One of the slower runners in the digital transformation race is the energy and utilities industry. The big traditional companies that dominate the European energy market are not quick to adapt to change. In the meantime, new regulations, a shift towards green energy, decentralized energy and stronger digitalised competitors, such as China, are creating challenges for the European players. So the question is: Will they transform or become obsolete?

Let’s look into some challenges and opportunities for the energy sector.

Streamline and optimise

Legacy technology is one of the biggest challenges for energy producers, as they have yet to digitalise their IT infrastructure. To face the emerging challenges, the companies must streamline their work, optimise processes, create faster products, update their technology infrastructure and turn to new digital products. However, they cannot increase efficiency today with the legacy infrastructure of yesterday.

Decentralised energy production and smart grids

Germany is one of the countries beginning to realise the benefits of digitalisation in energy and utilities. German companies are investing in smart grids and power-to-gas technologies, and they are all looking for new business models and ideas for how to overcome the challenges of the changing energy era.

With the decentralisation of energy production on the rise in Germany, the smart grid is one of the technological advances companies are looking into. It is basically an electricity supply network that uses digital technology to detect and react to changes in power usage.

People are increasingly using their own sources of power. For example, your house might be creating its own power using a windmill, and your neighbour might be using a photovoltaic cell for power. If there is no wind, you could buy power from your solar neighbour instead of getting it from the big energy provider. People who are producing their own power are starting to share their smart power grids or micro-grids in the community where they live.

German legislation allows this sharing of power. However, if there is no wind or sun to enable alternative energy production, the traditional energy companies are legally obliged to provide electrical power for the households. Since Germany has wind and sun most of the time, the energy producers are providing just a small amount of energy to users. The result? Energy companies, especially the big energy producers, are becoming less and less important.

Power-to-gas technology

Green energy is still volatile. Sometimes there is enough green energy; other times there is too much or not enough. You need to balance it out. If there is no sun in the South of the country, you need to find ways to transmit the wind energy from the North. Big energy companies don’t have ways to distribute green energy through cables and power grids as they do with electrical energy. This is why decentralised production is making more sense.

Furthermore, this is where digital technology and smart power grids can make a difference. With advanced analytics, you can predict what the weather conditions will be and how that would affect energy production. So, you will know if there is not enough sun in the South so you can prepare to transport and distribute energy from the North to supply all households with power.

What about when there is too much power produced? Turn to power-to-gas technology and convert the excess energy into gas. The green gas can then be stored and later burned to produce power whenever needed — for example, during peak hours when everyone is at home.

Technology for maintenance

Manual maintenance of grids and big pipeline networks is cumbersome and expensive work. Checking the pipes for leaks or corrosion requires a lot of resources — both human and financial.

Digital technology is already making preventive maintenance easier for energy companies. For example, a corrosion protection system based on internet of things (IoT) technology includes sensors that put minimal voltage on the pipes to protect them from corrosion. Companies can then collect data from the sensors, analyse it and see whether there is any potential problem. Unexpected peaks in the data can show potential issues such as excavator attacks, which could be very dangerous to gas pipes. Catching such serious issues in near real time is essential.

Furthermore, if you add artificial intelligence (AI) to the system, the AI can detect what the problem is, whether it’s an excavation attack on the pipe or perhaps just tremor and movement from a nearby railway station, and can inform the company of the problem and whether there is need for maintenance.