Digital transformation in the energy and utilities industry

By Justin Tuttle

Advanced technology is transforming the way energy and utilities companies operate. Renewable energy sources, regulatory changes and shifting consumer expectations are just some of the challenges forcing energy and utility businesses to re-evaluate their processes and develop more efficient and cost-effective operations. 

They will need to leverage new technology to create opportunities for innovation and optimization of outdated business models. A process of “re-imagining,” or digital transformation, must occur. As new revenue streams emerge, demands for decarbonization increase and technology shifts consumer behavior. Energy and utilities companies must develop an innovative mindset or get left behind.

A re-imagining of the energy and utilities industry

Digital transformation is known as the process of using digital technology to create new or modify existing operations to improve a business model and satisfy customer needs. It’s a “re-imagining” of how businesses use their talent, technology and processes to capture new market opportunities and improve existing models. 

Digital is changing the way we work. According to a recent report from the International Data Corporation (IDC), global spending on digital transformation will double to $2.8 trillion by 2025. More companies are learning to leverage artificial intelligence (AI), cloud and Internet of Things (IoT) to improve their business and operating models and capture new revenue streams.

How can digital transformation improve the energy and utilities industry? As the market evolves and new revenue streams present themselves, companies must implement a digital strategy to become more agile, resilient and competitive. 

A Tech-Clarity study of top-performers utilizing digitalization to innovate their product development found that 31% improved revenue in two years versus 15% of companies that did not adopt new digital strategies. In the context of energy and utilities, this creates opportunities to save on production time and costs that can be used to improve a product or service.

Challenges facing the energy and utilities industry

Evolving Technologies: Industry 4.0., a term used to describe the digitization of manufacturing operations, has transformed the traditional business model. Artificial intelligence and machine learning technology have given rise to autonomous operating systems fueled by massive amounts of data. Cloud technology, digital twins, IoT devices and simulation software present even more opportunities for energy and utilities manufacturers to gain a competitive advantage. This also creates the need for more stringent data privacy practices to strengthen cyber security. Unfortunately, moving to digitalization can be an overwhelming process with seemingly endless new digital possibilities. Speaking to a Siemens representative or solution partner can help businesses learn the best way to leverage these new technologies. 

Compliance: One of the biggest challenges for the energy sector is meeting new emissions regulations and sustainability targets. The heat is on for many in the industry to reduce emissions by almost 50% by 2050. Oil and gas companies are now tasked with implementing energy-efficient and cost-effective operations. 

For future-ready industry leaders, doing more of the same isn’t the answer. Companies will need to get creative with available technology solutions to develop intelligent and sustainable operations. 

Renewable Energy: As demands rise for sustainability in producing and consuming energy, businesses will need to prove they are part of the solution and not part of the problem. This requires creativity and resourcefulness from every stakeholder. 

Simulation tools like Computational Fluid Dynamics (CFD) can provide the insight that oil and gas companies need to design and operate systems that work together more efficiently. This also ensures organizations reach the highest safety, environmental and performance standards needed to meet current clean energy demands while adding value to their customers. 

Dynamic Markets/Consumer Expectations: Shifts from oil, coal and gas to alternative energy sources like solar panels, electric cars and wind turbines have revealed new revenue streams for energy and utilities companies. Additionally, accessibility and sustainability have become driving forces for customers when choosing a service provider. Internet of Things (IoT) devices present opportunities for these companies to connect and influence consumer behavior and add value where needed.  

Leveraging Industry 4.0

To help energy and utilities companies face these challenges and leverage Industry 4.0, Siemens developed Digital Enterprise – a holistic portfolio of software and automation solutions – that supports speed, flexibility, and efficiency in new business models for manufacturers and owners. These solutions help companies to get started with digitalization at any step of their value chain.

Digital twin technology is included in this portfolio. Digital twins create virtual models that can help businesses develop a new product, design a new plant and much more. Using a combination of physics-based simulations and data analytics, the digital twin creates new insights that can be used to make innovations faster and more reliable without having to create multiple prototypes. Industry leaders like Rosendahl Nextrom, a global leader in battery, cable, wire and optical fiber production technologies, used this technology to improve their operations.

Using Siemens Digital Enterprise Rosendahl Nextrom was able to create a more efficient development process for its batteries and reduce its machine downtime. The company is now able to automate individual process stages in the complex machines it uses to manufacture lithium-ion batteries. It also uses automatic guided vehicles (AVGs) to supply cells with raw materials and semi-finished products so that it can flexibly increase and decrease production capacities and respond quickly to changing requirements.

Simulation tools have also helped the company save on prototyping. Rosendahl Nextrom can now view future machines in a virtual space and make adjustments for special requirements without having to refine the prototype later. Digitalization is also credited with improving the way employees work together. Now, they can exchange data and communicate more efficiently across many different disciplines and fields of expertise.

Harnessing the Power of Technology

There is a bright future for energy and utility companies that leverage the potential of today’s technology. Digital solutions have already improved the way some industry-leading businesses operate. As we edge closer to Industry 4.0, companies will need to plan, develop and execute digital transformations if they want to make an impact as a leader in the energy and utilities industry.

From improved product design to more efficient production processes, Siemens Digital Industries Software provides the automation, simulation and planning tools to prepare future-ready companies for success. Learn more about our solutions here.

Leave a Reply

This article first appeared on the Siemens Digital Industries Software blog at