Today’s energy companies find themselves navigating a complex landscape fraught with challenges, including strict government regulations, fierce competition, fluctuating oil prices, global inflation, and changing consumer behavior. These challenges demand a fundamental shift toward digitalization to maintain their relevance and competitiveness. Thus, energy retailers are compelled to accelerate their digital transformation and migrate to cloud systems to reap cost, efficiency, profitability, and innovation benefits.
, many factors will likely impact the industry in the next decade, including:
The cloud’s impact on value creation is quite apparent.
across various industries, benefiting some sectors more than others. The oil and gas industry, for instance, is expected to see a boost in EBITDA of 29-60% by 2030, thanks to the cloud.
Currently, companies are taking significant steps to accelerate their digital transformation and incorporate cloud-native systems. As per
, 78% of executives from various regions confirmed that they have adopted the cloud in most or all areas of their business. Additionally,
showed that 66% of CEOs from the Middle East have expressed their intention to implement cloud solutions, AI, ML, and other advanced technologies in their operations. Improving workforce skills is a crucial aspect of this digital transformation, with 74% of Middle Eastern CEOs saying they expect to invest in employee education. The survey highlights that businesses have recognized the immense potential of cloud technology and are increasingly relying on it to revamp their operations.
But how can energy companies unlock the cloud’s full potential to adjust to the dynamic business environment? What are the areas in which the energy industry excels with the tools provided by the cloud? Throughout this article, we will discover some of the benefits associated with cloud solutions and how these benefits are transforming the energy sector in today’s rapidly changing environment.
1) Cost Savings
Cloud solutions provide a variety of cost benefits for the energy sector. With cloud systems, companies can seamlessly discard costs related to infrastructure
, which can cost astronomical amounts depending on the size of the business. Cloud can also help eliminate maintenance costs
associated with on-prem solutions. Flexible payment options
like pay-as-you-go and subscriptions allow energy companies to optimize spending. According to a report by Accenture
, cloud migrations can reduce energy consumption by 65%
and carbon emissions by 84%
. Migrating to the cloud also puts savings on the total cost of ownership at 30-40%
Cloud systems provide a range of tools to improve collaboration and communication within organizations, resulting in significant reductions in operational costs
due to enhanced efficiency and time management. Furthermore, outsourcing cloud system management eliminates the requirement for full-time IT personnel, thereby reducing HR costs
for energy companies.
2) Data Management and Analytics
Businesses today gather and analyze vast amounts of data to excel in their field, improve their operations, and provide better customer service. On-prem systems are outdated and ineffective, and collecting data can become very complex due to the many parties involved in the energy supply chain. IT solutions are changing drastically as well, with less than 40% of data now held on local servers compared to over 90% 15 years ago, as per Google. Digitization efforts are accelerating, and there is a reason for it: the cloud offers a range of perks for data management.
Cloud-based advanced analytics tools and ML services can accurately predict demand fluctuations, operational costs, and risks for energy suppliers. By optimizing energy distribution, costs can be reduced. Cloud systems enable data integration from various sources, including IoT devices, legacy systems, and external data feeds
Companies in the energy sector can gather data from multiple sources and conduct more in-depth analyses more efficiently through cloud systems. This approach provides a broader perspective on the company’s current state, business environment, and cloud. Compared to on-prem IT solutions, the computing power of the cloud is unmatched, allowing companies to store vast amounts of data and analyze it seamlessly. For example, Schlumberger, a company in the sector, utilizes Google Cloud
to enable data-driven decisions. The company deployed a data lake with over 100M items consisting of more than 30TB of petrotechnical data using BigQuery
, unlocking newer, faster insights for its customers.
With enhanced visualization tools the cloud offers, managers can easily visualize the data, better understand the status quo, make effective business decisions based on the data available, and select appropriate short/long-term strategies for the company. In addition, advanced AI and ML analysis features also assist enterprises in saving time on their daily operations. For example, French utility company Engie has partnered
with Google Cloud to develop an AI-based wind energy solution
. This solution is expected to improve decision-making and benefit wind facilities worldwide with enhanced AI forecasting capabilities by utilizing high-performing and scalable data systems and advanced ML algorithms.
3) Scalability and Flexibility
Cloud solutions can be deployed much more quickly compared to physical on-prem solutions. With quick deployments, enterprises can save valuable time and money and easily expand their business to new territories. The flexibility of the cloud also enables energy companies to restructure their resources and energy production aligned with seasonal fluctuations in demand, providing enhanced optimization.
