For many organisations migrating to cloud, the opportunity to run workloads from energy-efficient cloud data centres is a significant advantage. However, carbon emissions can vary from one country to another and if left unmonitored, will gradually increase over time as cloud use grows. This issue will become increasingly important as we move into the era of compute-intensive AI and the burden of cloud on natural resources will shift further into the spotlight.
The International Energy Agency (IEA) estimates that data centres are responsible for up to 1.5% of global electricity use and 1% of GHG emissions. Cloud providers have recognised this and are committed to change. Between 2025 and 2030, all hyperscalers – AWS, Azure, Google, and Oracle included – expect to power their global cloud operations entirely with renewable sources.
Chasing the Sun
Cloud providers are shifting their sights from simply matching electricity use with renewable power purchase agreements (PPA) to the more ambitious goal of operating 24/7 on carbon-free sources. A defining characteristic of renewables though is intermittency, with production levels fluctuating based on the availability of sunlight and wind. Leading cloud providers are using AI to dynamically distribute compute workloads throughout the day to regions with lower carbon intensity. Workloads that are processed with solar power during daylight can be shifted to nearby regions with abundant wind energy at night.
Addressing Water Scarcity
Many of the largest cloud data centres are situated in sunny locations to take advantage of solar power and proximity to population centres. Unfortunately, this often means that they are also in areas where water is scarce. While liquid-cooled facilities are energy efficient, local communities are concerned on the strain on water sources. Data centre operators are now committing to reduce consumption and restore water supplies. Simple measures, such as expanding humidity (below 20% RH) and temperature tolerances (above 30°C) in server rooms have helped companies like Meta to cut wastage. Similarly, Google has increased their reliance on non-potable sources, such as grey water and sea water.
From Waste to Worth
Data centre operators have identified innovative ways to reuse the excess heat generated by their computing equipment. Some have used it to heat adjacent swimming pools while others have warmed rooms that house vertical farms. Although these initiatives currently have little impact on the environmental impact of cloud, they suggest a future where waste is significantly reduced.
Greening the Grid
The giant facilities that cloud providers use to house their computing infrastructure are also set to change. Building materials and construction account for an astonishing 11% of global carbon emissions. The use of recycled materials in concrete and investing in greener methods of manufacturing steel are approaches the construction industry are attempting to lessen their impact. Smaller data centres have been 3D printed to accelerate construction and use recyclable printing concrete. While this approach may not be suitable for hyperscale facilities, it holds potential for smaller edge locations.
Rethinking Hardware Management
Cloud providers rely on their scale to provide fast, resilient, and cost-effective computing. In many cases, simply replacing malfunctioning or obsolete equipment would achieve these goals better than performing maintenance. However, the relentless growth of e-waste is putting pressure on cloud providers to participate in the circular economy. Microsoft, for example, has launched three Circular Centres to repurpose cloud equipment. During the pilot of their Amsterdam centre, it achieved 83% reuse and 17% recycling of critical parts. The lifecycle of equipment in the cloud is largely hidden but environmentally conscious users will start demanding greater transparency.
Recommendations
Organisations should be aware of their cloud-derived scope 3 emissions and consider broader environmental issues around water use and recycling. Here are the steps that can be taken immediately:
- Monitor GreenOps. Cloud providers are adding GreenOps tools, such as the AWS Customer Carbon Footprint Tool, to help organisations measure the environmental impact of their cloud operations. Understanding the relationship between cloud use and emissions is the first step towards sustainable cloud operations.
- Adopt Cloud FinOps for Quick ROI. Eliminating wasted cloud resources not only cuts costs but also reduces electricity-related emissions. Tools such as CloudVerse provide visibility into cloud spend, identifies unused instances, and helps to optimise cloud operations.
- Take a Holistic View. Cloud providers are being forced to improve transparency and reduce their environmental impact by their biggest customers. Getting educated on the actions that cloud partners are taking to minimise emissions, water use, and waste to landfill is crucial. In most cases, dedicated cloud providers should reduce waste rather than offset it.
