AVEVA CEO believes a ‘connected’ industrial economy is the key to sustainable energy operations

Caspar Herzberg, CEO of AVEVA, tells CNME Editor Mark Forker, that in order to accelerate the decarbonisation process, and build long-term value for all stakeholders – the energy industry needs a data-centric, and AI-enhanced approach to the global energy value chain.

AVEVA is a global leader in industrial software – and its cutting-edge portfolio of solutions are driving digital transformation and sustainability across the global energy ecosystem.

Caspar Herzberg is one of the most prominent thought leaders in smart cities and digital transformation – and has enjoyed a decorated and distinguished career as a corporate entrepreneur.

He spent the best part of a decade at IT behemoth Cisco, before joining Schneider Electric in 2015.

In March 2023, he was appointed as the new CEO of AVEVA.

In a compelling and candid interview, Herzberg outlines how tackling concerns around security, affordability and sustainability, referred to as the ‘energy trilemma’ is an existential issue that the energy sector needs to address now.

The pace and rate of change in today’s rapidly evolving economy means industries are managing a constant balancing act.

The energy sector is particularly faced with responding to increasing pressure for environmental responsibility while maintaining consistent and dependable energy supplies at affordable and equitable prices – and with energy demand expected to soar over the next three decades, Herzberg says the time to act has come.

“Global energy demand is predicted to increase by 47% over the next 30 years, thanks to population and economic growth. Yet, unprecedented operating conditions – including geopolitical tensions and dynamic and complex market situations – have created an uncertain business scenario, sparking security and affordability concerns. At the same time, avoiding the worst effects of climate change requires realigning value chains to meet net-zero carbon emissions targets, and transition to renewable sources of energy,” said Herzberg.

Herzberg believes that solving the energy trilemma of security, affordability, and sustainability will require a comprehensive and multi-layered approach.

Action on three pillars is essential to tackling the energy trilemma.

“I believe that three pillars are essential to solving the energy trilemma. Firstly, policy approaches help by way of setting goals, enacting new regulations, and creating incentives. Secondly, market-based solutions such as carbon pricing, energy auctions and efficiency incentives play an equally important role. However, the third and most important pillar is technology. Developments such as cloud computing, artificial intelligence (AI) and robotic process automation can help improve energy efficiency and reliability, while simultaneously supporting the other two pillars of policy approaches and market mechanisms,” said Herzberg.

Herzberg added that digital technology can really deliver tangible gains for energy businesses – and he referenced research conducted by Accenture and WEF that illustrated the reductions that are possible.

“Research by Accenture and the World Economic Forum shows that technological tools available today could deliver up to 20% of the reductions needed to hit the 2050 net-zero trajectories laid out by the International Energy Agency (IEA) for the energy, materials and mobility industries. In a recent report by the IDA, just one subset of the industry – power – saw investment in digital technologies rise 13% in 2021 to $55 billion after a slowdown in 2020, reaching around 18% of total investment in electricity grids,” said Herzberg.

It has been well documented that data is the new oil.

Herzberg declared that the core of the new energy tech economy lies firmly in data.

“Data helps industrial businesses make informed decisions, optimise operations, and improve performance. When data collected from sensors and other production sources is contextualised with industry- and segment-specific analytics and AI in the cloud, it supports the creation of a coherent digital thread spanning the entire value chain, including internal and external business units. This digital strand supports the discovery of patterns and anomalies, driving insights that can shift entire business models from reactive to proactive decision-making, boost efficiency and drive sustainability. In practical terms, fully digital capabilities to design and optimise lead to decarbonised supply chains and reductions in fugitive emissions and carbon generated through industrial operations – all while increasing revenue,” said Herzberg.

Like most industries there is always some form of resistance of change – but according to Herzberg, advanced technologies are already proving their worth and showing a ROI.

“From smart grids to predictive maintenance, digital technologies are enabling industrial enterprises to operate more efficiently, conserve energy across their operations, and find new routes to improved sustainability,” said Herzberg.

Herzberg believes that the integration of data management can drive greater efficiency for the energy sector globally – but said having a metric for measurement was critical.

“As the adage goes, you can’t fix what you don’t measure. Efficiency is the biggest value play for businesses, but improvements aren’t possible without measurement data. Information management systems – whether for engineering, operational and financial metrics – can provide easy access to real-time data, which industrial software programs can then convert into contextualised information quickly and effortlessly,” said Herzberg.

Herzberg said the resulting visibility into plant operations can save millions of dollars while reducing resource use, and pointed to a project between AVEVA and DCP Midstream as an example of what savings can be achieved.

“Fortune 500 company DCP Midstream used AVEVA PI System over a five-year period to create a single view of operations, connect disparate systems, and give its workforce a single view of operations. Thanks to improved plant operations, DCP Midstream saved $25 million in a single year,” said Herzberg.

In terms of how to reduce emissions – the CEO of AVEVA believes that leveraging AI models is the best way forward.

“We’re using AI in more ways than ever, with companies having doubled the average number of AI capabilities in use, from 1.9 in 2018 to 3.8 in 2022, McKinsey data shows. Beyond enterprise applications, AI and machine learning offer companies the opportunity to maintain existing energy supplies while lowering greenhouse emissions. In simple terms, AI-driven strategies offer a way to precisely estimate emissions levels and suggest ways to abate them through simulated models. The technology also helps monitor process optimisations, providing empirical evidence of emissions reductions,” said Herzberg.

Herzberg is also a strong advocate of a shared-data approach to accelerate energy transition.

“As we look to bring about the energy transition, we will need to prioritise renewable energy solutions in ways that build new value streams. Sharing data with partners, suppliers, and customers, often in the cloud, enables renewable energy companies to manage and analyze large amounts of data and to optimise energy production, improve efficiency, and reduce costs. Moreover, connecting and scaling industrial data can also reveal new routes to generating value,” said Herzberg.

He used Dominion Energy in the UAE as an example of what results can be yielded through the AVEVA System Platform.

“Dominion Energy in the USA uses AVEVA System Platform in combination with PI System to unify data from across their fleet of renewable power grids to manage intermittency and ensure optimal energy supplies to customers. With complete real-time operations data on their grid’s performance in the cloud, Dominion has also been able to share this data to their utility customers, providing them with a way of validating their ESG energy commitments. Dominion gained a competitive edge while achieving a 50% increase in speed to market while fewer greenhouse gases are released into the atmosphere,” said Herzberg.

However, as highlighted and outlined at the beginning of the feature, Herzberg is adamant that a connected industrial economy holds the key to solving the energy trilemma.

“Despite short-term economic uncertainty, industries have a once-in-a-generation opportunity to unlock transformational value for the next few decades. Governments around the world (including in the USA following last year’s bipartisan Infrastructure Investment and Jobs Act) are prioritising and incentivising the use of tools to achieve zero-carbon operations while balancing securing energy needs. At the same time, advances in data collection, optimisation and information sharing are unlocking greater value and creating new routes to sustainable operations – a phenomenon we call the connected industrial economy. AI, machine learning and cloud computing are already radically changing the way we do business, whether in terms of generating new insights or unlocking new ways of collaboration,” said Herzberg.

Herzberg concluded a wonderful conversation by reiterating how a data-centric approach is key to delivering a sustainable future for our planet.

“In a changing world, energy companies are responding by realigning their operations to take a digital, data-centric approach that can drive responsible use of the world’s resources. This digital way of thinking is the only way for businesses to create long-term value for their stakeholders while juggling the requirements of ensuring equitable and affordable energy supplies with contributing to a sustainable future for the planet,” said Herzberg.