In 2020, the Covid-19 crisis upended the energy industry like nothing before it. The shutdown of the global economy and the resulting unpredictability of demand in everything from jet fuels to the electricity needed to run factories and workplaces led to unprecedented price volatility. Repercussions from the crisis altered the trajectory of global energy demand, and arguably, also the evolution of the industry for the foreseeable future.
As we move into the new year, the timeline for the expected recovery is still murky. The rollout of the Covid-19 vaccine globally has been slower than expected, and many countries are still on lockdown. But the energy transition had already started before the Covid-19 crisis. And governments are now looking to stimulus spending in clean energy as a way of accelerating economic recovery while at the same time supporting clean air objectives. As economies begin to recover, and the energy transition that had already started pre-Covid-19 picks up speed, industry players that can capitalize on the following trends will build the resilience and agility they need to thrive in 2021 and beyond.
1. Keep looking for new opportunities to invest in clean power
In a blog written in mid-2020, Bill Gates had this to say about climate change: “Start now. Unlike the novel coronavirus, for which I think we’ll have a vaccine next year, there is no two-year fix for climate change. It will take decades to develop and deploy all the clean-energy inventions we need.”
In 2020 the energy industry responded to market volatility with consolidation aimed at driving economies of scale and diversification into new market segments to support decarbonization. Investment in renewable power resources remained resilient last year, despite the economic downturn. However, operators struggled to keep construction of new renewable power production facilities and infrastructure, as well as maintenance on existing facilities on track because of safety constraints driven by the pandemic.
In 2021, industry convergence is expected to continue with the acceleration of investment in clean power initiatives such as electrification, energy storage, green hydrogen and distributed generation. As the recovery begins to take shape and energy operators have found ways to ensure the safety of employees in the field, owners and operators alike are expected to make significant investments to restart construction on power production facilities and infrastructure and to catch up on overdue maintenance.
Growth in renewable power capacity will continue to accelerate in the years to come. New technologies are pushing the boundaries of what’s possible to create new market segments. Players who are willing to invest in renewable energy sources and in the digital innovations needed to support those sources will build the resiliency they need to succeed in the post-Covid-19 economy.
[Related: Energy and Digital: A Zoom-like Moment?]
2. Build a resilient organization
The Covid-19 pandemic has forced companies to become faster and more adaptable to survive. The energy industry is particularly vulnerable to revenue interruptions caused by Covid-19 as a large part of its workforce is employed in jobs that cannot be done remotely. During the height of the crisis, companies put in place new processes and new technology in record time out of a need to survive and serve their customers.
In the post-Covid-19 world, winning organizations will be successful in creating learning cultures that will empower their employees to embrace change. Companies will need to reskill employees not just with technical know-how, but with tools that allow them to develop the problem solving, critical thinking and creativity skills needed to drive a culture that is agile and flexible in decision making. Adaptable teams will enable organizations to imagine and quickly pivot to new clean energy business models. Resilient firms will learn to “fail quickly” and move on to the next idea to remain relevant – the cost of being “good enough” will no longer be sustainable.
3. Investment in digital technology: It is no longer optional
There is no doubt that the pandemic has accelerated reliance on digital technology and innovation in all industries. In the energy industry, technology is no longer a “nice to have,” but rather a differentiator that will determine who succeeds in the post-Covid-19 economy and who is left behind. Digital innovation is enabling the transformation to new energy sources as well as new ways of working.
At the height of the crisis, companies rapidly implemented technology solutions that enabled a “contact center” approach to supporting customers through connected assets and advanced analytics combined with remote technical support. The ability to support operations remotely allowed energy providers to keep their assets running through the worst of the pandemic-induced lockdown.
Digital innovation is the differentiator that is driving the evolution from larger-scale, centralized energy sources to cleaner, more decentralized and personalized energy sources:
- Operators are using data from intelligent sensors and digital twins to track performance and reduce downtime of critical assets
- Artificial Intelligence and access to asset data is driving the evolution to intelligent grids through the integration of multiple energy sources into a wider network
- Operators are using big data and advanced analytics to optimize the performance of the network
- Digital transformation is also helping energy companies improve their disaster preparedness by reducing cybersecurity and other risks to critical infrastructure such as energy grids
The number one lesson learned from the Covid-19 crisis is how unprepared most companies were to deal with a global calamity of Covid-19’s magnitude. Quick adoption of digital technology allowed companies to survive through the crisis, and digital transformation is now being valued as a competitive differentiator as opposed to an operating expense. The importance that connected assets played in ensuring that energy companies were able to keep the lights on throughout the crisis cannot be understated. The technology innovation which will fuel economically viable growth in renewable energy sources will undoubtedly come from the information that is collected, analyzed, and acted upon from increasingly connected energy assets and infrastructure.
Undoubtedly Covid-19 has changed the trajectory of global energy supply and demand. Continued market turbulence and the pace of global economic recovery will impact the energy industry for years to come. One certainty that has emerged from the crisis is that new energy sources will play a critical role in the global economic recovery process. Covid-19 has helped level the playing field and given all players in the energy sector the ability to be leaders in the transition to new energy sources if they can be invested wisely, drive resilience and agility in their operations, and leverage digital innovation to grow and evolve.
[Continue Reading: Paralyzed or Catalyzed? Servicing the Energy Transition]