A new industry-wide report from DNV GL highlights benefits and challenges of digital technologies for renewable energy financing as the market moves away from subsidies. DNV GL surveyed nearly 2,000 senior stakeholders from across the energy industry. A lack of digital mindset is seen as a bigger barrier in the finance industry compared to other sectors.
The survey of nearly 2,000 senior stakeholders across the energy industry found that with renewables projects increasingly exposed to the full volatility of the market by the phasing out of subsidies; financiers and developers are increasingly turning to digital technologies to better inform their assessment of the value and risk associated with projects, with technologies such as big data analytics being used to provide insight into optimized forecasting of asset performance, lifetime and generation levels.
The survey also highlighted the impact of blockchain, with 30 percent of finance respondents claiming that the technology is having an impact on their industry versus just 15 percent across all energy respondents. However, despite the hype around blockchain, 40 percent of finance industry respondents said they were not using the technology at all.
A general reluctance to take advantage of new digital technologies is born out of a lack of clear revenue streams coming from the digital world with uncertainty about clear revenue which could be generated in the future. A lack of senior level buy-in, and a lack of digital mindset was also highlighted in the survey as a bigger barrier to digitalization in the finance industry compared to other sectors in the energy industry.
While the benefits of digitalization for the finance industry are growing, the unproven nature of new technologies and how to use them, coupled with a lack of digital mindset means the finance industry leaves itself open to disruption by new market players.
“Digital technology and digitalization are instrumental to ensure the returns that will drive continued investment in renewable energy, as market mechanisms evolve away from subsidies,” DNV GL – EnergyVice President of Technology and Innovation Lucy Craig said. “But for investors to make their financing decisions with confidence, the finance industry needs to better understand both the risk and opportunity of new technologies and their long-term viability. By combining an open-minded approach to new technologies and an understanding of risk, the industry can take full advantage of the opportunities that digitalization brings, for a profitable future.”
The new report Digitalization and the future of energy finance is available to download here.