- Enable Remote Workforce. Cloud-enabled security and networking solutions, such as SASE, allow employees to work securely from remote locations and reduce their transportation emissions. With a SASE deployed in the cloud, routine management tasks can be performed by IT remotely rather than at the branch, further reducing transportation emissions.
The UN’s global stocktake synthesis report underscores the need for significant efforts to meet the ambitious goals of the Paris Agreement to keep the global warming limit to 1.5ºC, compared to pre-industrial levels. Achieving this requires collective action from governments, organisations, and individuals.
While regulators focus on mandates, organisations today are being influenced more by individual responsibility for positive impact. Customers and employees are leading ESG actions – another fast-emerging voice driving ESG initiatives are value chain partners looking to build sustainable supply chains.
Ecosystm research reveals that only 27% of organisations worldwide currently view ESG as a strategic imperative, yet we anticipate rapid change in the landscape.
Click below to find out what Ecosystm analysts Gerald Mackenzie, Kaushik Ghatak, Peter Carr and Sash Mukherjee consider the top 5 ESG trends that will shape organisations’ sustainability roadmaps in 2024.
Click here to download ‘Ecosystm Predicts: Top 5 ESG Trends in 2024’ as a PDF.
#1 Organisations Will Evolve ESG Strategies from Compliance to Customer & Brand Value
Many of the organisations that we talk to have framed their ESG strategy and roadmaps primarily in relation to compliance and regulatory standards that they need to meet, e.g. in relation to emissions reporting and reduction, or in verifying that their supply chains are free from Modern Slavery.
However, organisations that are more mature in their journeys have realised that ESG is quickly becoming a strategic differentiator and compliance is only the start of their sustainability journey.
Customers, employees, and investors are increasingly selective about the brands they want to associate with and expect them to have a purpose and values that are aligned with their own.
#2 Sustainability Will Remain a Stepping-Stone to Full ESG
Heading into 2024, the corporate continues to navigate the nuances between Sustainability and Environmental, Social, and Governance (ESG) initiatives. Sustainability, focused on environmental stewardship, is a common starting point for corporate responsibility, offering measurable goals for a solid foundation.
Yet, the transition to comprehensive ESG, which includes broader social and governance issues alongside environmental concerns, demands broader scope and deeper capabilities, shifting from quantitative to qualitative measures. The trend of merging sustainability with ESG risks is blurring distinct objectives, potentially complicating reporting and compliance, and causing confusion in the market. Nevertheless, this conflation ultimately paves the way for more integrated, holistic corporate strategies.
By aligning sustainability efforts with wider ESG goals, companies will develop more comprehensive solutions that address the entire spectrum of corporate responsibility.
#3 ESG Consulting Will Grow – Till Industry Templates Take Over
At the end of 2022, LinkedIn buzzed with announcements of Chief Sustainability Officer appointments. However, the Global Sustainability Barometer Study reveals that only around one-third of global organisations have a dedicated sustainability lead. What changed?
Organisations have recognised that ESG is intricate, requiring a comprehensive focus and a capable team, not just a sustainability leader.
Each organisation’s path to sustainability is unique, shaped by factors like size, industry, location, stakeholders, culture, and values. Successfully integrating ESG requires a nuanced understanding of an organisation’s barriers, opportunities, and risks, making it challenging to navigate the sustainability journey alone. This is complicated by the absence of clear government/industry mandates and guidelines that frame best practices.
#4 Sustainability Tech Will Finally Gain Traction
Many organisations initiate sustainability journeys with promises and general strategies. While the role of technology in accelerating goals is recognised, alignment has been lacking. In 2024 sustainability tech will gain traction.
Environmental Tech. Improved sensors and analytics will enhance monitoring of air and water quality, carbon footprint, biodiversity, and climate patterns.
Carbon-Neutral Transportation. Advancements in electric and hydrogen vehicles, batteries, and clean mobility infrastructure will persist.
Circular Economy. Innovations like reverse logistics and product lifecycle tracking will help reduce waste and extend product/material life.
Smart Grids and Renewable Energy. Smart grid tech and new solutions for renewable energy integration will improve energy distribution.
#5 Cleantech Innovation Will See Increased Funding
Cleantech is the innovation that is driving our adaptation to climate change. We expect that investments into, and the pace of innovation and adoption of Cleantech will accelerate into 2024.
