The Energy transition: Seizing the Digital opportunity
In the age of Net Zero, the energy industry faces pressure from all sides. Governments and regulators are calling on firms to improve their contribution to the carbon footprint of the UK whilst minimising bill impact on consumers.
Investors are now increasingly guided by ESG considerations, while consumers are becoming more aware of their impact on the planet and are seeking ways to reduce their carbon footprint. NGO’s, meanwhile, are pushing for greater transparency surrounding carbon emissions, while disclosure requirements are evolving daily.
In April this year, the UK government announced its ambitious climate change target – to cut emissions by 78% by 2035 compared to 1990 levels.1 The new target will become law in June 2021, leaving the energy industry, as well as every other sector, to work out how to reach this goal.
These pressures come as Digital technology is disrupting the industry - redefining business models while shifting traditional sector boundaries. As a result, players in the energy value chain are operating at a time when the future is uncertain in terms of market structures, optimum business models and consumer behaviour. Given this uncertainty, many within the industry are unsure of which path to take to achieve their Net Zero ambitions and maintain or expand their commercial outcomes.
Whichever path they choose, Digital will be central to their efforts – navigating a path through uncertainty while enabling a relentless push for efficiency. Successful players in the value chain will be those that evolve and even reinvent their business models – powered by Digital – becoming more agile and customer-centric in the process. They will learn to collaborate across the entire value ecosystem while leveraging data to gain valuable insight into their Net Zero ambitions.
Leading industry bodies are taking note of the value of Digital in realising Net Zero goals. The IEA, for example, has stated that digital technologies are opening the door to improved energy efficiency solutions, with ambitious government targets requiring a “dramatic rethink of the systems and habits that power our economies”.2
The UK’s Net Zero ambition provides the energy industry with the imperative to unlock the value of Digital. We identify four steps that businesses can take today:
1. Chart their course right from the outset, and not lose sight of their ‘North star’ when looking to reach their goal.
2. Align the leadership team’s objectives to Net Zero ambitions, while establishing a clear owner for the digital evolution of their business.
3. Build trusted data into the foundation of their Net Zero journey to deliver business value.
4. Embrace the challenge by adopting a ‘test and learn’ attitude, being prepared to take risks where necessary.
2 ‘HowEnergy Efficiency Will Power Net-Zero Climate Goals, IEA, 29 March 2021/