How Automation is Powering the Energy Industry

Automation in the energy industry has advanced significantly, developing from basic mechanization to sophisticated systems that integrate artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT). Today, these technologies drive rapid developments, enhance efficiency, reduce costs, and improve system reliability across the energy sector.

So how can energy companies balance automation’s advantages with workforce displacement, cybersecurity concerns, and other challenges?

This blog post explores the current state of automation in the energy industry, highlights key trends and case studies, outlines numerous benefits and challenges of implementation, and examines its impact on the energy sector.

The State of Automation in the Energy Industry

Technology for energy has steadily developed since the mid-20th century, evolving from basic mechanization to programmable logic controllers (PLCs) and supervisory control and data acquisition (SCADA) systems. These advancements enabled more sophisticated monitoring, control, and optimization of energy production and distribution processes, laying the groundwork for today’s advanced automation solutions.

Current trends

The energy industry is witnessing a rapid acceleration in automation, driven by advancements in disruptive tech. Key trends include:

• AI-driven analytics: Companies are increasingly using AI for predictive maintenance, which can reduce facility downtime by up to 15%, increase labor productivity by up to 20%, and lower new equipment costs by 3%-5%.
• Digital twins: The use of digital twins to simulate and enhance energy systems is becoming more widespread, improving operational efficiency and reducing downtime.
• Smart grids: As of 2024, nearly 10,000 utility-scale solar photovoltaic (PV) projects, each over 1 MW, were in operation or development across the United States. This substantial number highlights the country’s rapid growth and adoption of utility-scale solar energy. The largest solar farm in the U.S., Solar Star, uses 1.7 million solar panels and covers more than 3,200 acres in California. This increase in utility-scale solar projects aligns with broader energy sector trends. The U.S. Energy Information Administration (EIA) reported that more than half of the new electric-generating capacity added in 2023 was from solar energy, further emphasizing the significant role of solar power in the country’s energy mix.
  

Case studies in oil, gas, and renewable energy industries

Both BP and Shell have seen success by implementing predictive maintenance systems in the oil and gas sector. These AI-powered capabilities reportedly helped Shell reduce maintenance costs by 20%, saving an estimated $2 billion annually.

And General Electric's development of an AI/ML tool using a digital twin was projected to reduce wind turbine logistics and installation costs by 10%, saving the global wind industry up to $2.6 billion annually by 2030.

Key benefits of automation

Automation has many benefits, such as improving operational efficiency, safety, and decision-making in the energy industry. Here are some of the key benefits:

• Efficiency and productivity: Automation significantly increases operational efficiency and productivity in the energy sector, giving companies greater control. Energy companies can streamline operations, reduce manual intervention, and minimize errors by automating routine tasks and processes. This results in faster and more reliable energy generation and distribution. Automated systems can also optimize the operation of power plants and grids, ensuring more efficient energy generation and delivery. Companies can achieve higher productivity levels, meet energy needs more efficiently, and maintain a competitive edge in the market.

• Cost reduction: One of the most compelling benefits of automation is its potential to reduce costs by streamlining various aspects of energy production and distribution. Automated systems help reduce the need for manual labor, maintenance costs, and downtime due to equipment failure. They also help increase profitability and project financial stability, contributing to a more sustainable business model.
• Safety improvements: Automation is critical to improving worker safety and reducing environmental risks. Automated systems can perform hazardous tasks that would otherwise put people at risk, such as monitoring and controlling high-pressure systems, handling hazardous materials, and inspecting remote or hazardous locations. In addition, automation helps monitor and control environmental factors, reduces the likelihood of accidents, and minimizes the impact of potential incidents. It also protects workers and helps companies comply with strict safety and environmental regulations.
• Data-driven decision-making: Automation makes decision-making easier with advanced data analytics. Automated systems collect vast amounts of data from various sensors and devices throughout the energy production and distribution network. This data is then analyzed in real-time to provide valuable insights into job performance, equipment health, and market trends. Using this information, energy companies can make informed decisions about optimizing their operations, increasing energy efficiency, and quickly responding to market changes. Data-driven decision-making improves strategic planning, risk management, and overall business agility.
  

Challenges and considerations

The introduction of automation in the energy sector creates both opportunities and challenges. Addressing technological, personnel, and regulatory issues is critical to successful implementation.

• Technological barriers: Implementing automation in the energy sector comes with tech challenges, including integrating new automated systems with existing infrastructure. Many energy companies rely on outdated systems that don’t seamlessly integrate with modern automation technology. Adopting smart grid technology, for example, demands substantial upgrades to existing grid infrastructure, which can be expensive and time-consuming. The energy sector must also prioritize robust cybersecurity measures to safeguard automated systems from potential cyberattacks — a major concern across industries globally. In fact, 39% of surveyed global experts consider cyberattacks among the top five global risks, according to the World Economic Forum's Global Risks Report 2024.
  
