As the world is anticipating the end of the COVID-19 pandemic, energy consumption in industry and services is likely to grow. In the longer term, the developing world will increase its energy utilization, leading to growth of global primary energy demand by of 0.4% – 0.6% per year, or a 25% increase by 2050. According to scenarios calculated by energy giant Total SE, massive electrification of transportation will lead to decarbonization, and will require a rapid growth in renewables as a source of electricity.
This energy transformation will see an explosion of growth in Artificial Intelligence (AI) utilization in the sector – up 50% between 2020 and 2024 – to allow smart, 21st century grids to become the gold standard, gradually replacing the “dumb” grids laid down in the late 19th – early 20th century in Europe, North America, Japan, China and beyond.
The grid is a meta-system of generation facilities, be it nuclear, gas, coal, solar, wind, and hydro, connected by high voltage wire networks to transformers, and then to sub-stations and individual buildings, households, and apartments. Today, ambitious projects are in the works to provide electricity thousands of miles from the point of generation, for example, from Australia to Singapore via the ‘suncable.’ But transporting energy over long distances is a tricky, inefficient business. AI can help remedy that.
The leading trend in optimizing energy distribution and storage utilizing AI will become Energy Management Systems (EMS) connected to Internet of Things (IoT). The IoT allows for remote control of systems, consumption monitoring, data collection and analysis, and, with the help of AI, decision making: where to send energy, which generating capacity to switch on and off, how much energy to store, etc. New systems will utilizes smart sensors and meters to collect terabytes of information, and exploit massive cloud computing capacity and AI algorithms to process vast data into usable decisions. The market value of energy management systems is anticipated to exceed $45 billion by 2026.
According to the recent Global Artificial Intelligence in Energy Market 2020-2024 report, companies leading technological development and implementation in the energy AI sector include:
- Alphabet Inc. (AI)
- IBM Corporation
- General Electric Co.
- Intel Corp
- Mitsubishi Hitachi Power Systems Ltd.
- Microsoft Corp.
- Cisco Systems Inc.
- Tata Consultancy Services Limited
- Mitsubishi Electric Corporation
- Honeywell International Inc.
This transformation leads to explosive market capitalization. In the energy management market alone, AI experts anticipate value growth of 300% between 2018 and 2025, from $4.5 million in 2018 to $12.2 billion in 2024. Between 2020 and 2024 the sector will grow by over $8 billion. This is 48 percent growth over the next 4 years, mostly in the utility sector. Many companies, including Exxon, BP, Dominion Energy
Entire suits of services and software offered by the IoT married to AI will make the power generation systems and grids more predictable, and more stable. They will significantly reduce energy management costs, but will increase system complexity and heighten human resources demands needed to manage these systems. This represents an additional challenge for both developed and developing countries.
The battery management market utilizes AI for ‘smart’ recharging and discharging of batteries, ranging from electric vehicles connected to the grid to utility size industrial storage facilities. A new report singles out Robert Bosch GmbH, ION Energy Pvt. Ltd., Advanced Charging Technologies (ACT), Texas Instruments Incorporated
Investors should be alert to the meta-trend that marries the two growing industries: AI and smart grid development. While it will first affect developed markets, the action will be even more exciting in the energy-hungry developing world. These regions will add tremendous generation capacity as they catch up with OECD countries in the next three decades – often times leapfrogging their more advanced neighbors in technological adoption. The opportunities to make above average profits are staring us in the face.