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April 27, 2023

The power sector may have hit its peak emissions moment

2023 may be the year renewable energy gains a true global foothold. The business implications are enormous.

In the news

In 2022, the world saw record growth in the use of wind and solar power, which reached 12% of all electricity generated worldwide. This jump in clean power usage has prompted some to postulate that emissions generated by the power sector have peaked. In addition to wind and solar’s stunning 19% growth between 2021 and 2022, clean energy sources overall (including renewables such as wind, solar and hydro, plus nuclear) accounted for a record quantity of the world’s electricity—39%.

At the other end of this equation is a relative flattening in demand for fossil fuels. While power sector emissions rose 1.3% in 2022 to an all-time high, the world did not experience a feared spike in demand for coal despite the energy crisis. Meanwhile, gas power generation was essentially flat, dropping 0.2%.

If typical demands hold in 2023, some analysts foresee a drop (albeit a small one) this year in fossil-fuel-powered electricity generation.

All this is vitally important, because if the world at large is to meet net-zero targets, the electricity generation sector must do so first. The International Energy Agency’s Net Zero Emissions scenario targets 2040 for electricity generators to reach net zero, 10 years ahead of the 2050 target for the rest of the world.

Of course, all this indisputably good news has significant implications for enterprise technology stacks across industries. What developments must take place to help the global economy run on renewables?

The Cognizant take

“Renewable energy generation is variable, intermittent and distributed,” says Jan Konietzko, Manager, Sustainability Advisory at Cognizant. “To go renewable, companies will need to implement sophisticated energy management systems.”

Digital technology will play a vital role in their ability to do so. Key applications include advanced forecasting tools for efficient energy planning, smart grids for better coordination and optimization of energy consumption, and platforms that enable real-time monitoring and control.

Konietzko notes that companies can also leverage data analytics and Internet of Things devices to improve energy efficiency and implement demand response programs to balance grid supply and demand. They can also use virtual power plants to aggregate distributed energy resources for a flexible and responsive energy network. “Overall,” he says, “digital technology enhances the integration and management of renewable energy for companies, ensuring a reliable and stable energy supply.”

But before taking this on, the general attitude toward energy needs to change. “Energy costs are, on average, about 5% of total expenditures and therefore often not a high priority,” Konietzko points out. “Energy projects are undertaken when something breaks down, and there are no systematic processes to identify and assess projects to find the best technology options.”

The renewable energy transition is putting new, digital approaches to energy management firmly on the map. With green technologies becoming exponentially cheaper and better, focusing on renewable energy management not only provides cheaper energy, but also helps businesses meet ambitious climate targets. “This sweet spot of profitability and sustainability is here now,” Konietzko says. “It is just waiting to be leveraged.”

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