New Delhi: The global market for digitalization in the energy sector is set to grow to $64 billion by 2025 and new energy innovations will be centered on digital technologies and the strategic use of data, according to new research published today by Bloomberg New Energy Finance.
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 BNEF report, 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.
“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,” said Claire Curry, head of emerging technology analysis at BNEF.
Currently, 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.
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 home owners that own rooftop solar, batteries or Electric Vehicles, 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, the report said.
Digital technologies including 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 – intermittency, aging 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, 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.
BNEF said the U.S. will also do well, having long been a leader in digital technologies and early-stage fundraising while 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.
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