As companies commit to their net-zero targets, the need to operationalise the technologies required to fuel this transition becomes all the more urgent. BloombergNEF reported that for Europe alone, nearly USD 220 billion was invested in Cleantech in 2022.
But to meet net-zero ambitions, annual investments in Cleantech will need to triple over the rest of this decade and quadruple in the next.
The ongoing Ecosystm State of ESG Study throws up some interesting data about organisations in Asia Pacific.
We see ESG more firmly entrenched in organisational strategies; organisations leading with Social and Governance initiatives that are easily integrated within their CSR policies; and supply chain partners driving change.
Download ‘Sustainable Asia Pacific: The ESG Growth Story’ as a PDF
While there has been much speculation about AI being a potential negative force on humanity, what we do know today is that the accelerated use of AI WILL mean an accelerated use of energy. And if that energy source is not renewable, AI will have a meaningful negative impact on CO2 emissions and will accelerate climate change. Even if the energy is renewable, GPUs and CPUs generate significant heat – and if that heat is not captured and used effectively then it too will have a negative impact on warming local environments near data centres.
Balancing Speed and Energy Efficiency
While GPUs use significantly more energy than CPUs, they run many AI algorithms faster than CPUs – so use less energy overall. But the process needs to run – and these are additional processes. Data needs to be discovered, moved, stored, analysed, cleansed. In many cases, algorithms need to be recreated, tweaked and improved. And then that algorithm itself will kick off new digital processes that are often more processor and energy-intensive – as now organisations might have a unique process for every customer or many customer groups, requiring more decisioning and hence more digitally intensive.
The GPUs, servers, storage, cabling, cooling systems, racks, and buildings have to be constructed – often built from raw materials – and these raw materials need to be mined, transported and transformed. With the use of AI exploding at the moment, so is the demand for AI infrastructure – all of which has an impact on the resources of the planet and ultimately on climate change.
Sustainable Sourcing
Some organisations understand this already and are beginning to use sustainable sourcing for their technology services. However, it is not a top priority with Ecosystm research showing only 15% of organisations focus on sustainable procurement.
Technology Providers Can Help
Leading technology providers are introducing initiatives that make it easier for organisations to procure sustainable IT solutions. The recently announced HPE GreenLake for Large Language Models will be based in a data centre built and run by Qscale in Canada that is not only sustainably built and sourced, but sits on a grid supplying 99.5% renewable electricity – and waste (warm) air from the data centre and cooling systems is funneled to nearby greenhouses that grow berries. I find the concept remarkable and this is one of the most impressive sustainable data centre stories to date.
The focus on sustainability needs to be universal – across all cloud and AI providers. AI usage IS exploding – and we are just at the tip of the iceberg today. It will continue to grow as it becomes easier to use and deploy, more readily available, and more relevant across all industries and organisations. But we are at a stage of climate warming where we cannot increase our greenhouse gas emissions – and offsetting these emissions just passes the buck.
We need more companies like HPE and Qscale to build this Sustainable Future – and we need to be thinking the same way in our own data centres and putting pressure on our own AI and overall technology value chain to think more sustainably and act in the interests of the planet and future generations. Cloud providers – like AWS – are committed to the NetZero goal (by 2040 in their case) – but this is meaningless if our requirement for computing capacity increases a hundred-fold in that period. Our businesses and our tech partners need to act today. It is time for organisations to demand it from their tech providers to influence change in the industry.
The idea of solar energy beamed back to earth from space was born a century ago by astronautics pioneer, Konstantin Tsiolkovsky, and then popularised by Isaac Asimov in his 1941 short story Reason. Although the first designs for a solar power satellite with microwave-based transmission were developed by Czech-born NASA engineer, Peter Glaser, in 1968, it has taken decades for complementary technologies to catch up to even make testing the concept feasible.
Space-based solar power (SBSP) uses photovoltaic panels on satellites to generate electricity and beam it back to Earth in microwave form. The energy is then converted back to electricity at a rectenna receiving station connected to the grid. By deploying a network of geostationary satellites, it is theoretically possible to transmit energy around the globe before beaming it back to Earth. The technology would be a breakthrough, generating abundant renewable energy 24 hours per day, regardless of the weather or season. This would overcome the primary challenge of renewables – intermittency – and reduce the need for storage.