• Workforce impact: Automation profoundly impacts the energy sector workforce. While it improves efficiency and safety, it raises concerns about job displacement, too. Automating routine maintenance tasks in oil refineries reduces the need for manual labor, potentially leading to job losses. The International Energy Agency (IEA) points to a clear need for training and reskilling to retain knowledgeable talent within the industry while addressing skill shortages across different sectors, according to its World Energy Outlook 2024 report. Shell and BP have already launched extensive training programs to help employees gain new data analysis, robotics, and AI skills, ensuring they remain relevant in an automated environment.

"The new clean energy economy offers substantial opportunities to stimulate local economies and improve the quality of life for workers. But capturing these benefits and preventing the skills gap from widening further requires both the public and private sectors to invest in education and training," according to IEA's World Energy Outlook 2024 report.

• Regulatory and ethical concerns: Implementing automation in the energy sector involves regulatory and ethical considerations, too. Regulatory bodies often have stringent requirements to ensure the safety and reliability of automated systems. The environmental impact of automation technologies, such as increased electronic waste and energy consumption, for example, would also impact net-zero goals and sustainability standards globally.

Outlook for the Energy Industry

The United Nations’ Sustainable Development Goal 7 aims to ensure all access to affordable, reliable, sustainable, and modern energy by 2030, emphasizing energy efficiency and renewable energy sources.

And numerous other initiatives and strategies are underway to improve energy efficiency across various sectors.

Energy mix

A significant global shift toward renewable energy sources — such as solar, wind, hydro, and geothermal — is underway. These sources are becoming more cost-competitive and are being adopted to reduce reliance on fossil fuels and mitigate climate change. Diversifying the energy mix enhances energy security and reduces vulnerability to supply disruptions.

Decentralized and distributed generation

Distributed energy resources — including rooftop solar panels, small wind turbines, and community-based projects — are becoming more prevalent. This trend reduces reliance on centralized power plants and enhances energy resilience. For example, the U.S. Department of Energy's Puerto Rico Energy Resilience Fund aims to support Puerto Rico’s grid resilience efforts to meet its electricity needs with renewable energy by 2050. More than $450 million is allocated for rooftop solar and battery storage installations, focusing on the region’s most vulnerable residents.

Storage technology

Advancements in battery technology and other innovative storage solutions — such as hydro, compressed air energy, and thermal storage — are critical to integrating large amounts of wind and solar power into the grid. Energy storage installations are expected to exceed 15 times the 2021 online capacity by 2030, with the U.S. and China likely representing more than half of global storage installations, according to BloombergNEF.

Hydrogen production

Clean hydrogen produced with renewable energy or fossil fuels using carbon capture can contribute to a more sustainable future and greater energy security. Hydrogen’s ability to be stored over prolonged periods supports using variable renewables in the electricity system.

Nuclear energy

Small modular reactors (SMRs) can be used for decentralized and distributed generation. Their smaller size and output characterize them compared to conventional reactors. Various companies and organizations worldwide are developing small nuclear power reactors, with pilot projects and demonstrations underway.

Large-scale interconnectors

Different regions around the world are adopting and benefiting from automation in the energy industry in unique ways:

• Europe is a leader in energy automation, with countries such as Germany and Denmark at the forefront. Germany’s Energiewende (Energy Transition) initiative aims to make the country’s energy system more sustainable and efficient. Automation technologies are integral to this plan, helping to manage the intermittent nature of renewable energy sources and stabilize the grid.
• Asian-Pacific countries including China and India are rapidly embracing energy automation to meet their growing energy demands sustainably. China’s investment in smart grid technology is expected to reach nearly $23 billion by 2025, driven by the need to support its massive renewable energy infrastructure.
• The United States and Canada are leveraging automation to modernize their aging energy infrastructures. The U.S. Department of Energy’s Grid Modernization Initiative aims to create a more resilient and efficient grid by deploying advanced automation technologies.
  

Sustainable automation

Automation is crucial in promoting sustainability and reducing carbon footprints in the energy industry. Companies can significantly reduce energy waste and optimize renewable energy sources by automating energy management processes. Key examples include:

• Automated Demand Response (ADR): ADR systems automatically adjust energy consumption based on supply conditions, helping to balance the grid and reduce reliance on fossil fuels.
• Predictive maintenance: Automated systems can predict when equipment will probably fail, allowing for timely maintenance that prevents energy loss and downtime.
• Renewable energy integration: Automation facilitates the seamless integration of renewable energy sources, such as solar and wind, into the grid. By dynamically adjusting energy flows based on real-time data, automated systems ensure maximum utilization of green energy.
  

The future of energy automation is bright, with innovations promising to enhance efficiency, promote sustainability, and provide significant economic benefits.

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