Digitalization in the Energy Industry

The recent energy crisis has shown how quickly the energy supply system can become unstable. The Russian invasion of Ukraine led to an interruption in gas supplies to Europe. The consequences were energy shortages, price increases, uncertainty over energy supplies, and disruptions in the supply chain. Protecting consumers from fluctuating fuel prices in 2022 cost governments hundreds of billions in emergency aid. Nevertheless, energy consumption continues to rise unabated, as shown by statistics.

Parallel to the energy crisis of this era, the environmental crisis is getting worse. This is also closely linked to the energy issue, and becoming increasingly apparent. The Federal Environment Agency describes this development with a drastic figure: In the northern hemisphere, the last decade was the warmest in more than 125,000 years. In its Assessment Report (IPCC-AR6, 2021 to 2023), the Intergovernmental Panel on Climate Change came to the conclusion that very ambitious climate protection measures and strong reductions in CO2 and other greenhouse gas emissions can limit the average temperature increase to 1.5 °C to 2.4 °C by 2100, compared to pre-industrial times.

The sector of energy producers includes companies that generate energy from fossil fuels (coal, natural gas, oil), solar, wind, hydropower, biomass, geothermal, and nuclear energy.

The energy transmission and distribution sector comprises the infrastructure required to transport the generated energy from the generation plants to the points of consumption. This includes transmission grids, distribution grids, power lines, and pipelines.

Energy storage is also an important area of the energy industry. This is where the balance between energy supply and demand is maintained to ensure the reliability of the energy supply. Energy storage technologies include batteries, pumped storage power plants, compressed air storage, thermal storage, and others.

Another area is energy retailing. This area involves retail of energy products such as electricity, natural gas, and oil. Energy is also supplied to end consumers such as households, companies, and the industry.

Important aspects of the energy industry are the optimization of energy consumption and the maximization of energy efficiency. Companies and organizations develop and implement energy efficiency programs to reduce consumption and costs.

The renewable energy sector focuses on the development, installation, and use of technologies that utilize renewable green energy sources, such as solar energy, wind energy, hydropower, biomass, and geothermal energy.

In the energy industry, a variety of products and technologies are actively used to drive digitalization for companies. These include RFID read/write devices, which are used to read and write RFID tags or labels in order to identify and track assets, equipment, or products. Bluetooth LE or LoRaWAN gateways are also used to connect wireless IoT devices to the Internet or a central network in order to network smart metering devices or sensors, for example.

Scanners are used to capture barcodes, QR codes, or other identification codes. This is relevant in the energy industry for the stock taking of materials or for tracking orders, for example. Antennas are used to improve the range and performance of wireless radio-based systems, especially in large installations or challenging environments. Cameras are used to monitor equipment and security systems, or to capture images and video for inspections and training. Labels and transponders are used to mark and track objects, devices, or products in order to identify assets or to enable component traceability, for example.

Printers create labels, barcodes, or other markings that are used in the energy industry to identify products, shipping labels, or documents. Trackers, on the other hand, track the position of assets or vehicles in real time in order to monitor vehicle fleets or the transportation of materials, for example.

In addition, various software solutions are used to optimize processes, analyze data, manage security systems, or improve the efficiency of facilities. Part of these software solutions include asset management software, SCADA systems (Supervisory Control and Data Acquisition), and predictive maintenance platforms.

According to a study by the Federal Institute for Geosciences and Natural Resources (BGR) based in Hanover, Germany, global energy consumption has reached a new record level despite geopolitical crises. Although the increase in global energy consumption slowed to +2.1 percent in 2022 (+4.9 percent in 2021), it is still above the average growth rate for the years 2010 to 2019 (+1.4 percent per year). Asia, particularly India (+7.3%) and Indonesia (+21%), recorded the strongest increase in energy consumption.

The reasons for this are economic growth and the sharp increase in the use of air conditioning systems. This is due to the warming environment. Energy consumption in Europe has fallen for the third year in a row, which can be attributed to savings measures by private households, the war in Ukraine, and the sanctions against Russia, the world’s second largest natural gas producer. Conclusion: Energy consumption and the use of fossil fuels, with the exception of natural gas, continue to increase.

According to the BGR, global oil production rose by 5 percent to around 4.4 billion tons. Global hard coal production also increased significantly by 8 percent to around 7.5 billion tons. This was by far the highest global growth rate in the last 10 years. Global uranium production also increased by 1.2 percent after years of decline. Trade in liquefied natural gas (LNG) increased significantly by 60 percent, partly due to the halt in deliveries to Germany and the EU via the Nord Stream pipeline.