Reusable Rockets and Small Satellites
One of the greatest hurdles to commercialising SBSP is the prohibitive cost to launch into orbit, but the advent of reusable rockets and small satellites has brought down the price dramatically. Private companies, like SpaceX and Rocket Lab, charge between USD 3,000-30,000 per kilogram of payload to low earth orbit, a fraction of the cost when launches were dominated by government space agencies.
The emergence of cheaper small satellites, or CubeSats, is also creating a landscape favourable to innovation in space. Researchers can afford to experiment with new technologies by launching prototypes into orbit and iterating quickly.
Caltech Experiment Proves Transmission is Possible
While the efficiency and durability of photovoltaic panels have improved exponentially and the cost of launching satellites into space has plummeted, transmitting power back to Earth remains a challenge. Electricity must be converted into microwaves, with the beams steered back through the earth’s atmosphere. Transmission can be degraded by factors, such as atmospheric absorption, diffraction, and weather.
Researchers from The California Institute of Technology (Caltech) recently achieved a milestone by demonstrating that the transmission of energy from space is possible. The Caltech Space Solar Power Project (SSPP) launched the Microwave Array for Power-transfer Low-orbit Experiment (MAPLE) onboard the Space Solar Power Demonstrator (SSPD-1) earlier this year. In progressively ambitious experiments, the researchers lit up two LEDs in orbit to test energy transfer in space. Next, they successfully transmitted a “detectable” amount of power to antennae on the roof of the Moore Laboratory at Caltech. This may prove to be the first step toward developing a commercially viable system.
Governments Recognise Space-based Solar Potential
With sustainability and energy security coming sharply into focus over the last year, governments have sat up and paid attention to the potential of SBSP. The UK’s energy security secretary, Grant Shapps, recently announced the winners of £4.3M in funding to develop the technology. The grants were devised to tap into the 10GW of space-based solar power potential that an independent study estimated would be available to the UK. Public entities in the EU, China, Japan, and the US have made similar announcements over the past 12 months, signalling a rapid shift in momentum for SBSP.
A Revolution of Space-based Power and Communications
Although SBSP is still undeniably an experimental technology, recent developments hint at a future where clean energy could be beamed down to Earth. Even accounting for transmission loss, each solar power satellite is estimated to deliver the equivalent of a nuclear power station to the grid.
Access to power remains a major obstacle to data centre operators, whether they are hyperscale cloud providers, city-based facilities at capacity, or small regional edge data centres. In recent years, cloud hubs, such as Singapore and Ireland, have imposed strict controls on new data centre builds due to concerns about escalating power consumption. Rising prices for natural gas have made the business case for renewable sources for data centre power even more attractive and space-based solar is an alluring candidate to add to the future mix.
Power transmitted to Earth could be coupled with low latency connectivity provided by satellites in low earth orbit from the likes of Starlink. The pairing of power and connectivity from satellites means even remote locations could be served. Advances in energy and communications have ignited progress since the discovery of fire and the emergence of language and these space-based innovations will undoubtedly play a key role in the next industrial revolution.
Earlier this month, I had the privilege of attending Oracle’s Executive Leadership Forum, to mark the launch of the Oracle Cloud Singapore Region. Oracle now has 34 cloud regions worldwide across 17 countries and intends to expand their footprint further to 44 regions by the end of 2022. They are clearly aiming for rapid expansion across the globe, leveraging their customers’ need to migrate to the cloud. The new Singapore region aims to support the growing demand for enterprise cloud services in Southeast Asia, as organisations continue to focus on business and digital transformation for recovery and future success.
