COP 28 is history and it became obvious that it is still a big stretch for fossil fuel enthusiasts to say goodbye to oil, gas and coal. But even without more mental preparedness to do so, more energy tech innovation is required to make this happen over time. Another remarkable development are the record earnings levels some companies were able to achieve lately in the energy business. Why is this relevant? Because solid earnings levels make it easier at the end of the day to mobilize money for innovation (either directly from these corporates or indirectly from venture investors). Given where energy prices are, don’t expect significant changes to these innovation friendly market conditions.
Let’s have a look at four key innovation trends in energy tech in 2024:
Given the overall attention Artificial intelligence get’s these days, we can expect that this area will get way more attention as we move into 2024. AI can play a crucial role in optimizing energy grids, predicting demand, and managing and maintaining energy resources. Expect to see smarter grids that can self-heal and adapt to real-time conditions. A big hurdle for the adoption of AI in energy is the availability and access to relevant data sets, helping the AI to become more intelligent. If data cannot be accessed, the time to AI will be very long. Also big energy players should further develop their AI strategies and support energy startups and scaleups and AI ecosystems with funding, projects and data.
To enable AI and further optimize power generation, distribution and consumption also requires more OT and IT convergence. This means that more sensor and device data must be used for optimization purposes. To deliver this requires to overcome security barriers which have been built in the past when a clear split between OT and IT was possible. A rigorous end to end approach to data and digital can increase the earnings from generation assets by twenty to thirty percent according to research. To deliver this requires a new and holistic view on all existing and new data opportunities.
The digitalization, interconnection and automation of energy systems increases the attack surface significantly. New attacks by an array of nefarious actors ranging from pranksters to fraudsters to political and state-funded terrorists must be expected. This requires an increased focus on new security technologies and new trust models for energy data.
Demand-Side Management will also get smarter in 2024. This is true for industrial, business and private energy consumption. All energy consumers can have more tools to actively participate in managing energy demand. This can lower energy bills and help reducing green house gas emissions. Think electric vehicles, storage batteries, smart thermostats, dynamic pricing schemes, and rewards for shifting energy use to off-peak periods.
A variation of this topic are Virtual Power Plants. These have been around for more than 10 years but the global VPP capacity is still very small compared to overall generation capacities from renewable and thermal. Expect to see significant demand for VPPs as rising rates of renewables drive business cases. Why? Because more grid congestion and distribution restrictions increase the value of flexible energy. One key challenge is the lack of standardized protocols and security to connect and integrate energy assets into VPPs.
Overall, 2024 will be a very exciting year for energy tech! The decarbonization agenda as well as the flow of money into the sector will enable good innovation progress.