Digitalisation will guide future renewable energy investment strategies

wind turbines

Renewable energy investors and developers are increasingly turning to digital technology to build effective investment strategies, with almost half (47 per cent) of the finance industry saying they have digitalisation as a core part of their publicly stated strategy. This is according to new research by DNV GL. 

The survey of nearly 2000 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 optimised forecasting of asset performance, lifetime and generation levels. 

The survey also highlighted the impact of blockchain, with 30 per cent of finance respondents claiming that the technology is having an impact on their industry versus just 15 per cent across all energy respondents. However, despite the hype around blockchain, 40 per cent of finance industry respondents said they were not using the technology at all.

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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 digitalisation 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.

DNV GL – Energy Vice President of Technology and Innovation Lucy Craig said, “Digital technology and digitalisation are instrumental to ensure the returns that will drive continued investment in renewable energy, as market mechanisms evolve away from subsidies.

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“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, commented.

“By combining an open-minded approach to new technologies and an understanding of risk, the industry can take full advantage of the opportunities that digitalisation brings, for a profitable future.”

The new report Digitalisation and the future of energy finance is available to download here.