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Does the future of energy lie in artificial intelligence?
1. What are the key challenges facing the energy industry at the moment?
The answer is multi-fold. The growth of renewables is a major challenge: the industry now has to deal with a more distributed energy system than the industry is used to. The implementation of smart meters is also a hurdle as energy companies are having to deal with the ability to connect with clients and have to answer questions on what they do with the data they collect from this system. We are also seeing the liberalisation of the energy sector and today there are more competitors in the sector than ever before. Companies are also having to compete with the growth of digital utilities. These companies do not generate energy but aggregate it from producers and are much more effective at selling to the client base.
2. In what direction do you see energy strategies heading?
The future is about intelligent systems that focus on the outcome. It’s also about recognising that companies are part of a connected ecosystem that uses AI to allocate energy most efficiently. For example sometimes it will make sense to generate energy, sometimes to store energy, and sometimes to procure from other members of the ecosystem. Distributed energy is going to happen, and you need to be part of it either as a consumer or a producer - and if you’re not part of that ecosystem, you’re going to be buying inefficient contracts.
3. What are the technologies that companies should be focused on as the enablers of this change?
It’s important not to look at technology for technology’s sake. It’s about asking what problems you’re looking to solve and for most companies that’s about reducing energy costs and carbon emissions. For us, that takes you down the road of connectivity and AI. For example: we’ve been demonstrating how AI can optimise trading and scheduling operations for a utility by up to 20%, and we are working on broader applications in terms of grid and congestion management as part of our broader IOT activities. ”In regards to connectivity, many companies have already invested in smart meters and so it’s now about seeing how the IoT can connect everything up by using big data analytics and AI.
4. Do these new technologies mean we need different, more innovative digitally-focus mind-sets?
The focus needs to be on developing skills rather than changing mind-sets. Working with IoT and AI requires more specific operational experience than current levels and this needs to be communicated into the jobs market. Further recruitment of data scientists is also needed to get the most out of both technologies. However, the real challenge lies in finding the data scientists with the operational experience. There is therefore the challenge to ensure education is laying the groundwork for these growing skill sets.
5. Who are the companies to follow?
I would look at how things are evolving in Germany, where the disruption has been felt earlier than other markets. For example Stadtwerke, local authority owned utility companies, are beginning to use virtual power plants to connect their multiple generation assets, optimally controlling them to balance out the variable supply from renewables.