How to Decarbonize Electricity: A Digital Approach

Decarbonization is no longer negotiable.

As we learned at the U.N. Climate Change Conference, COP26, there is almost universal agreement on the need to collaborate to reduce the amount of toxins and greenhouse gasses our machines spew into the atmosphere. What’s missing is agreement on how to get there.

Not surprisingly, power generators and electricity producers in particular are receiving their share of scrutiny in this debate. Electricity production alone accounted for 25% of greenhouse gas emissions in the U.S. just two years ago, according to the U.S. Environmental Protection Agency. About 62% of that electricity was generated by burning fossil fuels, namely coal and natural gas. While it dropped in 2020 due to the pandemic, it rose again in 2021.

There is a path forward, however. With greater and more strategic digitalization, electricity producers can leverage advanced technologies to manage greater energy diversification while providing insights to make better, data-driven decisions and improve resilience.

With new digitalized energy platforms in place, electricity producers can host and interconnect data from the variety of renewable energy sources, like wind and solar, with greater flexibility and security, knowing that the grids and networks remain reliable, resilient, and flexible.

Still, such integration and management of diverse energy sources can seem daunting, especially for those not yet fully converted to green energy. Why? Renewable resources are intermittent by nature and hard to predict, easily reducing inertia and destabilizing the system. To counteract and react to this, we need highly accurate weather forecasts and the ability to predict production levels. We also need to be able to predict and manage the demand side of the system by controlling loads such as buildings. Automation and AI can help orchestrate the balancing of supply and demand.

The time to start thinking about such moves is now. As noted in BNEF’s New Energy Outlook 2020, 56% of power generation could be provided by solar and wind in 2050, assuming no further policy support from today’s levels. This would require $5.1 trillion investments in solar, wind and batteries and $14 trillion power grid investment by 2050.

Digitalization is the enabler to all of this, as it allows for the automation of complex processes – like properly predicting the maintenance of digital assets ahead of time – and facilitating information sharing within the energy sector. AI can rapidly sift through troves of data within the energy sector to identify patterns, calculating how to best respond to anomalies and initiate proper action. By reducing the “unknowns,” the pace of the energy transition quickens.

And the benefits are inescapable. A recent study from BCG showed that for an organization of about 80,000 people, the combination of process automation, carbon data transparency, circular product or service design, and sustainable business models can reduce emissions by a remarkable 45% to 70%.

Accelerating the transition to a carbon-neutral energy system will require adapting and adopting policies and regulations to enable technology and new business models to support scalable, flexible and secure energy systems. Both digital and energy platforms working in concert, interconnected and integrated, are needed to manage the enormous power system energy challenges: increased complexity and additional capacity for the reduction of CO2 emissions.

For more, check out Dave’s conversation with the biweekly energy podcast: On The Grid.

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