SAP energy management solutions are contributing to the world’s attempt to transition to more efficient renewable energy schemes: taking up the slack as global sustainability initiatives by governments are being delayed.
COP27 is taking place in Egypt next week in the middle of the worst global energy crisis since the 1970s, and many are sceptical whether this year’s Conference of the Parties on climate change will lead to progress on commitments agreed in Edinburgh last year.
This week IgniteSAP will take a look at some ways in which ERP and digital transformation in the renewable energy and utilities sector is reducing the carbon footprint of industry and commerce, as well as revolutionising the means by which energy is produced and distributed.
The 2022 Energy Crisis
The energy crisis is not just causing problems like how to heat homes without warming the planet. It also affects the cost of production and distribution for all businesses, leading to higher prices for the consumer.
In Europe, as Russia reduced the flow of gas through the Nordstream pipeline prices rose by 50%, compounding the existing economic downturn from Coronavirus and the lockdowns. This has led to many new advocates of renewable energy infrastructure on national energy security grounds as much as delaying global warming.
But there is no universal agreement as yet on the best way to implement national renewable energy schemes, and many politicians are encouraging further investments in oil and gas extraction despite the absolute necessity to massively cut down on carbon intensive energy.
COP27 is being held in Sharm-el-Sheik amid substantial controversy. President al-Sisi’s respect for human rights and Egyptian civil society organisations has been called into question as more than 60,000 individuals have been arrested since he seized power in 2014. Severe restrictions have been imposed on environmental groups in Egypt and their presence at COP27 has been limited.
Egypt has national renewable energy schemes which seek to increase the share of renewable energy to 42% by 2035, but the corporate sponsorship of COP27 by Coca-Cola (which is said to be the biggest source of global plastic pollution by one company) is drawing accusations that the event is being used for large-scale greenwashing.
A recent report by the UN commission on climate change suggests that countries are reducing global greenhouse emissions but this trend will still be unable to limit the rise in temperature to 1.5 degrees Celsius by the end of the century.
“GHG emissions need to be cut 43% by 2030. This is critical to meeting the Paris Agreement goal of limiting temperature rise to 1.5 degrees Celsius by the end of this century and avoiding the worst impacts of climate change, including more frequent and severe droughts, heatwaves and rainfall.”
The difference between 1.5 degrees and 2 degrees is dramatic. The IPCC report on climate change predicts that the extra 0.5 degree will result in 2.5 times more extreme heat events, massive sea level rises, twice as much loss of habitats and vertebrate species, and a 2.3 reduction in crop yields, among many other disasters.
Action is Needed at All Levels
So it is becoming clear that the world’s governments cannot meet their own contributions toward global carbon reduction without the help of the private sector, private households and individuals.
Governments can bring about legislation to enforce the participation of companies and individual citizens to realise environmental and sustainable objectives, but this takes time. And they are also under pressure to reduce the cost of living and ensure energy security.
All of this makes it even more necessary for government organisations and corporations to take a more integrated, systematic and technological approach to generating and distributing energy more efficiently.
The World Energy Markets Observatory recently produced a report about balancing the fight against climate change with energy security. The report pointed out that the European market for example, needs to be more cohesive, and also move towards a hybrid method of energy generation, though primarily renewable energy would be preferable in the long term.
Energy for the Next Generation
Though carbon emissions were reduced during the lockdown they have returned to previous high levels, and the demand of an expanding global population for energy is increasing, particularly among emerging and developing economies.
However, the International Energy Agency (IEA) believes that even in the face of unprecedented challenges, if governments and industry work together, all of these demands can be met. Though full of many warnings their report, The World Energy Outlook 2022 states:
“The cost advantages of mature clean energy technologies and the prospects for new ones, such as low-emissions hydrogen, are boosted by the Inflation Reduction Act in the United States, Europe’s increased push for clean energy, and other major new policies. The result is to turbo-charge the emerging global clean energy economy.”
The level of investment in clean energy and infrastructure must triple by 2030, but if current rates of growth for solar, wind and electric vehicles are maintained and extended across the world then this could lead to a much faster transformation, potentially achieving these targets.
“Supply chains for some key technologies: including batteries, solar PV and electrolysers, are expanding at rates that support greater global ambition. If all announced manufacturing expansion plans for solar PV see the light of day, manufacturing capacity would exceed the deployment levels in the Announced Pledges Scenario in 2030 by around 75%.”
