The digital revolution is happening in all sectors. Although some applications of digital technologies are more evident to users than other (i.e., smart phone apps), energy is one of the areas that has benefitted the most by this revolution. The energy sector has seen an expansion in possibilities, transitioning from an industry of traditional services to a highly complex multiactor system.
Today, we hear about renewable energies, smart grids, prosumers, and many other terms that could not have been imagined without those technological advancements. However, this sector has the big challenge of moving towards a consumer-centric (or end-user-centric) paradigm, taking advantage of the opportunities given by digitalization. In this way, the energy sector presents an interesting opportunity to create value by combining digital technology, people and business strategy and reducing carbon emissions trough the way we produce and consume electricity, safeguarding the planet for future generations.
We hope that digitalization will become a fundamental factor for the energy transition and an enabler of industrial trends related to decarbonization and decentralization. A state-of-the-art review of the digital revolution was performed, as well as an analysis of gaps and opportunities for digitalization applications, with a focus on energy and the associated sectors. The review included scientific publications as well as policy from ten key countries that were selected for their merits in an international digitalization ranking: Germany, Finland, Japan, China, USA, UK, Sweden, France, South Korea and Singapore. From this review, a total of 30 key uses/applications were identified, along with eight classes that group related applications. Several enabling technologies were also identified, divided in six categories. From the analysis, smart grid technologies and uses are prevalent.
Enabling technologies on the Internet of Things category are those most often found in digitalization uses. Big Data, Machine Learning and Artificial Intelligence technologies are usually found in the customer domain uses, which are key when taking into consideration that an end-user-centric vision is usually associated with the digital transformation, according to the literature. In addition, the analysis helped identifying digital uses and applications that support or incentivize the development of the measures included in the updated Nationally Determined Contributions (NDC) proposal and the carbon neutrality target by 2050.
In general, most of the identified digital uses and applications are not included explicitly in the NDC: Eight applications and uses were found to contribute directly to mitigation actions proposed in the NDC, while four applications, although not associated with a specific measure, contribute indirectly to the carbon neutrality target. The analysis of gaps and opportunities was performed both for the key countries as well as for Chile.
This included the goals that the key countries have set for themselves, what gaps they are (or were) associated with, the barriers that digital uses and applications have had to face, and the main opportunities associated with digital uses and applications. The main barriers for the identified applications are summarized below:
• Economic: Most of the digitalization uses face economic barriers, such as the lack of economic incentives to implement an application or to deploy a technology. Also, the high investment cost of several technologies appears frequently as a barrier.
• Regulatory: Several applications require a modification or update of the current regulation. This is notorious on the Smart Grid, DER Management and Customer domain classes of applications, and in a lesser degree in the Mobility class of applications.
• Infrastructure: Barriers found on the technical level, related to the deployment of enabling technologies or the required infrastructure for an application to succeed were also found. Because of the variety of barriers included under Infrastructure, these were found across all classes.
• Security: Privacy, data sovereignty and information security were also barriers recognized across all classes of uses.
• Human Capital: Several applications, particularly those that involve and benefit customers or end users, were recognized as having barriers on the lack of training and the need of new skills, knowledge and digital education.
The opportunities for digital applications in Chile can be summarized as follows:
• Smart grids: These technologies present a great opportunity for both urban and rural zones, with solution that improve access to energy services and their quality.
• DER management: The growing penetration of renewable energies at the national level, empowered by the country’s goals, brings opportunities for new uses associated with distributed resources. The modernization of the distribution systems regulation opens new possibilities for uses such as demand response and distributed storage
• Customer domain: Uses of this class can impact directly the customer's service experience and engagement with the energy sector as they can offer customer-tailored energy products with a wide range of incentives and features.
• Process management: The incorporation of these uses entails an improvement in the efficiency of the processes through the deployment of equipment and technology, as well as an increase in the satisfaction levels of employees and the creation of new job profiles.
• Mobility: Digitalization favors the reduction of emissions by making the transfer of goods and people more efficient, for example, reducing the number of simultaneous vehicles in the streets and the transit time of each vehicle, or fostering the adoption of electric vehicles in the extent to which it can generate added value to the owners (vehicleto-grid services, smart charging networks, etc.).
• Data management: Data management technologies present an important opportunity to take advantage of the abundant renewable energy resources of Chile, as well as to better understand demand (elasticity, patterns, etc.) for electricity, transport and heating.
• Smart city: Digital applications in this class bring social benefits associated with an increase in social well-being, improved road safety, reduced travel times, better services, reduced visual and olfactory pollution, increased quality of life, among others, contributing to the reduction of GHG emissions, through the efficient management of energy and water, the reduction of fuel consumption and the improvement of production processes.
• Other uses: Specific opportunities were recognized for each use under this class, where contribution to emission reduction was transversally recognized. Teleworking, in particular, has gained more visibility during the 2020 pandemic. Considering the international experiences, the following recommendations for public policies are considered in order to reduce barriers and promote the implementation of uses and digital applications:
• Promote articulation between the different institutions related to the digitization of the different sectors at the national level, considering a national policy approach.
• Promote and disseminate the existence of identified digital applications to the public and private sectors.
• Include the impact of the digitization of the energy sector in long-term energy policy and in climate change mitigation policies.
• Increase the public investments in digital infrastructure, build a large-sale ICT infrastructure that supports public utilities and other services such as road infrastructure.
• The adoption of a common data architecture, tools, and standards to reduce bugs and raise the quality, reliability, and security of devices and services, and that facilitates economies of scale and data sharing across different institutions.
• Reduce the digital gap among the different territories of the country.
• Increase investment in human resources and education related to digital application and enabling technologies.
• The implementation and reinforcement of Government’s Personal Data Protection Laws and Policies for public and private sectors.
• Develop pilot programs to promote the use of different digital applications, involving the public sector, private sector, and academia.
• Encourage investment by private parties in projects associated with the digitization of the energy sector (greater offer of shared mobility, aggregators for VPPs, smart lighting services, etc.)