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Leadership / Digital Transformation

Why the future of energy must be defined by operational excellence

CGI’s Shan Roy discusses the key themes defining the decarbonised energy transition – and why solving the energy puzzle requires action and innovation across the value chain.

Today’s energy industry is fast becoming unrecognisable to that of only a decade ago.

The delineation lines between oil majors and utility companies are increasingly blurred. Investor demand, growing legislative pressures, ambitious carbon reduction targets, changing consumer behaviours, shifting mobility requirements, the growing ability to harness big data, and advancements in the generation, storage and affordability of renewable energy sources are just some of the factors reshaping the energy landscape.

future of energy

CGI’s Shan Roy discusses the key themes defining the decarbonised energy transition – and why solving the energy puzzle requires action and innovation across the value chain. (Photo by iStock)

However, while it feels as though a great distance has been travelled, we remain closer to the beginning of this journey than its end. A decarbonised future of energy is still being defined.

“Previously the main focus was solely power-related; how one moves from selling hydrocarbons to selling electrons which are not easy to differentiate,” CGI’s Shan Roy says of his conversations with oil and gas clients in regards to the energy transition. “What we’ve seen recently is a far greater recognition that it’s not just individual puzzle pieces that need to be solved, but the entire energy puzzle itself; how do you integrate all the different elements across the entire energy value chain for not just power but across all cleaner energy alternatives?”

CGI’s VP for energy; oil and gas characterises that value chain as running the gamut from renewables management, through energy production, storage, distribution, market management, retail and billing. There’s no doubting the complexity of the undertaking – Roy’s puzzle metaphor feels particularly apt. He also acknowledges that appetite for the extent of cultural and operational transformation required varies – especially at a time when the oil and gas sector is seeing margins from traditional operations shrinking.

“Some still view this all purely through the lens of power or electricity,” Roy says. “But an increasing number are seeing the need to address the renewables bit, the biofuels. How do they bring this all together, have a standardised approach across the value chain that leverages the best of what they do in the hydrocarbons space, but also recognises the bits they don’t have and considers how to fill those gaps.”

‘Journey to a carbon zero footprint’

For Roy, who has spent over two decades helping corporates align business and IT goals and is responsible for C-suite advisory of strategic solutions for oil, gas and energy clients, there are three overarching requirements driving the direction of travel and shaping the future of energy: the customer-centric; the environment-centric; and the operation-centric.

“What does the future customer look like and what do they want from organisations like the super-majors?” Roy asks. “Citizen-centric demand is driving solutions and propositions to the end customer. This is not just related to power; it spans across e-mobility, EV charging, energy-as-a-service – also, concepts such as microgrids, where citizens can become energy producers, installing their own low-carbon energy alternatives, moving from consumer to prosumer.”

End-to-end management of energy assets and services is no easy feat and perceived complexity goes some way towards explaining why there has been something of a lag in energy companies rising to the challenge. “Take electric vehicles as one piece,” says Roy. “You have the electricity generation itself, the supply aspect, the charging, even mobility as a service. There are strong overlaps with oil and gas and energy, but also with transport, with local government. All these pieces have to come together to address this single point and it’s a challenge. I think there have been some cases of energy companies looking at each other and saying, ‘who wants to have a go at the puzzle first?’. But creating that connected, citizen-centric view is just one part.”

That takes us to the environmental component of the conversation – a consideration which, for Roy, has not always been afforded the same prominence as the citizen-centric. “This is about the journey to a carbon zero footprint – not just net zero, because net zero may not be enough,” he says. “It is where we’re seeing new business models emerge, new ways of driving cleaner alternative optimisations and supply chain solutions by each business line.

“The challenges for downstream are quite different to those faced in upstream, for example, the approach of achieving a set of sustainability targets in exploration and production chain versus downstream retail are very different and will move at an individual pace.”

Funding cleaner energy solutions for the future

These challenges feed directly into the third major piece: the operation-centric. Funding cleaner energy solutions is one thing, but the challenge remains regarding how one integrates these changes operationally into the mainstream value chain. From storage and charging to central markets and trading, super-majors such as BP, Shell and Total have undertaken significant acquisition activity in recent years to diversify their portfolios. This trend is likely to continue, making the integration of new offerings – and the adaptation of existing models – an overarching priority.

“It must all be interconnected,” Roy explains. “Integrating acquisitions, getting better visibility of what’s happening with your assets, realising what an integrated offering looks like for your customer base – offering a broadband service, smart charging, or smart home solutions, for example. It comes down to a balanced set between these three moving parts: citizen, environment, and operational. They’re all interconnected, but at the same time emerging at different speed and priority.”

This last point is vital. While progress is being made across the value chain, for now, at least, many of these efforts remain siloed. “Whatever good looks like in two, five or ten years, it should be stressed that there will be multiple interim states to go through,” Roy says. “Do we have the full energy picture as the transition is evolving? In all honesty, no. We are all still trying to find what good looks like.

Roy points to the sheer breadth of work CGI is undertaking to highlight the complexity of this picture. He cites efforts in the area of smart cities and 5G, helping energy companies and local governments harness tech to minimise emissions and create more connected communities; the group’s renewables management system (RMS), which offers an integrated set of tools to help maximise energy production, increase availability, control energy losses and improve overall operational performance; and Central Market Solutions, an energy platform with an ecosystem of utility companies, authorities, partners and consumers, focused on consumer needs and the customer experience around home energy consumption and generation.

“It’s about bringing a combination of partner strategies, our own IP and products, and the expertise to appreciate the bigger picture,” Roy explains. “The future of energy will ultimately come down to operational excellence. Getting that part right requires optimising your partner ecosystem, collaborating with those who understand the various components of the journey you’re on.”

The future of energy is citizen-centric, environment-centric and operation-centric. Integrating all three requires significant innovation based on data, ambition and the harnessing of emerging technologies, platforms and providers. This will not be a fast process, but it appears that there is a growing appetite among a number of the industry’s biggest players for tackling the challenge head-on.