Digital is key for energy sector transformation – Eaton survey

Digital is key for the energy sector to change and legacy technology is unlikely to impede the path with the gains that AI can offer, a new Eaton study has found.

The survey, investigating digital transformation in the utilities as well as data centre, building and manufacturing sectors, found that digitalisation strategies are being developed quickly in all of these sectors.

Fewer than one-quarter of the companies surveyed said that legacy technologies pose a barrier to digitalisation and are willing to relinquish them compared with one-third in 2022.

Newly emerging AI and machine learning (ML) applications, with their potential to transform businesses, are credited with this shift in sentiment over a mere 24 months.

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“This research shows how urgently businesses want to implement digital technologies that deliver the benefits of AI and ML,” said Mark Roces, vice-president of digital offer management at Eaton.

Commenting that the data centre sector is going to be instrumental in this shift because the utility and other sectors depend on them to underpin their AI journeys, he added: “Digitalisation will also help these sectors deliver on the decarbonisation strategies required by regulations, many of which have been introduced in support of the UN’s 2050 net zero target.”

Utility digital challenges

The survey, which was conducted with leaders from the sectors in North America, Europe and the Middle East by S&P Global Market Intelligence, found that utilities are under pressure.

While over half pointed to outdated infrastructure as their biggest problem, they expect grid capacity requirements to rise significantly over the next 10 years, in some cases as much as 100%, with the electrification of transport and industry as well as population growth and a changing climate.

Other top operational challenges highlighted were grid stability and renewables, electric vehicle charging and load shedding, particularly in North America, Europe and the Middle East, while energy storage emerged as a top challenge in Eastern Europe.

From the organisational perspective the top challenge is changing business models, driven by smart meters, more sophisticated customers and the move to performance-based regulation.

Other operational challenges are more localised. For example in North America, changing and/or inconsistent regulations and legislation is seen as an additional inhibitor, while in central Europe and the Nordics, digitalisation is a major challenge.

In the Middle East, utilities indicated overly siloed organisations to be their number one challenge.

Given the surging demand for power, utilities must increase their power supply and expand the capacity of the existing power grid, the report reads.

Adding renewable capacity, energy storage and grid upgrades have traditionally been the focus of discussions to address this challenge, but the reality is that most physical grid expansion projects take years to complete, and adding distributed energy resources can endanger grid stability.

For these reasons, the discussion has turned to digitalisation, which utilities see as critical to the expansion of grid capacity.

On average, utilities expect digitalisation can increase their load capacity on their existing T&D infrastructure by a quarter, with digitally driven use cases that will help including capacity forecasting and management, demand forecasting and response, outage detection and failure probability monitoring, predictive maintenance, demand planning and vegetation analysis.

“In each of these cases, data-driven insights can help utilities significantly stretch current grid capacity, enabling them to better match supply and demand, anticipate and forestall outages and more proactively maintain critical equipment.”

Data centres, manufacturing and buildings

Among other findings of the survey, data centres were found to be scaling up to meet growing demand, with almost half focusing on facility upgrades and around one-third expanding capacity and improving their IT asset performance utilisation.

Manufacturers believe AI could facilitate decarbonisation and boost their environmental, sustainability and governance scores, with over half also citing improving electrical energy monitoring and optimisation, enhancing digital twins and predictive maintenance applications.

Building operators also are focused on digital transformation to help them achieve sustainability targets, with over half planning to install building management systems within the next year to help them optimise energy use and two-thirds seeing AI as a future tool to help them predict space utilisation.