As the energy transition accelerates, there will be an unprecedented need for reliable, verified and high-quality data. From emissions reporting, to documenting carbon reductions, data management and tracking will be a leading focus for all clients navigating changes in the energy landscape. Another pressing issue for the renewables industry is cybersecurity. Smart grid technologies, which help integrate, monitor, control and steer bidirectional flows of energy, significantly heighten the risk of cyber attacks.
Many companies don’t have the data practices to monitor their current business operations, but for those using the IRA to finance the exploration of new energy-transition-related projects, renewables initiatives or business models, they’ll need to put the data processes and protocols in place to efficiently monitor and report on their new initiatives. This could mean building out data frameworks, platforms and reporting systems and either upskilling current personnel or adding staff to help manage it all.
Separate and apart from the reporting and monitoring aspects, many of the IRA’s provisions are expected to elevate data from merely a reporting or compliance requirement to a direct participant in income-producing activities. For example, significant data rigor and platforms will be needed to both demonstrate compliance with certain IRA incentives (e.g., the IRA’s improved tax credit for carbon capture use and sequestration), as well as to substantiate and differentiate a company’s carbon reduction efforts for purposes of attracting capital through the developing voluntary carbon offset markets. The IRA’s developments are therefore turning high-quality data management from a “want to have” to a “have to have.”
Data management might also include the adoption of a smart compliance approach to determine, monitor and manage the many reporting variables and complicated compliance requirements of operating clean energy technologies. Likewise, some companies will need to build in a comprehensive operational technology (OT) review and the necessary steps to secure access to the grid, digital factories and every facet of the organization’s digital operations. And, of course, the adoption of new technologies and data practices will increase the prevalence, or at least possibility, of cybersecurity risk.
Companies should make plans now to review, assess and align their data, digital and cyber practices around likely needs. Key questions include:
- If regulations change, are we prepared with the data needed to properly report on environmental, social and governance (ESG) metrics?
- How are we measuring data quality, and do we operate with integrated, cross-enterprise, data-driven practices that will allow us to provide the needed data to all essential stakeholders? Can we use that data to make truly informed business decisions?
- Does our organization have the digital infrastructure needed to implement transformations in our business strategy, such as conducting intelligent asset management or tracking carbon efficiencies and renewables across the supply chain?
- How will the evolving strategy of our business change where potential cyber attacks may come from? Where are risks increasing? What vulnerabilities are being added to the system?
As companies evolve their energy strategies, their expanding data, digital and cyber needs must not be overlooked.