The energy landscape has experienced dramatic changes over the past ten years. As the world digitizes, the demand for electricity is growing exponentially and everyone wants energy that is reliable, efficient, sustainable, secure and clean. If you consider the entire digital domain, it includes everything from cell phones to videos to hardware manufacturers to the whole entertainment business–also primarily digital. The entertainment industry alone uses as much energy or more than Japan or Germany. As we become more and more dependent on the Internet–we increase our dependence on hardware powered by energy. For example, there are 1,500 datacenters in the U.S. who use an enormous amount of energy and serve as the hubs of the Internet for every aspect of the digital world. These facilities consume close to 100 billion kilowatt hours per year based on analysis done by the National Resource Defense Council. And their usage is growing rapidly, estimated to be 150 billion kilowatt hours by 2020.
In the last five years, a great deal of work has been focused on optimizing our energy consumption because of escalating costs. For example, how can we reduce energy consumption in datacenters or optimize the consumption of the servers? How do we leverage new technologies to become more efficient? The utility grid is one of the most extraordinary engineering achievements of the 20th century, but our lifestyles and growing global electrification are taxing capacity, infrastructure and capability. Every energy resource of the energy landscape is challenged by location, site selection, energy mix, climate, water resources, weather and natural disasters. In fact, natural disasters reduce the capacity of coal and nuclear power plants and have fueled a continuing migration from coal-fired plants to natural gas-fired plants. Additionally, the energy grid is aging and recent reports have placed the cost of upgrading the grid at $2 trillion to address all the aging issues.
Innovation in Energy Sector
Addressing our explosive hunger for all things “energized” and the continuous demand for reliability and clean/green resources is inspiring a lot of work in innovation. And innovation in the energy sector has two basic components–the fuel and its supply, and the system that will convert the fuel to energy and distribute it. The main reason use of natural gas has increased so dramatically is the use of software that facilitates finding the gas reserve much more effectively than in the past. No other country in the world has increased their production as fast as the United States and it’s all driven primarily by the ability to discover new reserves through software. This is having a tremendous impact on the first element of energy innovation–the fuel. The other side of energy innovation–the delivery method–has seen a proliferation of progress in the use of fuel cells, an energy delivery system that even Bloom Energy has adopted to deliver natural gas powered clean energy to their clients. Fusion is another major potential source with the ability to dramatically change the entire energy outlook for mankind. But one of the greatest energy innovations can be found in energy savings by reducing energy consumption and making products that are more efficient. Great examples are the evolution of lighting–from incandescent to fluorescent to LED lighting–and the blooming industry of electric vehicles which will reduce our dependency on oil for energy. These innovations are now becoming common.
Advice to Upcoming CIOs
Follow the trends. The energy industry has never moved so rapidly or been so dynamic. Companies and industries that were once so successful have died, disappeared, or become 2nd class players because they didn’t adapt to the changes. If you look at every element of the economy, whether it is technology or computers or entertainment or banking, the rate of change in the last 10-20 years has been phenomenal. Unless you always–as an executive or manager–stay on your toes, look behind you, look in front of you at what's going to happen, look at your competition and the market and adapt and adjust quickly–you are going to become irrelevant.