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Well you can’t say that I didn’t warn you! In my previous article, see 2020: The Year When Planet Earth Finally Woke Up? the linkage between Sustainability and the potential Climate Emergency was made crystal clear. But I also pointed out the tremendous Green Business opportunity for every country around the world.
The oil sector within energy and utilities has already experienced the greatest level of disruption in 2020 than all of the previous 20 years. The current global economy may depend on oil, but not for much longer, Big Oil has had it. At its peak in 2008 oil reached $150/barrel. In March 2020, due to a dispute between Russia and Saudi Arabia, this plummeted to $20/barrel. Although it has since recovered to around $40/barrel, the current COVID-19 pandemic has dramatically reduced demand again, due to travel falling off a cliff and the shift to Working From Home.
The Oil Majors have only one place left to go: Big Green. Take BP in the UK. For the first time since World War II BP halved its dividend – unheard of. Much worse than that, BP recently announced a massive $17.7 Billion quarterly loss. The CEO’s response? An impressive $5 Billion a year investment in Big Green. Investors were so impressed that the BP share jumped up 6%! From zero to hero. We live in strange times.
All the Oil Majors must go Big Green, meaning investment in totally renewable energy sources. This predominantly means solar, on and off-shore wind, bio and hydroelectricity. Nuclear generation remains another clean but controversial option. Big Green investment extends to related infrastructure, for example, electric vehicle charging systems, hydrogen production and storage plus carbon capture technology.
We must not forget to add geothermal and marine to the growing list of renewables, especially as the former accounts for a hefty 10% of New Zealand’s energy supply. The sheer variability of renewables generation remains a challenge, but Germany is making rapid progress in overcoming this. New technologies like Big Data, Advanced Analytics and Machine Learning are already helping to dynamically balance supply and demand.
Any idea how much renewables are contributing to the energy market right now? Well in the UK it was around 38% last year. But for Q1 2020 this jumped to 45% - more than any other power source. Australia is a fair way behind, at 23.5% last year, but Germany is way ahead with just over 46%, for 2019. But these industries are changing so fast. A year ago, a $20 Billion deal was announced to provide 10 Gigawatt (20%) of Singapore’s future electricity needs from a huge 15,000 hectare solar farm in Australia’s Northern Territory.
Now back to the wonderful world of SAP. Energy and utility industries have always been really important to SAP. Guess which industry was targeted for SAP’s very first Industry Solution product? It was oil and gas, back in the early 90s, so it is no surprise that SAP has an impressive list of all big name customers in that sector. From an ANZ perspective these same industries feature finalists Powerco in New Zealand and Australia’s TransGrid in SAP’s annual awards for its Best Run customers (see finalists here).
To bring you right up to date, on July 28 SAP announced a new partnership with one of the world’s largest investor-owned electric utilities: E.ON in Germany. This aims to develop a platform based on the S/4HANA Cloud Utilities solution for more standardized billing and exchanging information in the energy market.
In summary, there are many other challenges facing the energy and utilities not mentioned yet, for example Smart Meters, Smart Grid, storage and call centre automation, but these industries remain central to both our global economy and the SAP customer base worldwide.
Dr Derek Prior spent 19 years as an analyst specializing in SAP at Gartner and AMR Research, advising organizations all around the world on SAP strategy and best practices.
SAPTURE, feature women working in SAP and making it happen. To be featured, or to nominate someone to be featured, contact danielle@sapture.com.au