Overall, the average per capita energy consumption in kilowatt hours (kWh) has continued to increase in recent years, rising from just under 18,000 in 2000 to just under 21,000 in 2021. The country comparison (2021) shows that per capita energy consumption varies greatly.
Somalia: 217 kWh | India: 7150 kWh | Germany: 41,0000 kWh | USA: 79,000 | Russia 55,500 | Iceland: 166,000 kWh | Qatar 194,000 kWh

Renewable green energies experienced a record expansion of 295 gigawatts of capacity worldwide in 2022. 140 gigawatts of this was installed in China alone. According to the independent research company ‘Enerdata’, the share of wind and solar energy in electricity generation rose steadily, reaching 12.2 percent of the global electricity mix in 2022. The driving forces continue to be China, the USA, and the EU.

As climate change is causing water levels to fall further in many regions, experts believe that the use of hydropower will remain low. At the same time, hydrogen production is being expanded in many countries, meaning that further dynamic developments can be expected.

In contrast: Nevertheless, global energy-related CO₂ emissions rose to almost 37 billion tons in 2022. In 2000, there were 25 billion tons of global CO2 emissions. Using fossil energy resources continues to fuel global warming. According to the latest surveys, 2023 was the warmest year since records began.

In the previous sections, numerous global problems and challenges relating to the energy supply were highlighted. Firstly, the energy supply must be demand-oriented, flexible, cost-efficient, and stable. Secondly, energy networks must be digitalized, sensor data must be made available, predictive planning must be enabled, and systems must be interoperable. Another important aspect is real-time capability. Energy consumption and demand should be visible and controllable in real time, wherever possible.

Numerous fields of application can be identified with regard to these factors.

In digitalized logistics, for example, sensors are used to precisely measure temperature, humidity, and ventilation in order to ensure the transportation of goods and to enable delivery in line with demand. At the same time, real-time data can determine the exact location of goods or vehicles so that transportation and storage can be precisely controlled. The result is fewer empty runs, less need for storage space, more punctual deliveries, and higher quality goods. The storage areas themselves can also be optimized in terms of energy efficiency if the ventilation temperature and humidity are optimally adjusted and monitored in real time.

In industry, wireless sensors enable predictive maintenance and servicing, which reduces machine downtime and allows processes to be better planned. As a result, resources can be conserved and storage space reduced. In traffic management, the potential lies in flexible mobility concepts and needs-based lighting concepts.

In industry, predictive maintenance, smooth processes, and AI-supported calculations of production processes help to reduce storage space.

The smart city involves intelligent lighting concepts, intelligent building management systems, and traffic management with intelligent mobility concepts. Waste and water management in cities can also be optimized,

Building automation systems can help to save energy in buildings by monitoring heating, ventilation, lighting requirements, and even the occupancy of rooms, as well as controlling heating, ventilation, or cooling according to demand. Even weather forecasts can be integrated into these concepts. All solutions are based on sensor technology and communication with wireless IT platforms. The overall aim of these solutions is to save energy, use it as required, and react and control it in real time.

The integration of digital technologies can make a decisive contribution to Germany achieving its climate targets by 2030. According to the recently published Bitkom study “Climate Effects of Digitalization”, there is the potential to reduce annual CO2 emissions in Germany by around 73 million tonnes by 2030 if digitalization progresses rapidly. This is a net gain. It already takes into account the CO2 emissions caused by the use of technologies such as data centers and end devices.

Digitalization can account for almost a quarter of the climate targets that Germany has set itself for 2030. If, on the other hand, digitalization were to continue at the current pace and not accelerate, around 50 million tonnes of CO2 could still be saved by 2030 – this corresponds to 16 percent of the target.

The biggest challenge in tackling the problems in the energy industry is to reach a consensus between all decision-makers and stakeholders. The statistics in the first section have already shown that countries worldwide have very different key figures in terms of energy consumption, energy production, renewable energy production, and the will to reduce CO2.

However, this discrepancy between the environmental crisis on the one hand, and the willingness to change processes sustainably on the other, is not just a global problem. The energy industry is also treated very differently within a country or a city. For example, governments issue laws and regulations that are impractical from a business perspective and therefore have a negative impact on the country as a business location. On the other hand, the governments themselves are often difficult to convince, in terms of implementing innovative new concepts. Decision-making processes are long and cumbersome.

Despite these major challenges, an increasing number of wireless IoT projects are being implemented, particularly in the area of energy distribution and consumption monitoring in the smart city. The result: municipalities and cities benefit from falling energy costs, private households can adapt their consumption behavior to the real-time data from their smart meters, and commercial enterprises also benefit from energy-efficient concepts. The fact is that environmental problems do not solve themselves. Researchers around the world are working on developing energy-saving systems and technologies to conserve energy resources.