Dubai, UAE — The Gulf states have increased investments in renewable energy and are broadening their engagement with international and intraregional climate change dialogue. Saudi Arabia, the UAE and Bahrain have committed to becoming Net Zero and have announced their respective targets.
Today, as the digital transformation advances, enterprises in these countries are increasingly augmenting their focus on operational transformation with new approaches to managing and optimizing energy consumption and power usage.
In this context, intelligent power management company Eaton revealed new research on the relevance of the energy transition in digital transformation planning for power-critical businesses.
Commissioned by Eaton, this S&P Global Market Intelligence report under the title “The Intersection of Digital Transformation and the Energy Transition” highlights that although 77 percent of companies surveyed expect to transition away from their current power sources, only half are currently executing the digital strategies needed to navigate this shift.
In addition, less than a third of companies track key sustainability and energy intelligence metrics, and even fewer 17 percent have digitally enabled legacy systems.
The study included 1,001 respondents who are involved in digital transformation efforts across four power-critical business sectors in North America, Europe, the Middle East and Africa, including: buildings, data centers, industrials and utilities.
In an interview with Ashraf Yehia, managing director at Eaton Middle East, he said that the Gulf states are increasingly looking to place themselves on a more environmentally sustainable footing through investment in renewable energy; dedicating government resource to fostering international and intraregional dialogue that seeks solutions to climate change; and exploring more stringent targets towards net-zero emissions.
He mentioned that August 2021 alone saw the following developments:
- Saudi Arabia’s first wind farm, Dumat al-Jandal was connected to the national grid. The region’s largest wind farm can power 70,000 Saudi homes and offers some of the world’s cheapest wind-produced electricity.
- 300MW of solar energy was connected to Dubai’s grid. This project powers 270,000 homes and removes 1.18 million tons of CO2 per year. As a result of the project clean energy now accounts for 10 percent of Dubai’s energy mix.
- Saudi Arabia’s state-owned oil firm, Aramco, announced that it would join a group led by ACWA Power to build a 1.5GW solar power plant. Once completed in Q2 2022, the Sudair plant will be Saudi Arabia’s largest solar plant.
However, despite these accomplishments, Yehia told TRENDS that businesses in the region need to move far faster on digital transformation.
“The good news is that the time for action is now, and tools like our Brightlayer digital foundation help businesses gain deeper energy insights that are essential to evaluate worthwhile investments. Our industry-specific software suites are already helping customers meet these challenges”, he said.
He went on to remark that the digital transformation landscape constantly changes. Both big sharks and small businesses need to think fast and adapt to changes quickly to stay ahead of their competitors and grow their businesses. The companies that keep a step ahead will be the ones that find success.
The importance of digitization in businesses
According to Yehia, the importance of digitization in business is now widely accepted. Corporate leaders believe that digitization can be a major boost to revenue and profitability. But how companies have responded, however, has varied greatly, with some disappointing results.
He cited the following benefits as evidence of the necessity of digitalization in business:
New digital offerings
Development of new digital products or services can create additional value for the customer.
Digitized sales channels and marketing
Investment in the digitization of sales and marketing can improve the customer experience, thereby increasing the overall return on investment from these areas of the business.
Digitized supply chain
A supply chain equipped with sophisticated digital solutions can reduce the amount of time a product takes to reach the marketplace. This development can in turn increase the company’s asset turnover ratio — its revenue relative to the value of its assets — and its market share.
Digitized corporate processes
More streamlined internal operations rationalize the cost structure of the company, enabling it to become more profitable and competitive.
What tools are needed to progress?
The report revealed that one of the required centerpiece initiatives of digital transformation is the need to digitalize legacy operational technologies while incorporating new, modern information technologies into the mix.
Every industry has legacy operational technologies it depends on as its life breath.
For industrial firms, such technologies typically include decades-old manufacturing control systems and highly customized programmable logic controllers.
For utilities, supervisory control, and data acquisition (SCADA) systems manage a range of sensors, actuators, controllers and related hardware and software.
OT systems in buildings include a range of mechanical systems from elevator lifts to heating, ventilation, and cooling. In many cases, such systems are instrumented with analog alarms and serviced manually by experienced, mechanically proficient technicians. That also means they don’t fit easily into emerging digital environments: They lack interfaces for digital communications and data exchange and are ‘secure’ only because they’ve never been connected to the outside world.
Step one, then, in many digital transformation journeys is to modernize those systems, either by swapping them out for new or updating them with digital interfaces and sensors. That critical step can also be the most challenging: Just 17 percent of firms said they have digitally enabled their legacy systems.
Gaps that businesses in the GCC are still facing
In the recent research that Eaton has conducted they identified a major gap in how businesses are applying digitalization to realize decarbonization goals, said Yehia.
He stated that this research is a wakeup call, shedding light on the opportunities for businesses to focus investments and make a bigger impact.
Diversity, noise dust and pollution, traffic congestion, stakeholder engagement and community involvement in decision-making. Many of these issues are increasing in importance for the GCC. For example, in respect of environmental sustainability, some GCC countries are facing energy deficits and will be net importers of energy in the near future and hence are considering the use of more sustainable sources of energy such as renewables.