As the power sector is undergoing a complete transformation on its journey to become more environmentally friendly, technology is all set to play a significant role in facilitating the whole process while ensuring ESG compliance by all the stakeholders, notes Smitha Shetty.
A consistent supply of electricity has long been considered a benchmark to measure living standards in a country and is frequently used as a yardstick for evaluating a nation’s economic progress and living standards. However, despite its enormous significance, the power sector has often been blamed for polluting the environment, and according to some reports, the sector alone contributed around one-third of all CO2 emissions. As India’s power sector joins global efforts to slash emissions, technology emerges as the key force driving this transformative transition.
Energy Transition in the Power Sector
Building on the commitments to achieve net-zero emissions, power generation and distribution companies worldwide and in India are also showing enthusiasm for reducing greenhouse gas emissions, particularly with the help of renewable energy. This is also driving the decarbonization of the power sector while reshaping the whole electricity system operations. According to a report by the International Energy Agency (IEA), the structural change from an electricity system based on thermal generation powered by fossil fuels towards a system based on variable renewable energy continues apace at various stages across the globe. As a result, the power sector is gradually becoming more and more central to the global energy transition to achieve environmental goals. In this critical juncture when power is all set to undergo a big transformation, technology—particularly digital platforms and artificial intelligence (AI)—is emerging as a powerful enabler, driving the energy transition while ensuring the sector’s environmental, social, and governance (ESG) compliance.
AI-powered tools and digital platforms are enabling companies to optimize energy usage.
AI and Digitalisation to Support Energy Transition
Advanced technologies like AI and big data are playing a transformative role in decarbonizing the power sector. Traditional power systems relied on centralized management with minimal user interaction. Today, as renewable energy sources contribute an increasing share of the energy mix, more stakeholders and devices are actively engaging with the power system.
AI-powered tools and digital platforms are enabling companies to monitor, analyze, and optimize their operations. These technologies help control renewable energy sources, reduce downtime, enhance maintenance efficiency, and optimize energy usage. Moreover, they support ESG compliance by aggregating data from across the energy value chain—spanning production, transmission, and distribution—to provide real-time insights into a company’s environmental and social performance.
Value chain due diligence extends beyond immediate suppliers to all entities involved in energy production and distribution.
Due diligence of Supplier and Value Chain
As the power sector embraces ESG principles, supplier due diligence and value chain transparency are becoming critical. The entire energy ecosystem depends on a network of suppliers and partners whose adherence to ESG standards directly impacts a company’s compliance and reputation. Comprehensive due diligence ensures suppliers align with labor standards, human rights, and environmental norms.
Value chain due diligence extends beyond immediate suppliers to all entities involved in energy production and distribution. This broader perspective allows companies to identify risks such as environmental violations, unethical labor practices, or inefficiencies in resource use. Organizations can mitigate reputational and operational risks by addressing these issues while contributing to a sustainable and ethical energy value chain.
Moreover, technology plays a key role in simplifying and enhancing due diligence. AI-powered platforms can automate data collection, monitor compliance, and flag irregularities, enabling companies to maintain transparency and accountability throughout the value chain. By ensuring high standards across the supply chain, companies can build trust with stakeholders, reduce risks, and enhance their ESG performance.
Pressure from investors, regulators, and consumers has elevated ESG compliance from a voluntary initiative to a mandatory requirement.
ESG Compliance and Accountability
Pressure from investors, regulators, and consumers has elevated ESG compliance from a voluntary initiative to a mandatory requirement. Accurate data collection and reporting are essential to meet these stringent standards. AI-enabled ESG risk management platforms that easily integrate with legacy systems allow companies to track energy usage, emissions, and carbon footprints more effectively across their value chain. These platforms compile data from multiple sources, providing comprehensive insights into ESG performance and facilitating regulatory compliance.
Transparency and accountability in ESG reporting not only satisfy regulatory requirements but also enhance a company’s brand value. Organizations prioritizing ESG principles are better positioned to attract investment, foster innovation, and establish themselves as leaders in the transition to a sustainable future.
Future trends
AI and related technologies will continue to shape the future of the power sector, particularly in enhancing efficiency and reducing emissions. By analyzing data collected from sensors, AI tools can detect anomalies, predict equipment failures, and recommend preventive actions, reducing operational disruptions.
Renewable energy sources such as wind, solar, and hydrogen fuel cells are also evolving, with technology driving their adoption and integration into power systems. While some solutions are still developing, their potential to revolutionize the sector is undeniable. Embedding ESG practices across the value chain and driving an organization’s sustainability mission will take precedence.
Conclusion
As the power sector is undergoing a complete transformation on its journey to become more environmentally friendly, technology is all set to play a significant role in facilitating the whole process while ensuring ESG compliance by all the stakeholders. As ESG has rapidly gained global prominence due to the urgency of climate change, geopolitical tensions, and growing awareness of socioeconomic disparities, there is an urgent need for policymakers, energy companies, and technology providers to collaborate to accelerate technology adoption, foster innovation, and invest in the infrastructure needed for a sustainable future.
Smitha Shetty is Regional Director, APAC, at Achilles Information Ltd
