The global energy industry was significantly impacted by COVID-19 this last year. Largely affected by the worldwide lockdown, which led to disruptions in the supply chain and specific sectors that saw severe ramifications in 2020.
With a few days left before we enter 2021, and the coronavirus pandemic still showing no signs of extinction, it’s hard to say when the energy sector will bounce back in full ‘power’. Will the 2020 situation pull the plug on recent technological developments especially in alternate energy production?
The future of the energy industry looks bright despite the current doom and gloom
The entire world has their eyes set on 2021, with hope for a powerful vaccine and a resurgence of the global economy. The energy sector is bullish as well – and will witness a renewed focus on green energy and production of sustainable electricity in coming years. The pandemic has created massive shifts in the way energy is produced and consumed. “Living off the grid” will become paramount; energy producers will look beyond traditional models and embrace digitalization; consumers will become experts in energy conservation; and rise of the ”prosumer” will be inevitable. Some of the trends likely to emerge in the energy industry reveal an optimistic outlook for the sector in terms of production, trading, and consumption.
Digital transformation of the energy industry – “smart” everything
Challenged by varying pricing structures, consumption pattern variations, obsolete infrastructure, and threats of climate change, the energy industry is looking to technology innovation drive efficiencies and retain a competitive edge. Globally, investments in advanced digital technologies including data intelligence, digital grid systems, grid modernization, smart meters, grid automation infrastructure, and charging stations have witnessed a surge in the last few years. These rapid advancements in technology are creating new opportunities for employing unique business models and innovative strategies for advanced energy production and delivery. 2021 and beyond will be governed by all things “smart” – smart energy to power smart cities, smart power generation and consumption, smart grid optimization, and smart maintenance. Some key technology trends that will continue to support energy sector advancements are highlighted below.
What should energy producers and traders expect in 2021 and beyond?
The effects of COVID-19 will likely spill over into 2021 – especially in energy production and trading. The short-term outlook for the energy industry is a bit bearish due to low economic activity which leads to higher volatilities in energy demand and supply patterns. Energy companies should consider the following industry scenarios likely to be prevalent through 2021:
- Demand for oil is expected to rise slowly, even as travel and tourism gradually pick up steam (once the vaccine is out)
- Overall pricing (including coal and natural gas) will stabilize in 2021
- The renewable energy sector will show promise, with capacity additions anticipated to show an increase of about 10% in 2021; renewables will account for close to 95% of the net rise in global power capacity by 20251
- Digital transformation of the power industry could face some setbacks from electricity grids, with security and reliability proving to be major concerns
2020 has surely altered the dynamics of the energy industry and it is without a doubt that digitalization will play a key role in reshaping its future. Interconnected, intelligent, resilient, sustainable, efficient, and reliable systems will calculate energy needs and ensure delivery to the right place at the right time and at optimal cost. The transformational power of digitalization breaks all boundaries between different energy sectors, increases flexibility, and facilitates integration across large-scale grid networks. A 2019 Deloitte survey reports that 95% of energy executives believe digital transformation is a top strategic priority2, so it isn’t surprising that digitalization in the energy industry is anticipated to be a $64 Billion market by 20253. Energy organizations will be powering up investments in advanced and intelligent technologies such as IoT, cloud computing, and Robotic Process Automation (RPA).
Have you begun your transformational journey yet? Emtec Digital can help you leverage the power of smart technologies to future-proof your business. Contact us to learn more.