The gathering of energy leaders and policy makers at last weeks’ World Energy Week in Milan was made even more poignant by the timely release of the IPCC Special Report on climate change.
The report makes for sobering reading, painting a picture of just how extreme our efforts will have to be if we’re to keep global warming below 1.5 degrees celsius this century. The consequences of failing to do so are chilling to say the least.
Undoubtedly a further, global shift in policy is at the heart of achieving such a radical and fast-paced transition in energy. Among the energy leaders at the World Energy Council (WEC) event last week there was an intense sense of responsibility and urgency that underpinned a week of thoughtful discussion.
It’s clear that the energy industry is moving up a gear to consider not just how to meet emissions targets, but how to pick up the pace. It’s starting to feel less like a transition and more like a race against time to rewrite the future. In the words of a senior WEC representative, “Innovation is key. When the energy industry gets into innovation, it means revolution.”
I was pleased to hear some fantastic examples of this in practice in the World Energy Leaders’ session last week. China, for example, putting more electric buses on the street each day than exist on all US roads, ISO, the main Californian utility company, routinely running 50% of its grid on renewables, peaking at 62%. This is down to a huge amount of foresight on California ISO’s part, in that they invested in adapting the grid for renewable power generation a number of years ago (yet another application for neural network algorithms).
Regulators are also stepping up. Diesel fuels for ships will have much more stringent standards, which will lead to the upgrade of refineries to fall in line with new targets. It’s one thing to design a new refinery, but it’s quite another to repurpose an existing one and extend its life.
Innovation has driven down the price of producing wind and solar power to below the levels of many other sources. In fact this fall in price is beginning to look a bit like Moore’s Law, and when Moore’s Law takes hold, momentum builds. The remaining bottlenecks, such as power storage, are also getting unlocked. So in terms of product innovation, we’re there. The next step is large-scale deployment within a timeframe that allows us to meet ambitious climate targets.
Perhaps the greatest scalability challenge in energy is the design, manufacturing, deployment and maintenance of assets and infrastructure. The application of a full digital thread that allows for a connected data flow throughout the lifecycle, is the only viable solution to make this work against the set of challenges we face.
Think about the millions of hours spent on design and all the predictive data that’s generated as a result. If we invest in all this predictive power at the design stage, it only logical to use it in operations. It sounds like a no brainer, but I’ve yet to see many companies do it, losing out on a huge opportunity to reduce OPEX.
We’re working with a number of operators in both oil and gas and offshore wind to implement this digital thread.
The recent rise in oil prices does present a paradox, but such is the commitment to the energy transition this won’t derail plans to move to a low carbon world.
A recent DNV GL report indicated that peak oil demand will come sooner than expected, and while investment levels in large scale projects are starting to increase again, they’ll never recover to pre-crash levels. The focus is quite rightly on making the twilight decades of oil and gas as efficient and profitable as possible as we transition to low carbon sources. Increased sustainability with asset life extension, digitalisation, and measures to manage operations with lower emissions and OPEX are all areas which can contribute to this significantly.
It’s important to acknowledge that the oil and gas industry is where much of the emerging technology essential to the energy transition will come from. That’s where the integrated energy company model is so powerful, when leveraged properly. They have the opportunity to perfect emerging technology in established operations before applying it to renewables projects.
I was pleased to see during the event that the understanding of the impact of a true, real-time digital twin was very much there across the board. It’s great to see this become more and more of a common theme in high level networks. From upstream operators, grid operators, power generation companies, regulators and insurers, the demand is increasing to apply the best digital technology to make sure all kinds of projects are as safe, efficient and as cost effective as possible. Ultimately, it’s all about making our infrastructure more sustainable.
By Thomas Leurent, CEO