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Trends That Will Transform The Energy Industry

The energy transition has been discussed for years, but the pandemic has provided the world with an opportunity to make it happen faster than we could have anticipated if we make the right choices. Covid-19 has posed huge hurdles for the energy sector, just as it did for other industries. On one side, the energy transition has a number of exciting potentials and difficulties, on the other side, it is always on the high end of the scale. 

Renewable energy, according to experts, has proven to be more resilient than other sectors at this time. According to the data, worldwide renewable energy consumption climbed by 1.5 percent across all industries. And, by the end of 2020, it was predicted to have more than doubled. Instead, in the first quarter of 2020, transportation, aviation, and general economic activity were dramatically reduced, resulting in a 3.8% reduction in energy demand and 5% in emissions. 

Rather than only contributing to the energy transition debate, the pandemic has compelled the entire industry to act quickly in order to survive the unprecedented circumstances. They also encourage the industry to accept the circumstances and incorporate new energy-related trends as soon as possible.

Embracing renewable energy technology trends not only helps the entire sector stay afloat during that difficult time but also allowed them to increase their efficiency. Following the epidemic, these patterns will play a critical role and become best practices.

In the energy industry, this will imply speeding up a number of already-existing trends, such as decarbonization, decentralization, and digitalization.

1. A push for decarbonization

The current trend in business towards remote working and operations will most certainly continue, not least to mitigate the risk of future disruptions. As a result, energy consumption is predicted to decrease, owing to ongoing energy conservation efforts.

Electrification and renewable energy will also continue to grow and fossil fuel investments are already on the decline. This is partly due to climate change, but it’s also a reaction to ever-lower profits, as seen by the oil price’s ongoing decline. However, from the standpoint of an industrial company like Mitsubishi Heavy Industries (MHI), we’ve identified two major obstacles to electrification.

The first is renewable energy’s inconstancy. One alternative is to establish large-scale storage, with one of the world’s largest projects, Advanced Clean Energy Storage, currently under construction in Utah, USA. It looks into various kinds of storage for excess renewable energy, such as fueling the electrolysis process to produce hydrogen.

The second difficulty, easing the route of so-called hard-to-abate industries, is likewise largely recognized as a solution. Heavy transport, aircraft, steel manufacture, and cement production are examples of businesses that find it difficult to electrify their processes or minimize CO2 emissions. 

To help them transition to hydrogen, the government is implementing a variety of policies. The European Commission (EC), for example, has just launched its hydrogen strategy to grow up what is presently a niche sector. However, increasing scale means increasing demand, which is currently unmet by electrolytic (“green”) hydrogen, which is still in its infancy.

The European Commission has admitted that it will have to take a detour via “blue” hydrogen generation, which uses carbon capture and storage to reform hydrogen from natural gas (CCS).

2. For the people, by the people

Decentralization is a crucial component in hastening the energy transition. This is a departure from the typical utility business model, in which monopolist power firms deliver energy to end-users from huge power plants.

A distributed energy network with a democratic business model, in which energy customers manage their own energy portfolio, will eventually take its place. Renewables, homes and industries, batteries, and fuel cells, to mention a few, might all be part of such a setup.

When demand is high, more power is generated and distributed in the centralized approach. Demand response is used to regulate distribution and grid stability in a decentralized system. The sheer quantity of energy consumers, equipment, and demand patterns that must be managed is staggering.

Several governments and energy firms have been testing innovative market mechanisms to address these issues in a way that benefits users, such as the Cornwall Local Energy Market and Vermont Green.

3. Digitalization drives energy transition

Digital transformation, which has gotten a boost in the aftermath of the pandemic, is critical to the success of such projects. To manage a system fueled by a growing number of different energy sources, a high level of sophisticated automation and analytics is required.

Artificial intelligence that predicts the future, machine learning, and the Internet of Things and blockchain is an all-important tools for evaluating demand and modifying how much power is consumed from where across the distributed grid.

In the electricity business, these types of applications have yet to be completely exploited. To effectively orchestrate the individual parts of new power ecosystems, digitalization must progress from its current “casual IT” stage – in which many companies are still primarily experimenting – to a “serious IT” stage, in which digital technologies are mature, fully integrated, and business-critical.

Virtual power plants, home energy management (such as Hive, Google Nest), cloud computing solutions (such as our Energy Cloud), and digital twins (such as MHPS-Tomoni), which generate a virtual clone of a power plant or grid, are just a few examples.

Before new distributed networks can completely settle down, they must scale and undergo more standardization. As we emerge from the COVID-19 crisis, energy businesses, regulators, and policymakers must make rapid progress on these three themes to avoid a “carbon flashback.”

Whether we are “retro-fitting” outdated infrastructure or creating energy systems from the ground up, promoting decarbonization, decentralization, and digitalization so that society advances forward one of these issues demands balancing environmental, economic, and social concerns. Cities all around the world may achieve this delicate balance by using econometric methodologies like MHI’s QoEn Index for Energy Infrastructure.

Governments and municipal planners may ensure that future energy infrastructure is “just right” for our economic demands as well as the environment in this way.

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