7 November 2017 2017 11:25 AM GMT

Clean Energy Drives Digitalization In Power Sector. Market Growth: $64Bn by 2025

New energy innovations will be centred on digital technologies and the strategic use of data, according to new research published today. A shift is coming in the energy industry from a focus on hardware to the increased importance of software in order to make systems more efficient, resilient, and digital. Digitalization of Energy Systems, a report by Bloomberg New Energy Finance (BNEF), predicts significant shifts in the intelligence of digital technologies used in energy from today to 2025, and a big change in the sectors of the energy system that most benefit from these technologies.

Today, the biggest use of digital technologies like sensors, data collection and analytics in the energy sector is to improve the bottom line of fossil fuel generators. Revenue for digital services for fossil fuel operation and maintenance, or O&M, are estimated to be $24 billion in 2017 – some 44% of the total market size for digitalization measured by BNEF.

However, as natural gas and coal plants come offline, and those that remain become digitalized, the opportunities for new revenues from the fossil fuel sector will shrink. By 2025, digital technologies will be more intelligent and more capable, helping homeowners that own rooftop solar, batteries or EVs (often termed ‘prosumers’), to become more autonomous and derive greater value from these assets. This could be through trading energy with neighbours or better management of peak power prices.

Claire Curry, head of emerging technology analysis at BNEF, said: “Home energy management technologies will see the most significant change in digital revenues, rising from $1 billion in 2017 to $11 billion in 2025. The largest driver for digital technology revenues in 2025 will be smart meters, growing 44% between now and 2025, to $26bn. This revenue increase matches the fall in digital revenues from fossil fuel O&M – 46% over that time period.”

Figure 1: Market size for digital technologies in energy

Source: Bloomberg New Energy Finance.

Digital technologies like big data, analytics and machine learning, blockchain, distributed energy resource management, and cloud computing, can help overcome some of the key challenges in the energy sector –  most notably intermittency, ageing grids, balancing distribution-connected generation, managing consumer self-generation, and coping with increasing system complexity.

“Countries with high penetration of distributed renewables, good communications network infrastructure, and robust venture capital investment in digital technologies are likely to take rapid advantage of energy digitalization,” said Julia Attwood, an associate on the emerging technology analysis team and lead author of the report.

“Italy, for instance, is one of the global leaders in small-scale PV, has almost 100% high-speed network coverage, and supportive regulation for digital technologies,” Attwood added.

The U.S. will also do well, having long been a leader in digital technologies and early-stage fundraising. Australia, although ranking lower today, will move near the top of the group in 2025 due to high forecast levels of decentralized energy production. In emerging markets, countries that have beneficial government policies, foster innovative start-ups and are rolling-out network infrastructure are likely to digitalize soonest – for example, Chile, Indonesia and Nigeria.

Figure 2: The effect of digital technologies on energy organizations

Source: Bloomberg New Energy Finance

The motivation for industry digitalization will be different for each player. Generators and ‘prosumers’ are motivated by cost reduction, additional revenue streams and new services. Utilities face pressure from customers, government policy and regulation to improve their businesses. They can use digitization to streamline operations and enhance customer services.

Michael Wilshire, head of strategy at Bloomberg New Energy Finance, commented: “The power sector has traditionally been served by large industrial companies selling primarily hardware, but innovation is increasingly centred on software and advanced technologies such as machine learning. Whether the winning solutions will come from industrials, start-ups, or technology companies remains to be seen.”

Bloomberg New Energy Finance (BNEF) is an industry research firm focused on helping energy professionals generate opportunities. With a team of experts spread across six continents, BNEF provides independent analysis and insight, enabling decision-makers to navigate change in an evolving energy economy.

August 16th 2019
Corporate Sourcing of Renewables Growing, Taking Place in 75 Countries

Companies in 75 countries actively sourced 465 terawatt hours (TWh) of renewable energy in 2017, an amount close to the overall electricity demand of France, according to the report from the International Renewable Energy Agency (IRENA). With the continued decline in the costs of renewables, the report suggests, corporate demand will continue to increase as companies seek to reduce electricity bills, hedge against future price spikes and address sustainability concerns.

August 14th 2019
Wind: China Maintains Emerging Markets Top Spot Following 19.7GW Build Boom

Wind industry intelligence service A Word About Wind has launched its Emerging Markets Attractiveness Index report for 2018, which provides insight and analysis into the most attractive emerging markets for wind companies. The index, now in its second year, ranks the top 30 emerging markets that investors should consider when investing in wind in Europe, Africa, Asia and Latin America. The list considers factors including political and economic stability for investors, alongside the growth of electricity demand and potential for wind growth, in order to rank the countries by overall potential. As with last year’s report, China tops the list and the ongoing trade war with the US shows no sign of slowing China’s formidable growth.

August 12th 2019
EU Approves Ambitious Energy Efficiency Goals, Encourages Clean Energy Feed-In

Europeans will now be entitled to consume, store and sell the renewable energy they produce in line with ambitious targets set by the EU. The targets are to be reviewed by 2023, and can only be raised, not lowered. By making energy more efficient, Europeans will see their energy bills reduced. In addition, Europe will reduce its reliance on external suppliers of oil and gas, improve local air quality and protect the climate. For the first time, member states will also be obliged to establish specific energy efficiency measures to the benefit of those affected by energy poverty. Member states must also ensure that citizens are entitled to generate renewable energy for their own consumption, to store it and to sell excess production.

August 12th 2019
Battery Boom: Wind And Solar Can Generate Half Of Worldwide Electricity By 2050

Coal is to shrink to just 11% of global electricity generation by mid-century, from 38% now, as costs shift heavily in favour of wind, solar and batteries. Wind and solar are set to surge to almost “50 by 50” – 50% of world generation by 2050 due to reductions in cost. “Cheap battery storage means that it becomes increasingly possible to finesse the delivery of electricity from wind and solar so that these technologies can help meet demand even when the wind isn’t blowing and the sun isn’t shining. The result will be renewables eating up more and more of the existing market for coal, gas and nuclear.”

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