, essential tools everywhere, charged.
Electrification and digitization go hand in hand
Moving from fossil fuels to electrification has another great benefit: it also makes global energy consumption easier to manage in real time. It allows us to implement intelligent tools that help us finely balance production and consumption in a way that ensures we use energy in an efficient, effective and sustainable way. And this flexibility will increase as distributed energy storage mechanisms, like batteries, gain broader market penetration.
We can use digital to forecast to what types of renewables will be available, when and in which areas of the country. We can use it to forecast user demand, by estimating the number of electric cars charging. Or to send signals to the market, asking consumers to reduce their use or prosumers to increase production. By combining all these elements, we can optimize the energy footprint at different scales, from a single home to an entire continent.
Europe already has ‘zero emissions’ microgrid islands based on solar and wind combined with storage. Digital intelligence automatically manages the balance between production and consumption through monitoring, alerting and more – capabilities vital to achieving zero emissions.
This is important because, while increased use of renewables and growing electrification is leading to a drop in the consumption of fossil fuels, it may not be enough to ensure we meet the UN targets. Only through digitization can we hope to take full advantage of renewable energy and electrification to meet those targets while, at the same time, producing enough energy to sustain the quality of life of our planet’s growing population.
Digitizing the energy value chain
Digitization is also essential for bringing together the various players in the energy value chain so it can function optimally. Every player in that extended value chain – whether microgrid, electric car, digital factory or smart city – needs to exchange information with other agents on the wider energy network so they can work together to manage energy efficiently.
Take electric vehicles, as an example, and how they could help balance the production and consumption equation in real time. We can also interact with the electric cars charging for adapting to the demands of the grid, so they recharge (or not) when it is most convenient. They can recharge if there is a peak on renewable production or stop doing so if the demand on the network can’t be fulfilled. Long term, car batteries can even be used as storage, becoming a ‘home battery with wheels.’ For this, lots of systems in the energy value chain need to interact, and the way to do that is through digitalization.
We’ve seen how digitalizing energy value chains is fundamental to addressing the threats facing our planet. Read our latest Journey 2022 ‘Resolving Digital Dilemmas’ report, researched and written by the Atos Scientific Community, to learn more about developing strategies to resolve E&U’s emerging Digital Dilemmas.