So a broad coalition of countries, working in concert can achieve the required changes, but it requires the support of industry.
IgniteSAP has explored the way that ERP can bring about systematic changes in business operations so that commercial enterprises can reduce their own carbon footprint and material waste from manufacturing processes. We have explored SAP sustainability solutions like SAP Product Footprint Management and SAP Business Ecology Management, as well as core products like S/4HANA Cloud and SAP Ariba that can bring the necessary level of transparency to a business to achieve far greater levels of efficiency.
SAP also has a group of products which target energy management for energy companies.
Rise with SAP for Utilities
In March 2021 SAP announced Rise with SAP for Utilities which consists of a variety of modular cloud solutions for energy companies and other utilities providers.
As part of SAP Cloud for Utilities these customers have access to components that include a version of SAP S/4HANA for utilities, SAP Cloud for Energy, CX and finance, as well as SAP Field Service Management, and the Business Technology Platform.
These bundles are intended to simplify energy provision so customers and partners can build and integrate solutions that are transparent and efficient, leading to a far easier roadmap for scenarios such as solar energy, managing infrastructure and electric vehicle fleets, and optimising energy use with AI.
An early example of digitalisation of a power grid is the joint project between SAP and E.ON energy company begun in 2020. E.ON invested tens of millions of euros to digitalise its network and sales in partnership with SAP so that a solar system can now be connected to the power grid in a matter of days. Intelligent data technology is fundamental to this project in order to get insight into the overall network as well as link to endpoints service engineers and customers.
Centrica, a multinational energy and services provider worked with SAP to make it possible for customers to sell micro-generated energy from homes and businesses back to the grid, using a SAP Business Technology Platform cloud solution called Microgen.
“SAP Cloud Application Programming Model was the model used to build Node.js back-end applications, and SAP Business Application Studio was used by developers to build all the Microgen applications, leveraging SAPUI5 technology and following standard guidelines for the SAP Fiori user experience (UX). Data was replicated from an Oracle database to the SAP HANA Cloud database using SAP HANA smart data integration.”
For some years now system integrators have been working closely with SAP to create products that can accelerate the transition of companies to digitalised and clean energy business operations. Many corporations have been creating bespoke products for energy companies so large power networks are more efficient, adaptable and scalable.
What these products have in common is a cloud-first approach and deep insight through analytics.
Capgemini have created a best practice-based template for electricity retail and distribution called Calorie. This solution integrates CRM, meter management, contract billing, account management and data migration. Smart metering and smart grids are incorporated so that customers, employees and managers can respond to changes in behaviour of the network, and change their own behaviours to reduce energy waste.
PwC, Shell and SAP have been innovating to create a working model of the energy company of the future. By redistributing its data resources to a public cloud deployment of S/4HANA, Shell freed up resources in such a way as to be able to consume innovation more quickly.
“They highlighted how it could replace legacy manual processes, boost speed, enhance collaboration, enable “in-context” discussions through social media-type interactions, transform internal controls from after-the-event to real-time, and provide consumer-grade user interfaces and experiences.”
Deloitte have been developing an SAP-based product for utilities which uses cloud infrastructure an Application Management Service to modernise the transformation process. This modular deployment encourages utilities companies to adopt simplified IT landscapes with a lower total cost of ownership. The Application Management Service allows companies to outsource support workloads while also making the process of adopting innovation much easier when responding to market changes.
The Common Good
We live on a planet with finite resources, and the global population and our combined demand for energy is expanding. Even without the sudden changes forced upon us by recent events we were moving in the right direction but nowhere near fast enough. As Scott Russell, SAP’s executive board member and leader of customer success said in a recent interview:
“The energy crisis is real. It’s ongoing. It’s not going to be fixed only through dialogue at the geopolitical level, it’s going to be solved through the use of technology and helping connect businesses, helping them to physically be able to address those challenges together”.
Businesses have always strived for efficiency as a means for competing with their peers, and now there is a new reason for achieving optimal processes in commercial and energy networks: for the benefit of everyone.
The private sector is demonstrating that business values can be compatible with concern for the common good, and it is necessary for governments, businesses, households and individuals to do what they can to achieve this.
IT consultants working with SAP and other types of ERP systems are ideally placed create profound and lasting change for the good of everyone. Their role in this regard has never been so crucial, so if you are engaged in transformation of energy companies or any other type of digitalisation project, you are helping to save the planet.