Here are my key takeaways from the session:
#1 Enabling the Digital Futures
The theme for the session revolved around Digital Futures. Ecosystm research shows that 77% of enterprises in Southeast Asia are looking at technology to pivot, shift, change and adapt for the Digital Futures. Organisations are re-evaluating and accelerating the use of digital technology for back-end and customer workloads, as well as product development and innovation. Real-time data access lies at the backbone of these technologies. This means that Digital & IT Teams must build the right and scalable infrastructure to empower a digital, data-driven organisation. However, being truly data-driven requires seamless data access, irrespective of where they are generated or stored, to unlock the full value of the data and deliver the insights needed. Oracle Cloud is focused on empowering this data-led economy through data sovereignty, lower latency, and resiliency.
The Oracle Cloud Singapore Region brings to Southeast Asia an integrated suite of applications and the Oracle Cloud Infrastructure (OCI) platform that aims to help run native applications, migrate, and modernise them onto cloud. There has been a growing interest in hybrid cloud in the region, especially in large enterprises. Oracle’s offering will give companies the flexibility to run their workloads on their cloud and/or on premises. With the disruption that the pandemic has caused, it is likely that Oracle customers will increasingly use the local region for backup and recovery of their on-premises workloads.
#2 Partnering for Success
Oracle has a strong partner ecosystem of collaboration platforms, consulting and advisory firms and co-location providers, that will help them consolidate their global position. To begin with they rely on third-party co-location providers such as Equinix and Digital Realty for many of their data centres. While Oracle will clearly benefit from these partnerships, the benefit that they can bring to their partners is their ability to build a data fabric – the architecture and services. Organisations are looking to build a digital core and layer data and AI solutions on top of the core; Oracle’s ability to handle complex data structures will be important to their tech partners and their route to market.
#3 Customers Benefiting from Oracle’s Core Strengths
The session included some customer engagement stories, that highlight Oracle’s unique strengths in the enterprise market. One of Oracle’s key clients in the region, Beyonics – a precision manufacturing company for the Healthcare, Automotive and Technology sectors – spoke about how Oracle supported them in their migration and expansion of ERP platform from 7 to 22 modules onto the cloud. Hakan Yaren, CIO, APL Logistics says, “We have been hosting our data lake initiative on OCI and the data lake has helped us consolidate all these complex data points into one source of truth where we can further analyse it”.
In both cases what was highlighted was that Oracle provided the platform with the right capacity and capabilities for their business growth. This demonstrates the strength of Oracle’s enterprise capabilities. They are perhaps the only tech vendor that can support enterprises equally for their database, workloads, and hardware requirements. As organisations look to transform and innovate, they will benefit from the strength of these enterprise-wide capabilities that can address multiple pain points of their digital journeys.
#4 Getting Front and Centre of the Start-up Ecosystem
One of the most exciting announcements for me was Oracle’s focus on the start-up ecosystem. They make a start with a commitment to offer 100 start-ups in Singapore USD 30,000 each, in Oracle Cloud credits over the next two years. This is good news for the country’s strong start-up community. It will be good to see Oracle build further on this support so that start-ups can also benefit from Oracles’ enterprise offerings. This will be a win-win for Oracle. The companies they support could be “soonicorns” – the unicorns of tomorrow; and Oracle will get the opportunity to grow their accounts as these companies grow. Given the momentum of the data economy, these start-ups can benefit tremendously from the core differentiators that OCI can bring to their data fabric design. While this is a good start, Oracle should continue to engage with the start-up community – not just in Singapore but across Southeast Asia.
#5 Commitment to Sustainability at the Core of the Digital Futures
Another area where Oracle is aligning themselves to the future is in their commitment to sustainability. Earlier this year they pledged to power their global operations with 100% renewable energy by 2025, with goals set for clean cloud, hardware recycling, waste reduction and responsible sourcing. As Jacqueline Poh, Managing Director, EDB Singapore pointed out, sustainability can no longer be an afterthought and must form part of the core growth strategy. Oracle has aligned themselves to the SG Green Plan that aims to achieve sustainability targets under the UN’s 2030 Sustainable Development Agenda.
