Reinvent business models
The transformative power of Digital
The Energy transition requires a rethink at the heart of the energy industry. According to a UK Energy Research centre report, if the Net Zero target is to be met, organisations will need to make a “fundamental change to their business models and operating practices”.3
As the major disrupter of the modern age, Digital will fundamentally change the way the energy industry operates. By breaking down traditional value chains, it will allow businesses to make new connections and business models that cut across traditional links in the value chain – even beyond the historic concept of the ‘energy sector’.4 With its disruptive capability already proven, embracing Digital will be key if energy players are to rethink their business models to achieve Net Zero.
The development of platform business models is one example, allowing for collaboration between new market entrants and traditional market players through the integration of multi-sided buyer seller configurations, such as utility-as-a-service. Digital technologies also enable the bundling of value, for instance through vehicle-to-grid technologies, where spare battery capacity can be sold on reserve markets.5
Digital aggregation and innovation
German virtual power plant operator Next Kraftwerke, now part of Shell, connects power-producing assets from renewable sources such as biogas, wind and solar with commercial and industrial power consumers and power-storage systems.6
Next Kraftwerke’s innovation opens new avenues for connecting and sharing renewable energy sources. By integrating power from numerous individual power plants, they can spread risk and improve renewable energy companies’ participation in the market.7
From Big Oil to Big Energy
While addressing the Net Zero challenge, leaders in the energy market are using data and digital technologies to better understand themselves, their customers and the market to reinvent their business models. In this way, they are acquiring a digital advantage that prepares them for the demands of the future – both in the short and longer-term.
The energy players that take the lead in the energy transition will be unafraid to explore new opportunities and change the course of their business. An oil and gas multinational BP, for example, is in the process of reinventing its business model – transitioning from an international oil company to integrated energy company in order to achieve its Net Zero ambitions.8
Digital set to underpin offshore wind effort
Demand for offshore wind is growing, with the UK government planning to increase offshore wind capacity from 30GW to 40GW by 2030.9 As the industry continues to grow in scale, Digital will be essential to underpin efficient and effective management while continuing to reduce operation and management costs. Predictive maintenance technologies, for example, are helping to drive down the cost of the repairs within the industry, with unplanned turbine failures having significant impact on commercial performance.10 The oil major BP has extended its partnership with Palantir, leveraging its ‘digital twins’ software to optimise wind farms and solar generation.11 12
3 Disrupting the UK energy system: causes, impacts and policy implications | UKERC | The UK Energy Research Centre 4 Twelve shifts to digital, Baringa 5 Unlocking the value of digitalization for the European energy transition: A typology of innovative business models, Energy Research & Social Science, Nov 2020 6 Being Digital, Next-Kraftwerke 7 Our philosophy, Next-Kraftwerke 8 From International Oil Company to Integrated Energy Company: bp sets out strategy for decade of delivery towards net zero ambition, BP, Aug 2020 9 New plans to make UK world leader in green energy, UK govt press release, Oct 2020 10 How digital technologies can help with unplanned wind turbine repairs, NS Energy, May 2020 11 Palantir & bp Deepen Partnership, Accelerate Energy Transition, Businesswire, Feb 2021 12 Twin win for oil and gas production, BP, Oct 2018