In an industry under pressure to meet net-zero ambitions whilst satisfying the investor community’s ROI requirements, strategic solutions such as digital twins and simulation can when applied appropriately, address the challenge of the energy transition and its affordability.

Complex Systems
The global energy landscape is increasingly complex. With a heightened focus on supply certainty and the impact of the geopolitical environment, industry players must now increasingly balance strategic priorities along the energy value chain, including:
– Energy security and reliability
– Higher investment risk profiles
– Profitability during times of volatility

Profitability During Times of Volatility

This is an environment where geopolitical tensions are rife and decarbonization efforts requiring large capital requirements are raising concerns about the viability of new energy projects, as well as the affordability of a near-net-zero economy.

Investment Risks
Investor responses to risks in the utilities and O&G sectors indicate that affordability is the energy transition’s number one concern. Additional concerns include:

• Difficulty in maintaining appropriate CAPEX levels
• Emerging industry regulations
• Climate urgency
• Challenge of labor shortages in O&G (43% of current energy workers want to leave the industry within the next five years)

With these concerns in mind, how can investors together with operators determine a sustainable model that delivers on return expectations in both the short and long term?
The industry has seen some major shifts recently that indicate fundamental changes in the way things work today. Without digitalization, it would be almost impossible for operators to lower carbon emissions at scale whilst improving ESG and at the same time contributing to increased output levels to assure energy certainty. This squeeze presents problems when investors and financiers strategize to allocate capital: the new requirements for measuring climate risks and changing market conditions need to be factored into capital planning processes.

Digitalization as a Driver for Energy Investments
Digitalization is a key measure that allows operators to future-proof their asset portfolios by delivering the combination of efficiency, speed, and reliability required by investors and operators to thrive during the energy transition.

O&G companies are continually repositioning for short-term energy reliability priorities, and here digitalization in the form of digital twins provides an in-depth understanding of optimization measures that can lower risk, costs, and emissions. It introduces more autonomous ways of working for higher returns by supporting workers to reskill, grow into new roles, and engage in immersive training on-site or remotely – thereby allowing operators to scale down the workforce, mitigate the imminent risk of labor shortages, and streamline operating expenses.

Impact of Digitalization
A digital twin can facilitate a cumulative effect of optimization for the entire value chain, even under changing market conditions. In fact, major integrated energy operators worldwide have used a digital twin solution as an enabler of digitalization across their operations with impressive results*:

• 5-30% increase in productivity by simplifying collaboration, enabling remote operations, and leveraging more autonomous workflows
• >20% reduction in greenhouse gas emissions through CO2 emissions tracking and reporting features like the Emissions Dashboard and facility modeling that provides carbon emissions transparency
• Decision-making backed by performance metrics that help measure the projected profitability of assets against the required costs of capital for new and existing investments
• Up to 85% reduction of manual work for processes like energy nomination by using Machine Learning to predict the energy consumption of various operating scenarios
• Release of 5-7% per annum in cost avoidance through Proactive Technical Monitoring of equipment conditions and behaviors

*Statistics provided by Kongsberg Digital's twin solution Kognitwin

Digital twins are consistently demonstrating how true digitalization can instill confidence for pragmatic growth that justifies renewed capital investments in O&G, help unlock safer operations, and move towards greener operations across the energy industry by embedding ESG measures into operations. As investors continue to search for a strategy that secures future energy needs in line with long-term net-zero ambitions that also account for risk factors in the valuation of portfolios, digital twins are beckoning.

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