The energy sector’s shift toward cleaner energy alternatives is in full swing, and this seismic shift underscores the need to manage power distribution more effectively and efficiently. Embracing the digital technologies that help an organization achieve these imperatives is more than checking an environmental, social, and corporate governance (ESG) checkbox. It’s an opportunity to add value to the organization.
Looking ahead, “energy companies expect digitization to have a significant impact on improving efficiency and reducing costs,” according to authors of a recent white paper from the Gutierrez Energy Management Institute and University of Houston (UH) Energy. That white paper cited data from a DNV GL report that surveyed nearly 2,000 professionals across the global energy value chain. When respondents were asked to name their organization’s main goals regarding their digitization strategy, “improving efficiency” and “reducing costs” were the top priorities for most companies, followed by “creating new products and services” and “enhanced customer connection.”
Amid this digital transformation, corporate leadership has a responsibility to integrate renewable energy sources such as solar and wind power. As C-suite leaders transition from conventional fossil fuels to renewable energy, intelligent grid management becomes a key component.
Adapting and integrating
The Environmental Protection Agency (EPA) has described The Inflation Reduction Act of 2022 as “the most significant climate legislation in U.S. history.” In addition to providing programs and funding designed to fast-track the shift to a clean energy economy, the landmark legislation also offers tax incentives for consumers and companies that cut renewable energy costs.
Legislation like the Inflation Reduction Act is intended to push organizations within the energy industry toward renewable energy sources as the Renewable Energy 2.0 era begins. This shift, however, to Renewable Energy 2.0 is a complex process that comes with myriad challenges. For instance, more traditional energy sources provide power consistently and uniformly, and energy grids have historically been designed accordingly. Renewables like wind power are less predictable and can vary based on weather conditions and other variables. As such, transitioning to wind power and other forms of renewable energy, such as solar power and hydrogen energy, requires going beyond conventional grid management methods.
Adopting and integrating AI and digital technologies grid management models help organizations ensure grid stability in the Renewable Energy 2.0 age. AI-powered grid management entails AI algorithms analyzing diverse data sources to optimize power grid management, reduce costs, and enhance sustainability. AI-powered grid management systems aid leadership in integrating renewables in a variety of ways, including offering real-time data processing and analysis, predictive analytics for energy balancing, efficient fault detection and maintenance, optimized energy distribution, and microgrid management and decentralization. AI and other technologies like blockchain figure to play key roles in revolutionizing the renewable energy sector. Beyond being environmentally responsible, embracing these technologies and their incredible potential helps organizations gain a competitive advantage in the renewable energy market.
In terms of what technologies to adopt for their organizations, C-suite executives will need to carefully review their business and their operating environment to see what best fits their needs. Features to consider should include cost savings and waste reduction, for example, as well as the difficulty of implementation and the effort required to onboard stakeholders and communicate these changes to the workforce.
The benefits of AI and digital technologies may seem apparent, but how do company leaders prepare employees and stakeholders to integrate digital technologies within renewable energy operations and infrastructure? Getting buy-in for the digital transformation effort often requires a cultural shift within the organization. Employees might face resistance or challenges when adapting to new processes, necessitating effective change management strategies. For this reason, it is vital for organizational leadership teams to set an example for the workforce, demonstrating a commitment to innovation and digital readiness by embracing new technologies and providing adequate resources—including budget and time—for research, development, and training related to digital technologies. This shows a clear and genuine commitment to innovation.
It’s important to display that commitment throughout the C-suite and beyond, breaking down silos within the organization and promoting cross-functional collaboration. These efforts engender the sharing of ideas and expertise, and the fresh and diverse perspectives gained through these collaborative efforts lead to more innovative ideas and solutions. The innovations that come from these partnerships must be rewarded as well. Acknowledge and reward employees who contribute to innovative projects or develop creative solutions related to the use of digital technologies. Recognition boosts motivation and encourages others to contribute.
Managing risks and overcoming obstacles
The production of renewable energy continues to increase as the once-prohibitive cost continues to tick downward, a decrease that the World Economic Forum says is “vital for the rapid and widespread adoption of renewable energy going forward.” Still, questions—and risks—remain. In addition to variability and intermittency hurdles, data quality and privacy concerns linger, as do regulatory, financial, and market barriers, such as fluctuating energy prices and policy uncertainties. It is vital for leadership teams to employ risk management strategies, such as power purchase agreements with fixed prices, to mitigate financial risks and enhance project viability.
Inconsistent or outdated policies and regulations can impede the growth of Renewable Energy 2.0 as well. Governments need to enact supportive policies, such as renewable portfolio standards, feed-in tariffs, and long-term power purchase agreements, to encourage private sector investments in renewable energy projects. Developing and implementing cutting-edge renewable energy technologies requires significant research and development. It’s imperative for C-suite leaders to help foster collaboration between research institutions, private companies, and government agencies to accelerate technological advancements and knowledge sharing.
Beyond the private sector and government entities, public resistance to renewable energy projects—stemming from aesthetic concerns, noise, or land use conflicts, for example—can also present challenges. Corporate leaders in the energy industry can help increase public awareness about the benefits of Renewable Energy 2.0 through education and transparent communication. Involve local communities in the decision-making process and consider their feedback when planning projects.
Addressing climate change and transitioning to renewable Energy 2.0 will ultimately require international collaboration and alignment of efforts. It will be essential for C-suite leaders to play a critical role in fostering global partnerships and agreements to promote sustainable energy practices and accelerate the adoption of renewable energy worldwide. This starts with their efforts within their renewable energy organizations, where they embrace, encourage, and reward innovation, promote collaboration, establish innovation metrics, create innovation teams, provide training and upskilling, and take many other steps to achieve widespread adoption of renewable energy.
About the Author:
Pratyush Kumar Singh is a management consultant at Ernst and Young, where he advises C-suite executives on strategic imperatives and the transformative power of technology to achieve organizational goals. With an eight-year tenure as an engineering officer in the Indian Army, he brings substantial experience in managing cutting-edge technologies. Pratyush’s genuine passion for technology and making the world a better place underscores his dedication to shaping a brighter future through his expertise and insights. He holds a degree in electronics engineering from Jawaharlal Nehru University, Delhi, and an MBA from the Ross School of Business, University of Michigan. Connect with him on LinkedIn.