ARTICLES — August 20, 2021

Implementing Digital Transformation in Indonesia’s Energy Industry

Energy has become a valuable source for everyday life from powering pocket-sized devices such as smartphones, to valuable business assets such as machineries and computers. With current technological advances, there is a need for consistent energy dispensation and a sustainable system that could distribute energy equally and efficiently in places with vibrant urban-living communities.

In 2016, 97.62% of Indonesian population had access to electricity. In the same year, the average person consumes 7,752 kW energy per hour. This includes electricity, transportation, cooling systems. As a country, Indonesia consumed 2,028 TW of energy per hour. Several years have passed, and the growth of energy consumption has become conspicuous. In 2019 an average person consumes 9,147 kW per hour, while the country consumes about 2,475 TW energy per hour.

As the energy demand increases, the energy industry has to become reliable to fulfil the current demands as well as the increasing demands in the future. It needs a tool to be able make prediction analytics based on the data accumulated from energy sources and consumers.

The ideal solution to this problem is digital transformation. It might not seem to be an intuitive first option for the energy industry that’s been built on old-engineering and heavy regulations. Yet, it serves as a foundation for innovation on many levels. Digitalization can streamline crucial issues in productivity, business model flexibility, real-time decision making, and cost efficiency.

Currently, there are several challenges in innovating the energy industry:

1. Conventional Engineering

Engineering dominated the energy industry. Engineer’s calculative nature and stupendous attention to detail has been credited for the industry's success. Impressive machineries and planning that adheres to the laws of physics became the main focus of the energy industry. Unlike companies that mostly rely on digital space like e-commerce or media companies, energy companies rely on its physical presence. For this reason, the industry often demands a deep inspection of new technology prior to its implementation. That is why the energy industry is slow to accept digital transformation.

2. Corporate Inertia

Many energy companies enforce strict regulations, and this is for good reason. Dealing with energy resources is a hazardous task, a slight miscalculation can result in a fatal accident or a catastrophe. Regulations are made to prevent accidents. This attitude of compliance is deeply rooted and pervaded in many aspects of the energy industry. Companies survive merely by following regulations passed down by their predecessors. Their main concern is not to innovate, but maintain a safe operation. Consequently, energy companies experience corporate inertia.

3. Lack of Data Mining

Although energy companies are often very careful in making decisions. It does not relieve them from missing some important data. Implementing new technology might pose safety risks in their operation. While it is safer to stick to the old rules, missing data impacts overall company performance, thus stagnating its profitability. Moreover, the energy industry's reliance on third parties to perform different operations made the companies prone to data fragmentation. Miniscule data scattered across parties and devices are crucial for analytics and future company growth. Without it, there will be no clarity of where the company is heading or how to solve some of its problems.

Now what?

To make innovation in the energy industry, first the industry has to transform in attitude. There must be boldness or willingness to become a more efficient power source by implementing digital transformation. It might not be feasible to bear a full transformation in one go. This can be implemented gradually.

Secondly, energy companies must be willing to work with a technology partner that has their best interest in undergoing transformation. Preferably a partner that will help throughout the entire transformation process.

If you are aiming to innovate your energy company, then it is time for you to find the right partner. An ideal relationship of this partnership can be seen in the cooperation between Indonesia's State Electricity Company (PLN) and Telkomsel IoT in the implementation of NB-IoT Smart Meter.

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