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article imageTenfold investment boom in digital transformation of energy firms

By James Walker     Nov 7, 2017 in Technology
Investments in AI and big data within the energy sector are up tenfold over last year, according to a new report assessing technology's impact on the industry. Despite being constrained by their scale, energy companies are starting to digitally transform.
Demand for AI and data applications is growing dramatically within the sector. Greentech Media reports on a new study from accountancy firm BDO which found the number and value of deals has grown sharply in the past year.
Generating data insights
Eight new mergers and acquisitions between energy firms and tech-focused deals were made in the second quarter of 2017, up from six last year. In the first quarter, 14 deals were made with an average value of $500 million. By the second quarter, this ballooned to $3.5 billion. Interest in data and AI seems to be soaring within the industry.
BDO suggested the trend is explained by the need to harvest more data insights in increasingly uncertain times. Political instability, emerging forms of energy production and Industry 4.0 are all steering energy firms towards streamlining their operations. AI can help to make sense of the scale and complexity of businesses within the sector, identifying inefficiencies to be acted upon during digital transformations.
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Analytical technologies can also help operators to maximise their revenue from existing resources. An AI could determine the best way to send power through the grid at peak times or predict when output from wind turbines is likely to reach optimum levels. The business could use these insights to react in real-time to changes in consumption and production.
"To operate the grid more efficiently and keep fossil reserves at a minimum, operators need to have a better idea of how much wind and solar power to expect at any given time," the report explains. "The way to generate such insights is through using big data analytics and AI to radically improve prediction models."
Gradual integration
Overall adoption is still slow though. While the pace of deals is rapidly increasing, the industry as a whole is still a long way off achieving complete digital transformation. Energy businesses operate at massive scale and rely on business processes established over decades. Moving them to technology-based alternatives will take time.
It's clear that industry participants are increasingly cognisant of the potential benefits though, making it probable that tech like AI, IoT and blockchain will noticeably permeate the sector over the next few years. The study said many operators are now evaluating new technologies with a view to integrating them into their business, ensuring they stay aligned with the industry's digitisation.
More about digital transformation, Digital, digital disruption, Ai, big data