#4 Digital Disruption comes to Energy
In 2013 something happened that would have been hard to envision even a decade ago; the combined energy consumption of the world’s data centers exceeded that of the 6th largest country - Germany. The ever-increasing demand from connecting billions of devices to the internet (the internet of things) and dealing with an exponentiating increase in the volume of digital data are the forces behind this growth. The good news is that digitization is helping us dramatically reduce energy use at the same time. The two big trends are removal of physical materials and moving to smarter systems. Removal of physical materials is what we’ve been focusing on for some time now. In companies, reducing the amount of paper printed and miles flown to meetings are usually music to a CFO’s ears due to cost savings. Smarter systems is where digital is really disrupting energy - we’re moving to smarter grids, buildings, homes and data centers that are enabled through automation, new energy efficient technologies and advanced analytics.
Smarter digital systems are helping use energy better and to manage for complex generation and distribution systems
Smarter grids are a necessity for an energy system is that is getting more complicated. An energy system that 40 years ago was run by a single monopoly generator and distributor from a coal-fired power station is now (in a number of cases) a deregulated system with an energy market. Consumers are now becoming generators through distributed solar that feeds back into the grid. These are just one way that grids are improving. We’re also seeing smart meters, more dynamic distribution of power and better use of resources such as water as illustrated in this set of case studies from the World Bank.
Smarter systems is really where digital is disrupting energy - we’re moving to smarter grids, buildings, homes and data centers that are enabled through automation, new energy efficient technologies and advanced analytics
Smarter homes and buildings provide the best market opportunities for the private sector as consumers and companies reduce costs and (hopefully) simplify their lives. Buildings represent nearly 40% of primary energy used on average globally, and between 25% and 40% of energy demand in OECD countries. Including the energy consumed in building construction, this number grows to more than 50% and is rising fast thanks to economic development and a construction boom in countries like China and India. The U.S. market alone for energy efficiency in buildings is approximately $236 billion annually, and is expected to triple by 2030. There are plenty of simple solutions to this problem - insulation, energy efficient lightbulbs, turning things off - but we’re battling against a rebound effect so we’re going to need to keep doing more. One example is in smart appliances that know the price of energy, learn your behavior and can turn themselves off when not in use. Google's 2014 acquisition of Nest for $3.2 billion is a prime example of an enabling technology for better energy efficiency. Nest is best known for its "learning thermostat", a device that knows whether or not you are at home and which can be controlled with a smartphone.
Through better automation, more efficient cooling technologies and power that comes from renewable resources many of our data centers are most certainly becoming more green. As were seeing with autonomous vehicles, this is important not only in terms of emissions but in effectively re-shaping an industry. As shown in this report companies such as Google, Facebook, Apple and Rackspace are leading the way in the use of clean energy technologies and building green data centres. Whereas many of our technology systems are decentralizing, data centers are actually centralizing (more people are moving to the big players as opposed to building their own) which makes what they do ever more important.
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