Recent news of a number of green energy projects being delayed due to a lack of capacity on the grid has shone a light on the complex technological challenges the energy & utilities (E&U) sector is facing.
And with the UK government aiming to generate 50% of its electricity from renewable sources by 2030, I believe the sector’s technology needs to undergo significant modernisation efforts if it’s to adequately support the rollout of sustainable energy solutions.
By Stephen Magennis, Head of Energy & Utilities, EU at Expleo
It’s a sentiment that resonates across the industry. For instance, our recent Business Transformation Index research found half of energy business leaders believe digital transformation is crucial for enhancing access to affordable power amid our current energy crisis.
However, the research also revealed that E&U organisations face several key barriers to adopting transformative technologies, such as technology immaturity, exposure to cybersecurity risks, and the skills gap. In this piece, I’ll explore these challenges and discuss how they can be overcome.
Technology as a vehicle for change
Over the past few years, the energy sector has demonstrated that technology can be a driver of sustainable change. This is exemplified in the numerous eco-friendly breakthroughs we’ve seen – from industrial heat pumps to solar powered trains.
In a sector that has traditionally been difficult to digitalise, the rate of transformation is picking up pace, a trend I expect to continue. For example, energy leaders now see the modernisation of data management as a key business priority. With its potential to provide flexibility, balance demand for intermittent renewables and drive efficiencies for suppliers, the benefits of accurate real-time data are evident.
On the infrastructure side, modernising data management can help facilitate the roll-out of smart grids to deliver data-driven operations, and enable better decision-making, predictive maintenance, and energy distribution. This translates to a more reliable and resilient system as E&U decision-makers utilise real-time data to improve planning and efficiency.
However, despite all this progress, nearly half (44%) of energy business leaders believe they will miss deadlines to deliver digital change in 2023 – up from 17% in 2022.
The barriers to digital transformation
Among our clients, we’re seeing resources and attention being diverted towards the effects of the energy crisis. It has heavily interrupted the delivery of transformation projects, including efforts to decarbonise or pivot away from hydrocarbons.
For instance, energy sector business transformation plans are still being hampered by the immaturity of certain key technologies, such as batteries, energy storage and carbon capture solutions. And the volatile investment climate and uncertainty around government support for these technologies in some markets is only exacerbating the issue.
Cybersecurity is also causing concern, with 65% of energy leaders expect their organisations to be victims of cyber-attack or data breaches in the next 12 months. There appears to be greater awareness around critical infrastructure vulnerabilities and the risk of attacks from cyber criminals, but there are still defensive gaps that need to be plugged.
Finally, 83% of leaders agree they’ve under-invested in the technological skills base of their employees. This has hindered transformation plans, as skilled professionals are integral to rolling out new technology across an organisation.
Looking to the future
For E&U companies, the focus must be on overcoming these barriers to technology deployment whilst addressing the sustainability agenda.
It starts with a focus on modernising technology they use, so they’re able to maintain accurate and up-to-date data. With existing operational models relying heavily on legacy systems and complex assets, it’s re-assuring that data management, quality, and governance are energy leaders’ top priorities.
At the heart of this solution lies talent. Addressing the sector’s skills gaps will require both internal training and external support to equip workforces with digital skills and encourage innovation. To ease the pressure in the short term, businesses can look to increase engagement with temporary or contractual labour who are experienced in the adoption of emerging technologies, such as artificial intelligence (AI).
And it should all be underpinned by a robust cybersecurity strategy. When working to modernise their technology infrastructure, businesses must create and maintain robust cybersecurity measures such as regular vulnerability assessments, strong encryption, and continuous threat monitoring. Energy organisations should also focus on implementing employee cyber awareness and best practice.
Overall, these technological challenges need to be overcome quickly to develop solutions that benefit consumers and meet net-zero targets. Because if these issues can be addressed, businesses will also improve their operational resilience as they will have clearer understanding of their vulnerabilities. As such, they’ll be more adept at plugging these holes and better optimise their operational functions – significantly increasing their competitive advantage in the process.
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