The French economist Charles Gave is very clear: “Most economic activity is nothing but energy transformed.” In recent years, energy has been at the center of debates around social responsibility, but it has also become a major line of reflection for innovation.
The cost of energy is skyrocketing around the world. A new report highlighted by the World Bank finds energy prices may increase by as much as 50 percent on average this year. Coal prices are expected to jump 81 percent this year, and natural gas prices 74 percent. Crude oil prices, too, are anticipated to rise by 42 percent.
These crushingly high numbers have led many to start more seriously considering renewable alternatives to oil, gas, and coal. The subject of energy is often treated simplistically by an ecological vision advocating degrowth.
Of course, the question of sustainable development, of a less energy-intensive world, is a legitimate virtue. But it is also helpful to take a step back to consider energy not as a simple utility, but as a real vector of business transformation.
Innovation in the energy industry
The question I wish to address today is not the place of energy in the transformation of our society, but rather the question of the platforming of energy suppliers (producer, distributor, service creators).
The quest to become energy-efficient using digital transformation methods is leading to new business and science innovations in the energy and utilities industry. Examples abound from all corners of the globe:
- In the UAE, a group of energy technology companies based in Abu Dhabi is exploring how to use AI to support a sustainable energy future. The group, collectively called Hub71, will partner with AIQ, the artificial intelligence (AI) joint venture with Group 42 under the Abu Dhabi National Oil Company banner, on the project.
- In Australia, SA Power Networks are using technologies for generating and managing electricity at the place of consumption that help decentralize the power grid. More than ⅓ of the South Australia state’s generation capacity is now directly connected to the distribution grid.
- In the USA, business partnerships between cloud enterprise providers and energy companies are emerging. One recent example involves a digital transformation for Xcel Energy, a US-based energy provider.
Energy executives are seeking innovative solutions, accelerated by digital transformation. It’s not always easy to do this, though.
Utility firms face diverse challenges such as regulatory challenges, for example, on the environmental front. And they also face changes in how power is generated, such as with:
- limited natural resources
- increased demand for renewable energy
- distributed energy resources.
Meanwhile, competition for customer expectations regarding digital experience is already in play: customers today want transparency and consumption control, they want to see and manage their electricity data and consumption.
Faced with these challenges and opportunities, how can players in this industry find new ways to securely innovate?
APIs can help accelerate digital energy initiatives, and they can transform energy into a real vector of business transformation – much more than a mere utility. With the right strategy, you can create data-driven processes, standards across business units, and value-generating service models for your customers and partners.
Energy has become decentralized
Imagine with me for a moment, and let’s look at an example of how APIs and digital transformation can create an entirely new business model in an untapped market.
Since the post-WWII period, energy production has largely been a state monopoly enterprise that has become more or less privatized in recent decades.
But as new innovations entered the energy industry (such as solar panels or wind turbines), it became possible for individuals to produce their own electrical energy. This helped to break up the centralized production.
As monopoly of production became no longer relevant, so too has the control of energy distribution fallen. In my viewpoint, this is paving the way for a new type of energy platform.
Electric vehicles as a means of energy storage
This first disruption is followed by another axis of transformation: the desire to move intelligently away from non-renewable energies.
But “clean” renewable energies, like solar or wind, are unable to adapt to demand. Production that cannot meet demand is doomed to failure. The only solution may be in energy storage.
When it comes to electricity, the solutions proposed today are based on batteries, cost, low capacity, and, above all, ecological impact. The progress of the last decade has allowed us to envision the democratization of electric vehicles, capable of reducing pollution in our large cities.
EVs could be a key element in the management of the electrical network due to their ability to store energy. A car is unused 95% of its lifetime, and the average use of an electric vehicle requires less than 80% of the battery capacity for daily trips.
Therefore, it’s possible to inject the electricity stored in an electric vehicle into the energy network during periods of high demand. Conversely, a person could charge the vehicle’s battery during off-peak hours. This is the “vehicle-to-grid” or V2G concept, which consists of using electric vehicle batteries as mobile storage capacity.
With this example, we can see the start of some form of a multi-connected network, a platform in both the technical and business sense.
By charging for/selling/injecting energy into the network, a real marketplace starts to take shape. This energy platform could become a business in its own right for those who hold this asset. In effect, a modern-day energy Amazon could be built.
Open standards and security measures
Furthermore, the platform needs to enable individual drivers to purchase electricity for their electric vehicle, wherever the driver is, without having to go through a new subscription, as is already the case on European roads.
Of course, ensuring platform security is a fundamental issue in this architecture. Can you imagine the consequences of hacking this platform, where ransomware could infiltrate electric vehicles? In such a case, hackers could access recharging data and ransom users to reload their vehicles.
Securing distributed energy and centralizing the energy value chain will be essential. As you begin to build APIs, look for a partner to help close the operational gap to securely and quickly these APIs into production. A defense-in-depth strategy will safeguard all your APIs, regardless of development or deployment.
Open up to liberate energy
Historical energy organizations, many of whom are seeing their monopolies crumble, should quickly take the turn towards platforming, and build services like the one I described above. They have all the assets they need to do this (i.e. trust, security, and an existing user base).
At Axway, we can help you take those assets and build this transformation. We have the right tools with the Amplify Platform. Finding the right partner can help you see how to move forward, close the operational gap, and quickly start to bring digital transformation into production.
Just look at how we helped oil and gas giant NOV Inc. build needed cloud-based services without sending costs soaring, or how low-carbon energy and services leader ENGIE transformed into a data-driven, API-first enterprise.
It’s time to open everything and liberate energy.
Discover how other energy and utility companies are securely opening their APIs for business.