Cloud infrastructure is going to be pivotal in shaping the future of the Digital Economy; but the ability to keep sustainability at its core will become a key differentiator. To quote Sir David Attenborough from his speech at COP26, “In my lifetime, I’ve witnessed a terrible decline. In yours, you could and should witness a wonderful recovery”
Conclusion
Oracle operates in a hyper competitive world – AWS, Microsoft and Google have emerged as the major hyperscalers over the last few years. With their global expansion plans and targeted offerings to help enterprises achieve their transformation goals, Oracle is positioned well to claim a larger share of the cloud market. Their strength lies in the enterprise market, and their cloud offerings should see them firmly entrenched in that segment. I hope however, that they will keep an equal focus on their commitment to the start-up ecosystem. Most of today’s hyperscalers have been successful in building scale by deeply entrenching themselves in the core innovation ecosystem – building on the ‘possibilities’ of the future rather than just on the ‘financial returns’ today.
Energy providers around the world have transformed their electricity generation profiles to include solar, wind, hydro, and geothermal to reduce the carbon intensity of their economies. Many countries have surpassed expectations by approaching or exceeding 50% of production stemming from renewable sources. Concurrently, the decarbonisation of the transportation sector and the growing use of air conditioning is putting upward pressure on electricity demand.
Energy providers are keen on leveraging AI in several areas (Figure 1).
The sudden evolution of the Energy sector is creating new complexity in the grid, which human operators will be unable to monitor and manage without the assistance of AI.
Predicting Supply and Shaping Demand
Output Forecasting. The primary inhibitor to the mass adoption of renewable energy is the issue of intermittency. Solar is affected by shorter winter days and cloud cover, while wind turbines are ineffective during periods of low or even high wind speed. If electricity supply does not precisely match demand, grid operators must fire up costly and carbon-intensive peaker plants to fill the gap or resort to rolling blackouts. AI is becoming a tool for generators and grid operators to forecast renewable output more accurately, insight which can, in turn, be used to shape demand.
Competitive Pricing. Wind farm operators are beginning to use adversarial AI to judge if publicly available data for velocity, pressure, and density obey turbulent flow physics and if not, to refine their forecasts. Equipped with more accurate projections, they can bid with greater certainty on day-ahead auctions rather than relying on less profitable spot prices. This consequently makes wind power more competitive with fossil-fuel-based generators and smoothens out hourly price variability.
Predicting Usage Patterns. Improved temperature and humidity forecasts can also be used by grid operators to carry out peak shaving – encouraging consumers to reduce consumption during high-load periods. By accurately predicting intervals of increased use of home heating or cooling, programs such as Rush Hour Rewards by Nest, allow distributors to remotely adjust thermostats during seasonal extremes for cash incentives. Advanced knowledge of these weather events can also give grid operators the chance to temporarily lift regulatory hurdles or conduct emergency maintenance to ensure maximum capacity is available.
Supply Orchestration. Home battery systems and electric vehicles are growing in acceptance and their storage capacity will eventually become an important piece of infrastructure for time-shifting supply to match demand. The increasing build out of solar PV has created an oversupply in the middle of the day while the rising adoption of home air conditioning creates a spike in demand after working hours, resulting in the so-called Duck Curve (see Figure 2).
By predicting periods of potential supply shortfall, distributors can increase prices to a level attractive enough to prompt battery owners to sell excess electricity rather than store it. The complexity inherent in such a distributed system is only manageable with machine learning to constantly optimise pricing and supply orchestration to simultaneously prevent excessive degradation of battery performance. This is already available for large scale battery operators, e.g. using Tesla Autobidder, and will become accessible to networks of home and eventually vehicle owners.
The Future
Optimising Renewable Generation with AI
Renewable energy sources continue to make efficiency gains due to engineering improvements. However, advances in AI will increase generation even further. Solar PV and solar concentrators that rotate on dual-axis trackers to follow the path of the sun must each operate individually according to their own precise position and the time of day and year. This must be balanced for efficiency to reduce excessive movement, which consumes a portion of electricity output. Neural networks and fuzzy logic can be applied to optimise rotation to maximise production while reducing power consumption for operation. Input variables can include position, time, temperature, and even sky colour. Similarly, wind turbines can dynamically alter their positions to maximise wind flow across the entire fleet rather than at an individual level. The large streams of data must be processed in real-time as wind variables change to have an immediate effect on output.
