Is the Energy sector digitised?

Digital Transformation is a process that, sooner or later, companies in every sector will follow in order to stay competitive but, how advanced is Energy sector in that sense?

Smart Grid

An overview

The pursuit of cheaper and non-fossil-fuel energies, the increase of a “green” consciousness among citizens and the boom in the use of electric vehicles are pushing the Energy industry to focus in business models around renewable energy. But there is still a great dependency from traditional sources worldwide.

Somehow, the situation is quite similar in terms of Digitisation of those companies. There are clear steps forwards into a whole digital transformation of processes, but there is still a lot to be done.

First of all, it is important to understand the value chain in the Energy supply process so for that, I’m borrowing the following chart from Seeking Alpha’s blog and originally created by Origin Energy (by the way, I do recommend taking a look to their article How Electricity Gets to You)

There 4 stages, traditionally, in this value chain:

  • The energy generation: The energy we finally consume is generated from different sources in power stations.
  • The energy transportation: It is the process of carrying (in high voltage current) all the energy generated by power stations to the distribution distribution points.
  • The energy distribution: it is the process of carrying the energy (in medium and low voltage current) from the distribution points to its final destination: the consumer
  • The energy commercialization: consumers do not (typically) buy the energy directly from the distributor. They normally do it through an energy commercializer, that acts as an intermediary.

In parallel to all this, there are also companies offering products and services to all the agents in that chain: Engineering and consultancy companies, installation and maintenance companies, etc.

So there is a bunch of stakeholders in the sector, and the stage they are in the Digitisation process, and the way they are carrying it out is completely different. I will focus on what typically is the first approach in Digitisation processes: the analysis of data.

Data is king

Extracting the data is the first step (and usually the most underestimated one). Being able to make informed decisions based in real, accurate and instant data is crucial for a real transformation of companies’ businesses.

That’s why there are many efforts in the industry focused on extracting and analysing meaningful data and IoT solutions are being deployed with that purpose. However, the challenges here are not trivial:

  • Data acquisition: Although it may seem so, gathering data is not easy, specially when these data comes from different sources. You sometimes have to be able to acquire data from legacy equipment with proprietary protocols, combine the process with getting info from modern sensors, and use cost-effective solutions to do all this so you guarantee the return of your investment.
  • Connectivity: Sending that data not only to internet but also integrating it with different internal and external services and systems (Analytics Tools, CRMs, ERPs…etc) may be a complex task. And these systems are the tools that will truly get the value out of the data
  • Security: It is vital that the whole data capturing process and the devices handling these data is secure. Unsecure IoT devices are a real threat for any company’s business, so it’s essential that any IoT solution you deploy takes security seriously.

Companies starting their path towards Digitisation tend to think that extracting data is the easy part, and that’s one of the main reasons why most IoT projects fail even in their PoC stage.

In the Energy sector, the meaningful data is typically captured by closed devices (PLCs, Meters, Inverters…) from big industrial manufacturers, and leveraging that data is not a simple task. Integration with that kind of equipment is complex and can imply too much effort from companies, whose primary goal is not to become experts in hardware integration but to make decisions based on data.

The most logical approach, from our humble point of view, is to use open IoT gateways with a platform that allows you not only to read data from those legacy devices but also to get data from other sources such as modern IoT sensors.

Barbara software solution has been created exactly with that purpose: to integrate in IoT gateways and allow companies to overcome the 3 challenges mentioned before (Data acquisition, Connectivity and Security) with an open, flexible and remotely manageable tool.

Moving forward

Once data is correctly captured, Energy companies have a source of information they have to transform into real insights.

Analysing this data allows not only to have real time monitoring on certain parameters but also to be able to make important decisions based on that data (such as when to change a certain piece from a machine before it breaks, or whether to buy energy instead of self-consume).

A good example of a use case is what’s being done in photovoltaic generation. But obtaining data from solar panels (mainly the amount of energy being produced at any time) and combined with other contextual information (weather conditions, price of the electricity…etc), some companies are building really smart services for energy producers, basically becoming their energy managers. This means new revenue streams to companies and saving money to their customers.

And the future is quite promising. Thanks to the spread of the electric car across consumers, new elements (the batteries in those cars) are becoming part of the energy grid. When plugged to chargers they can be used as a new energy source, and energy distribution companies can optimize their grids by taking instant actions depending on the data they handle.

The Energy sector has a long path to walk yet towards digitisation of its, but it has already started the journey, and with very steady steps.