Energy companies can seamlessly scale up or down when needed and allocate their resources to produce and distribute energy in the most efficient way possible. For example, a solar energy company, SunRun, scaled solar power data operations
with Google Cloud, which helped reduce data warehouse design time by 50%
and infrastructure development time by 75%
Additionally, employees, managers, and even shareholders can easily access resources and real-time data anywhere on earth, elevating collaboration and communication efforts within the company and allowing for effective decision-making.
4) Operational Efficiency
Maintaining operational efficiency can be tricky for companies in any sector, but the energy sector faces unique challenges. Fortunately, the cloud provides various tools that can help take operational efficiency to the next level. These tools enable seamless collaboration and communication among employees, promoting synchronous work and saving organizations valuable time, money, and labor. Additionally, real-time data allows energy firms to allocate resources more efficiently and minimize costs.
Cloud providers perform routine system updates, allowing energy companies to use their IT personnel more efficiently. The cloud eliminates IT system maintenance costs, freeing up resources for other business aspects.
Another significant feature of the cloud is disaster recovery: Energy companies can replicate their data and applications across multiple data centers, ensuring quick recovery in the event of system malfunctions. This minimizes downtime and ensures that operations are not severely affected. Furthermore, cloud systems constantly monitor company equipment to prevent breakdowns, allowing smooth and efficient operations.
The energy sector is always striving for innovation, as competition, technological advancements, and shifts in energy sources push companies to prioritize R&D and foster a culture of innovation. Therefore, the cloud has become a key component for energy companies in the digital era as innovation is deeply ingrained in its foundations.
As per McKinsey
, the cloud’s predicted value is primarily due to innovation, accounting for 75%. This is because cloud systems allow teams to work simultaneously, which increases efficiency and reduces project completion time. As a result, employees have more time and resources to develop innovative solutions. Real-time data and analyses provide accurate insights and predictions about industry trends and daily operations, creating an ideal environment for innovation. The advanced technologies that come with the cloud, such as Data Analytics
, and ML
, help energy firms develop new strategies and improve performance.
Another McKinsey study
found that high-performing companies use cloud infrastructure much more than their peers, with 64% of their AI workloads running on public or hybrid cloud, compared to 44% at other companies. Companies are also increasingly using AI to ensure worker safety
while maintaining productivity
in a health and safety-centric world.
6) Environmental Impact
The energy sector is undergoing a substantial shift as governments worldwide pass new conservation acts and regulations to combat the environmental damage caused by humans. More and more energy companies are investing in reducing their carbon dioxide emissions and turning to renewable energy sources to meet strict government regulations and cater to the increasing number of environmentally conscious consumers. Switching to the cloud helps. For example, you can reduce your environmental impact instantly when you choose to run on Google Cloud, as Google matches the 100% of energy consumed
by their global operations with renewable energy.
There are numerous advantages to using cloud technology to promote environmental conservation and sustainability. Cloud companies typically construct energy-efficient data centers to reduce energy consumption, benefiting both service providers and their clients. Research
conducted by the Berkley Lab and Northwestern University has shown that cloud computing can reduce energy consumption by a staggering 87%
Many cloud providers are also using environmental, social, and governance (ESG) metrics to measure overall sustainability performance to determine the overall impact of operations on the environment. An increasing number of cloud providers are opting for renewable energy sources to power their data centers, indirectly supporting green energy initiatives. With the cloud’s enhanced data analysis features, organizations can also optimize energy consumption while minimizing their carbon footprint.
Today’s energy industry is met with a multitude of challenges, such as intense competition, increasing infrastructure expenses, evolving government regulations, changing consumer habits, fluctuations in global demand, and the emergence of new technologies. To remain competitive and achieve organizational goals, efficient and effective solutions are required to tackle these challenges.
As Kartaca, we’ve assembled an unprecedented level of hands-on talent under one roof to create perfect solutions for our customers. Our team of 30+ software, network, and data engineers makes precise touches to our customer’s pain points and offers lifelong solutions. Our team is trained on Google Cloud products, concepts, use cases, etc. Their technical skills to solve real-world IT challenges are validated regularly through certifications.
If you would like to know more about how Kartaca can add value to your energy business, please check this page
and contact us
Kartaca is a Premier Partner for Google Cloud in the Sell and Service Engagement Models with “Cloud Migration” and “Data Analytics” specializations.