Stabilising the Super Grid
To improve resiliency and lessen the effects of renewable intermittency, there is a growing push towards increasing the interconnectivity of national grids. This ensures supply even when regional generators go offline or if sudden local peaks in demand occur. Moreover, interconnected grids help even out supply from renewable sources using the philosophy that it is always windy or sunny somewhere. For example, the proposed European super grid would take advantage of higher wind generation in northern countries in winter and in North Africa in the summer. Additionally, hydroelectric plants in the north could be modified to become pumped storage facilities powered by solar thermal plants in the south to supply all of Europe.
Not only will a super grid require investment in new infrastructure, such as high voltage direct current (HVDC) for efficient long-distance transmission but also in intelligent systems to manage the new complexity. The retirement of fossil-fuel generators and greater variability of renewable sources will require rethinking grid inertia and frequency control between countries. Measurement solutions, such as GridMetrix by Reactive, have been deployed by AEMO in Australia and National Grid in the UK to better monitor how inertia fluctuates as renewable sources ebb and flow. Once real-time data becomes available for analysis, infrastructure such as synchronous condensers and quick-response batteries can be automatically utilised to regulate frequency.
A Positive Outlook
Countries such as China, India, the US, Germany, and Spain have shown that it is possible to add large amounts of solar and wind generation capacity at a pace. The next chapter in the renewable revolution will be ensuring that this can be done at scale without disrupting the grid and AI will be a key component in managing the transition.
In the midst of the current global crisis, the Utilities industry has had to continue to provide essential public services – through supply chain disruption, reduction of demand in the commercial sector, demand spikes in the consumer sector, change in peak profiles, remote staff management, cyber-attacks and so on. Robust business continuity planning and technology adoption are key to the continued success of Utilities companies. The Ecosystm Business Pulse Study which aims to find how organisations are adapting to the New Normal finds that 6 out of 10 Utilities companies are accelerating or refocusing the Digital Transformation initiatives after the COVID-19 outbreak, underpinning the industry’s need for technology adoption to remain competitive.
Drivers of Transformation in the Utilities Industry
The Evolving Energy Industry. As consumers become more energy-conscious, many are making changes in their usage pattern to stay off the grid as much as possible, potentially reducing the customer base of Utilities companies. This increases their reliance on renewable energy sources (such as solar panels and wind turbines) and batteries, forcing Power companies to diversify and leverage other energy sources such as biomass, hydropower, solar, wind, and geothermal. The challenge is further heightened by the fast depletion of fossil fuels – it is estimated that the world will have run out of fossil fuels in 60 years. The industry is also mandated by government regulations and cleaner energy pacts that focus on climate change and carbon emission – there are strict mandates around how Utilities companies produce, deliver and consume energy.
Business Continuity & Disaster Management. Perhaps no other industry is as vulnerable to natural disasters as Utilities. One of the reasons why the industry has been better prepared to handle the current crisis is because their usual business requires them to have a strong focus on business continuity through natural disasters. This includes having real-time resource management systems and processes to evaluate the requirement of resources, as well as a plan for resource-sharing. There is also the danger of cyber-attacks which has been compounded recently by employees who have access to critical systems such as production and grid networks, working from home. The industry needs to focus on a multi-layered security approach, securing connections, proactively detecting threats and anomalies, and having a clearly-defined incident response process.
The Need to Upgrade Infrastructure. This has been an ongoing challenge for the industry – deciding when to upgrade ageing infrastructure to make production more efficient and to reduce the burden of ongoing maintenance costs. The industry has been one of the early adopters of IoT in its Smart Grid and Smart Meter adoption. With the availability of technology and advanced engineering products, the industry also views upgrading the infrastructure as a means to mitigate some of its other challenges such as the need to provide better customer service and business continuity planning. For example, distributed energy generation systems using ‘micro grids’ have the potential to reduce the impact of storms and other natural disasters – they can also improve efficiency and quality of service because the distance electricity travels is reduced, reducing the loss of resources.
The Evolving Consumer Profile. As the market evolves and the number of Energy retailers increases, the industry has had to focus more on their consumers. Consumers have become more demanding in the service that they expect from their Utilities provider. They are increasingly focused on energy efficiency and reduction of energy consumption. They also expect more transparency in the service they get – be it in the bills they receive or the information they need on outages and disruptions. The industry has traditionally been focused on maintaining supply, but now there is a need to evaluate their consumer base, to evolve their offerings and even personalise them to suit consumer needs.
