How energy conversion and digitization can accelerate each other

Complementary properties

How can energy conversion and digitization reinforce each other? In the beginning, many people mainly think about making processes more efficient by making everything measurable and largely automating it. Work with ‘digital twins’ so that products can be designed and tested before they are produced, and virtual consumption so that fewer flights are required, e.g. At the same time, computers, sensors, networks and algorithms also require power. While the energy efficiency of data centers is still increasing, data processing is also growing exponentially.

The synergy between the energy transition and digitalisation lies in a fundamentally different area. Both can facilitate each other because they have complementary qualities. Summarized in a table:

Digitization energy conversion
1. ‘Everything is possible’, everything is programmable. 1. Social and sustainable ambitions provide purpose and direction.
2. Everything becomes measurable, data. Need for measurability.
Collaboration is automated and scalable. Organization in ecosystems (inside = outside). Collaboration platforms. Need for cooperation. Goals exceed own organization. Joint management and coordination.
4. Learning strategy, plug & play make adaptive and flexible. 4. Need for flexibility, try and learn.
5. Enables new business models and value chains. 5. Requires new business models, new forms of value creation.

give direction

Digitization is making more and more possible and the world around us is becoming ‘programmable’. Business processes and value chains can be organized flexibly. This can transform existing markets and create brand new ones. But for many organizations, digitization in itself has no clear goal. Digitization can, of course, provide significant cost savings. Many companies are still taking the step to go online under COVID in order to continue serving customers. An important motivation behind digitization is a question of whether the ‘customer’ requires’ it. But transforming their own business from a vision of a future new market is a step too far for most organizations.

Many of the digital promises, such as organizing the value chain completely differently and innovating in ecosystems, were an abstraction for many companies. Therefore, they preferred to wait or take small steps.

The energy transition changes that. For the first time in a long time, all organizations are forced to think about all their processes; about their reason for being; about what kind of organization they want to be and what role they want to play in a (better) world; their relationship to the planet, humans and profit. Exciting and uncertain at the same time: what if it’s no longer just about making money at any cost? What if it was no longer about the winner? takes everything ‘goes except’ the winner equities all’?

The energy transition leads to uncertainty, but at the same time many employees seem to be extremely enthusiastic about contributing to a better world. The same is true of some top executives. Think of Dick Polman’s ‘hunt’ for a new role for Unilever and Elon Musk, which has given a decisive impetus to the development of electric cars with Tesla. Moonshots have become ‘sexy’ and appeal to the imagination.

To make measurable

The energy transition creates a need for measurability: to make goals concrete and to monitor and adjust progress. Not just in terms of cost and profit. For example, new measurement methods and standards must be developed for, for example, nitrogen and CO2emissions that provide a broader view of sustainability. New and different indicators need to be developed to make the sustainable goals concrete. For example, the concept of multiple value creation is on the rise, and more and more governments are working with the concept of ‘broad prosperity’. Digitization must help to make it measurable and quantifiable, find new patterns and contexts and thus get a better grip on the transition.

Large-scale collaboration

Sustainability goals can have far-reaching consequences for organizations. Many goals can only be achieved through collaboration or coordination of activities between different organizations, whether they are in new and varying combinations, across the boundaries of their own industry and across the business-state-citizen / consumer boundary. Anyone who wants to recycle raw materials has to deal with the entire production chain up to and including after sales† In short, to the extent that organizations have not yet done so, they will more often have to think about their role in relation to other organizations and their customers.

Thinking in ecosystems and working together at a higher level than your own organization is something that has been common in the IT world for years, there have been collaborations around technology platforms for decades, a method that is increasingly being imitated in all kinds of sectors due to digitalisation. In one platform, several parties use the same common technological basis and associated agreement system. Data exchange makes it possible to collaborate more easily and on a larger scale, to create connections and to automate processes. The energy transition can also benefit from this, I wrote on my own blog.

Learn and adapt

The energy transition involves great uncertainties for organizations: It is unclear what the future will look like, how the new revenue and organizational models will be. Digital systems offer flexibility and can be easily modified and customized based on feedback.

A balance between flexibility and stability can be sought, with certain components serving as pillars (the “platform”). For example, it is possible to experiment with new possibilities if it is applications, while the underlying technology does not have to change significantly. Agility and flexibility are at the heart of digitalisation and the transformation that digitalisation can bring.

New business models

In addition, digitalisation makes new business models possible. For example, we are seeing a growth of ‘as a service’ services, where customers pay for the use of a product without owning it. Customer data has also become an important source of revenue in exchange for lower prices or even free quotes. Blockchain technology makes it possible to price the use and production of energy, or other substances in networks, in new ways.

Some blockchains collect taxes and automatically redistribute revenue among participants. Digitization can thus help to enable new revenue models and the settlement of costs and redistribution of revenues that are appropriate for a more sustainable economy. Digitization and energy conversion can also reinforce each other in this respect.

The twins

The energy transition can set in motion a movement in which organizations begin to think much more strategically about their future and their relationship with other organizations, customers, and the planet. In the complexity and uncertainty that comes with it, digitization can provide the tools. Finally, it is no longer digitization to digitize or automate everything (make it more efficient, maximize profits), but to bring social goals, a more beautiful land closer.

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