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As the energy industry goes through unprecedented change, EY MENA (Dubai) and Microsoft analyze where to strengthen business today and move toward a sustainable future.
The energy industry is undergoing unprecedented change. Everything from how we source energy, through to how we share and use it, is transforming.
The COVID-19 pandemic has shown us how quickly change can happen, and how quickly we can respond to it. The pandemic disrupted supply and demand in the energy sector and reduced the price of oil and gas. It also accelerated the need for utilities to innovate and add value efficiently, quickly and sustainably. Gone are the days of traditional energy consumption.
Users now have more power to seek better value and dependability through the use of technological advances. This shift – of consumers becoming energy producers – has generated a new noun for these new contributors: the prosumers.
As growing concerns about climate change have shifted focus from fossil fuels to cleaner, renewable energy, companies are intent on reducing their environmental impact. This “end of an age”, as some headlines report, and transition towards renewable energy, is essential to realizing the world’s carbon-reduction goals. Users understand that our energy choices impact our future and the future of our planet. Renewable is going from strength to strength and digital offers real opportunities for energy leaders of tomorrow.
This shift in demand and supply means utilities are progressing, as the demand for reliable, quality energy has transitioned organizational focus from volume to value.
70% of oil and gas respondents are undergoing digital transformation and evaluating automation strategies to cut costs, optimize operations and create new M&A opportunities.
Middle East and Africa (MEA): the natural home of energy
The Middle East is the second most popular region for renewable energy investment after North America, responsible for more than half of the world’s oil and gas production. Though Africa is rich in fossil fuels, the region is on a sharp and essential transition towards renewable energy.
International Oil Companies (IOCs), National Oil Companies (NOC) and countries have set out towards a zero-emissions target. Africa shows possibilities for solar, wind, wave and geothermal energy, though traditional fuel-supply elements are likely to continue.
The largest single-site solar park in the world sits in Dubai at the Mohammed bin Rashid Al Maktoum Solar Park. To reach its ambitious renewable energy goals, the UAE has led in wind, solar and nuclear innovation. And with the increase of electricity consumption, renewables are predicted to be the largest source of power generation across Africa by 2040.
The future of energy is one in which power and data flow seamlessly in both directions, as demonstrated by the adoption of smart meters in Saudi Arabia. Innovation around the digital grid.
A powerful future for energy
In current practice, oil and gas companies aren’t able to leverage data efficiently due to their manual processes of extracting and validating internal data which is not centralized. Teams often work in silos and use different data management practices leading to delays and impacts on critical decision-making.
This has led to a shift towards digital transformation put in motion following the COVID-19 pandemic. Now, oil and gas companies are focused on purposeful and efficient improvements to their operations. This transition lends itself to better data, increased opportunities and added value.
Committed to a sustainable future
Digitalization of upstream businesses process flows could save employees time and add value leading to gains of over $145M annually. Routine tasks including data hunting, cross-checking and updating could be streamlined via common data models. Rather than problem solving, employees can focus on contingency planning.
Executives are looking to re-evaluate their operating models in order to create more sustainable, strong businesses. In response to the emerging crisis, energy clients should begin to prepare for tomorrow from today in 3 steps.
1. Operational improvement
To make the most of their investments in digital, companies must focus on making the right choices with integrated, and data-driven and digitally enabled upstream functions. The current industry downturn could create monetary challenges for companies. Though, as it addresses digital transformation initiatives, oil and gas companies can ensure maximum value through a long-term view on digitalization.
Since investor valuations are driven by operating efficiency, and operations are the biggest cost center for energy companies, improving operations is a high priority for organizations. Executives need to provide great returns while achieving sustainability targets.
This requires extracting value from existing assets, while investing in such as IoT, machine learning and AI to generate insights monitoring carbon emissions in real-time reducing the workload of employees so they can focus productivity on where it matters most and improves operations.
2. Workforce productivity
The future of sustainable energy organizations is linked to workforce productivity and happiness.
In upstream oil and gas companies, siloed data, inconsistent processes and unnecessary downtime are some of the inefficiencies that need to be remedied. Decentralized data with varying information, as well as different processes and workflow applications lead to reduced productivity. Without real-time access to data, managers lack information needed for quicker response times and decision-making.
Employing digital technologies in order to strengthen business, attracts top talent by empowering your workforce with access to technologies that give real time access to data to solve problems and automate mundane tasks. Reduce human errors and speed up issue resolutions to keep customers happy.
The report by EY and Microsoft, touches on a workflow management solution that provides predictive maintenance for an oil and gas company in order to be resilient.
3. The transition to clean energy
Business automations, empowered by an organizational transformation to the digital grid, will create significant opportunities.
Increased efficiency and decreased downtimes, errors and complications are advantageous at the onset. Energy companies must understand and leverage their strengthened insights in order to drive up customer satisfaction and streamline operations.
Furthermore, a simplified workflow can enable teams to work better together and lead to optimized decision making. Companies must take advantage of their real-time monitoring and analysis to get to market faster and forecast issues and opportunities.
Our report Intelligent energy for a sustainable future details ways for utilities to extract more value and move towards a more digitized, sustainable future. Download the report for a broader view.
The challenge
The pressure is on to keep the world moving while reducing carbon emissions.
Environmental concerns and commercial imperatives are driving improvements in energy efficiency; portfolio shifts; and diversification into renewable, clean energy sources.
The way we consume energy is also changing. With the growth of electrification comes the need to rethink the traditional business models of producer, grid, distributor, customer. Smart devices and the smart grid are the future, and smart energy providers are using innovative new technologies to gain competitive advantage.
Smart grids give customers greater visibility and control over how they use electricity and how much they pay for it. They can also feed any surplus electricity they generate back into the grid. As self-generating power accelerates, the customer might well become the competitor.
COVID-19 has compelled companies to focus on their competitive advantage while rethinking future operations.
Summary
Energy companies looking to thrive in a future energy world will need to identify what drives their customers, build business models that match, in order to achieve operational excellence, and transition to clean energy. Businesses must also develop the flexibility to consistently deliver against evolving customer expectations.