The global Ecosystm AI study reveals the top priorities for Utilities companies, that are focused on adopting emerging technologies (Figure 1). It is noticeably clear that the key areas of focus are cost optimisation (including automating production processes), infrastructure management and disaster management (including prevention). 
Technology as an Enabler of Utilities Sector transformation
Utilities companies have been leveraging technology and adopting new business models for cost optimisation, employee management and improved customer experience. Here are some instances of how technology is transforming the industry:
Interconnected Systems and Operations using IoT
Utilities providers have realised that an intelligent, interconnected system can deliver both efficiency and customer-centricity. As mentioned earlier, the industry has been one of the early adopters of IoT both for better distribution management (Smart Grids) and for consumer services (Smart Meters). This has also given the organisations access to enormous data on consumer and usage patterns that can be used to make resource allocation more efficient.
For instance, the US Government’s Smart Grid Investment Grant (SGIG) program aims to modernise legacy systems through the installation of advanced meters supporting two-way communication, identification of demand through smart appliances and equipment in homes and factories, and exchange of energy usage information through smart communication systems.
IoT is also being used for predictive maintenance and in enhancing employee safety. Smart sensors can monitor parameters such as vibrations, temperature and moisture, and detect abnormal behaviours in equipment – helping field workers to make maintenance decisions in real-time, enhancing their safety.
GIS is being used to get spatial data and map project distribution plans for water, sewage, and electricity. For instance, India’s Restructured Accelerated Power Development & Reforms Program (R-APDRP) government project involves mapping of project areas through GIS for identification of energy distribution assets including transformers and feeders with actual locations of high tension and low tension wires to provide data and maintain energy distribution over a geographical region. R-APDRP is also focused on reducing power loss.
Transparency and Efficiency using Blockchain
Blockchain-based systems are helping the Utilities industry in centralising consumer data, enabling information sharing across key departments and offering more transparent services to consumers.
Energy and Utilities companies are also using the technology to redistribute power from a central location and form smart contracts on Blockchain for decisions and data storage. This is opening opportunities for the industry to trade on energy, and create contracts based on their demand and supply. US-based Brooklyn Microgrid, for example, is a local energy marketplace in New York City based on Blockchain for solar panel owners to trade excess energy generated to commercial and domestic consumers. In an initiative launched by Singapore’s leading Power company, SP Group, companies can purchase Renewable Energy Certificates (RECs) through a Blockchain-powered trading platform, from renewable producers in a transparent, centralised and inexpensive way.
Blockchain is also being used to give consumers the transparency they demand. Spanish renewable energy firm Acciona Energía allows its consumers to track the origin of electricity from its wind and solar farms in real-time providing full transparency to certify renewable energy origin.
Intelligence in Products and Services using AI
Utilities companies are using AI & Automation to both transform customer experience and automate backend processes. Smart Meters, in itself, generate a lot of data which can be used for intelligence based on demographics, usage patterns, demand and supply. This is used for load forecasting and balancing supply and demand for yield optimisation. It is also being leveraged for targeted marketing including personalised messages on Smart Energy usage.
Researchers in Germany have developed a machine learning program called EWeLiNE which is helping grid operators with a program that can calculate renewable energy generation over 48 hours from the data taken from solar panels and wind turbines, through an early warning system.
Niche providers of Smart Energy products have been working with providing energy intelligence to consumers. UK start-up Verv, as an example, uses an AI-based assistant to guide consumers on energy management by tracing the energy usage data from appliances through meters and assisting in reducing costs. Increasingly, Utilities companies will partner with such niche providers to offer similar services to their customers.
Utilities companies have started using chatbots and conversational AI to improve customer experience. For instance, Exelon in the US is using a chatbot to answer common customer queries on power outages and billing.
While the predominant technology focus of Utilities companies is still on cost optimisation, infrastructure management and disaster management, the industry is fast realising the power of having an interconnected system that can transform the entire value chain.