Key challenges facing the energy industry in 2018
The energy market continues to operate against a changing backdrop and things show no sign of slowing down. The impact of digital disruption and new forms of power generation are among the key topics for debate as the industry looks at how to move forward, raising the question: what challenges will the energy sector face in 2018?
Australia’s energy system is under pressure from all angles, with a variety of challenges for energy producers and distributors to contend with. Here’s a rundown of some of this year’s challenges and what the industry can be doing to overcome them.
One of the main areas of change is driven by Australia’s commitment to lower emissions and encourage the generation of electricity from renewable sources, with a number of domestic and international agreements in place.
The number of large-scale renewable projects has increased dramatically, with a report released by the International Renewable Energy Agency (IRENA) in January 2018 predicting that electricity from renewables will fall within the cost range or be consistently cheaper than fossil fuels by 2020.
While this is good news for Australia’s emission reduction targets, this has resulted in a fracturing of Australia’s energy market, putting trade-exposed industries at risk and raising concerns about the security of supply for both households and businesses.
Gas has long been seen as a transition fuel to ease Australia through the closure of older coal-fired power stations and the growth in renewable energy, however the gas industry has recently been struggling with high prices and tight restrictions.
Where does gas fit in?
A 2017 report by Melbourne based consultancy, RepuTex, claims pumped hydro could replace gas as a transition fuel – unless gas prices fall.
Widespread bans and delays on the exploration and development of Australia’s natural gas resources have caused gas market upheaval, with sharp price rises in recent years driven by the growth of the LNG export industry and restrictions on gas supply.
The report suggests gas could still play a significant role but with gas prices remaining high and a subsequent increase in electricity prices, lower cost alternatives are being explored.
The International Energy Agency (IEA) has recommended State and Territory governments lift their bans on natural gas development or risk squandering Australia’s energy advantage.
APPEA Chief Executive Dr Malcolm Roberts said the IEA review of Australia’s energy policies released in Canberra on 15 February confirmed the need to remove restrictions on gas operations.
“The message to policymakers from the IEA’s Executive Director, Dr Fatih Birol, could not have been clearer,” Dr Roberts said.
“Dr Birol identified the number-one step Australia can take to deliver secure and affordable energy – removing bans on unconventional gas projects.”
Gas has been cited as a way to ensure affordability as new technologies addressing the gaps in renewable generation are developed.
“Australia has abundant reserves of natural gas. It is crucial to the security of our electricity system, particularly in supporting the introduction of variable renewable energy. It also has a pivotal role to play in meeting ambitious climate change targets – both in Australia and worldwide,” Origin CEO Frank Calabria said.
The development of renewable technologies is only one part of the digital revolution currently transforming the energy sector, triggering the arrival of new regulatory frameworks and business models as power companies move to operate within a fully digital system.
Adopting new technologies into the workplace
The ability to overcome barriers to innovation and adapt to changing digital processes within the workforce will also be a key part of navigating the evolving energy landscape.
Artificial intelligence is likely to automate basic maintenance of industrial processes, by using data from equipment and plant machinery along with information from the natural environment to optimise operations.
Drones also have the potential to reduce operational and maintenance costs, with the ability to monitor long stretches of transmission pipeline or identify locations where debris might be causing power outages.
Organisations will have to integrate these new technologies into their workplace and ensure all employees are comfortable operating any new software, and working in a more digitised environment.
Digital opportunities to improve operations and boost profits are available throughout the value chain. In the same way that customer-friendly software and mobile apps are empowering consumers to take control of their energy usage, mobile enablement for employees is quickly becoming a powerful productivity-boosting capability.
Mipela GeoSolutions, an Australian owned information management company that provides software solutions and GIS services, has a range of data capture and workflow automation offerings that greatly increase efficiencies for companies who perform field construction or maintenance work.
Their tools enable the energy and infrastructure mobile field service workforce to locate where they are, view their data and record what’s happening wherever they are, eliminating the need for paper filing, storage, and maintenance.
Digitisation is also impacting the energy sector in a different way, in the form of rising security threats and evolving security and privacy requirements.
Responding to cyber security threats
While the emergence of new technologies provides opportunities for a smarter, more reliable grid, with assets and devices increasingly connected through the industrial Internet of Things (IoT), enhanced data sharing will expose the energy sector to new cyber hazards.
According to a 2016 Threat Report from the Australian Cyber Security Centre, the energy sector was identified as the sector most targeted for malicious attacks that may compromise cyber security.
Energy networks are leveraging significant volumes of data in more ways than ever before in order to improve energy reliability and efficiency. Management of such volumes of sensitive information requires robust data security strategies, particularly with the rapid adoption of distributed energy resources, such as smart meters, smart inverters, electric vehicles, rooftop Solar PV, battery storage and home energy management systems.
Power companies must take steps to understand potential their weak spots, take stock of their defenses and put in place the right strategy and tools to detect, respond to and resolve cyber threats in order to strengthen information security and build resiliency into operations in a technology-driven environment.
Turning challenges into opportunities
Wade Elofson, Founder of Powered, an Australian energy and resource focused business development company, said that the key to overcoming many of these challenges is to view them as opportunities rather than threats.
The gas industry has experienced turmoil in recent years but it will continue its slow recovery in 2018.
“The Australian gas industry is evolving and taking a greater role globally. The International Energy Agency forecast Australia will become the world’s largest gas supplier in the world in the coming years,” Mr Elofson said.
“The industry must also continue its strong commitment to provide competitively-priced gas to the domestic market.”
Mr Elofson said businesses should seek new ways to innovate and explore how digital technologies can be introduced seamlessly into the workplace.
“The digital revolution is here, and for companies in the energy industry that could mean the difference between thriving, surviving, or floundering,” Mr Elofson said.
“The proliferation of increasing affordable digital technology has the potential to change everything, resulting in huge efficiency gains and improvements in both the top and bottom lines.
“Organisations are often resistant to change without understanding the benefits new technologies can have in reducing costs and improving efficiency.”
