Updated: Jul 8
Last year took a truth which people working in the technology sector were well aware of and threw it into sharp relief for society as a whole. While the pandemic has caused a level of disruption to daily life, across the globe, at a level not seen for a generation or more, it’s clear that that disruption could have been significantly more challenging were it not for the digitalised nature of much of daily life. Data has now moved beyond being the bedrock of industry, and is now – like water and power – an embedded and indispensable factor for modern life.
Our networked era means that colleagues have continued to collaborate through cloud productivity tools, that vulnerable customers have continued to shop through online grocery services, that vital medical information has continued to be shared with those who need it, and that friends and family have continued to see one another’s faces even under the strictest of lockdowns.
Many businesses – and especially those involved in professional services – have reaped the benefits of digitalisation by continuing to operate virtually as though their offices are still open. This is not to say, however, that every business was well prepared for this unforeseen event. Many have had to rapidly bring forward plans that were on the horizon, moving services to the cloud and creating ways for staff to access vital data, and achieving virtually overnight what was road-mapped for the coming years. In a survey by law firm Baker McKenzie, 78% of Technology, Media & Telecoms businesses, along with 74% of Financial Institutions and 65% of Consumer Goods & Retail businesses, have accelerated their digital transformation plans as a result of COVID-19. As Microsoft CEO Satya Nadella put it in April, we saw ‘two years’ worth of digital transformation in two months’.
The confluence of trends around data and power
While this pace of change is worth remarking on in itself, it’s possible that we haven’t yet begun to truly reckon with the consequences of this digitalisation acceleration. While it might seem grandiose to say, it seems likely to me that digitalisation is just one of an interconnected set of trends which will truly change how our world operates – and the pandemic has brought the timeline for that change markedly forward.
To understand why, we need to consider the fact that, as well as replacing or reworking existing systems with data centre-based technology, digitalisation is always also a transfer of energy from one system to another. The rise in home working as a result of social distancing is a perfect example of this: while the energy demands of cloud computing likely rose as a result of home working, and those powering video conferencing services certainly did, this replaced commuting which was to a large extent directly powered by burning oil. Likewise, online grocery shopping enables more efficient delivery routes rather than many individual trips, on-demand retail eliminates the energy expenditure of over-production and warehousing, and online banking reduces the need to power and maintain financial real estate.
Digitalisation of systems, then, is also an electrification of systems. Together with transport, industrial, and building electrification, this accounts for the expectation that, as calculated in a BloombergNEF report, the overall electricity needs of Northern Europe will increase 65% by 2050. While this may, on the face of it, sound like bad news for our climate goals, the truth is that shifting demand towards electrified systems will stimulate demand for adopting renewable energy, which is now generally cheaper per watt than fossil fuel alternatives. As well as being inherently more power efficient, thanks to the hyper-efficient nature of modern silicon, digitalisation opens avenues for carbon reduction as its emissions are directly related to the emissions of the grid as a whole.
From digitalisation, to electrification, to renewable energy: this cycle closes back on itself in the fact that renewable energy requires digitalised systems for its effective generation, transmission, storage, and usage. While wind and solar are now highly efficient and economical ways of generating electricity, they are by their nature less predictable and consistent than fossil fuel-based generation. Digital systems will be required to rapidly react to fluctuations in production, and the power held in those systems will also play a role in managing the grid’s performance. Already, stores of power like data centre backup systems and electric vehicle batteries are being used to help balance the grid’s frequency and performance.
As digitalisation, electrification, and renewable adoption accelerate, these interconnections will become deeper and more dynamic: this confluence of trends is a virtuous cycle that speeds itself up.
Digitalisation and sustainability at once
As this cycle continues, I would predict that we will see the distinction between these trends start to fade away. In its earliest days, when digitalising a system meant building on-premise data centre infrastructure, decisions around digitalisation were taken largely independently of power considerations. Over time, data centre applications became mission critical, such that those decisions became dependent on the quality, availability, and reliability of power in order to ensure continued operation. Today, data and power have become co-dependent considerations: governments make policy decisions around power with data centre rollouts in mind, and data centre operators in turn plan construction in accordance with grid capacity.
Tracing that shift into the future, we may see digitalisation and sustainability become, in many regards, synonymous terms. The share of overall power needs going into data centres and networking is growing rapidly, and this will drive and support the acceleration of renewable adoption. Far from being competing concerns, the cloud will be the route to decarbonisation, and vice versa.
At the beginning of 2020, much of the digital transformation that occurred this year existed only in the form of medium-to-long term planning – an ideal business goal which was still subject to capacity and favourable conditions. The pandemic brought all of that forward and made it an immediate necessity in ways that nobody could have predicted. Today, electrification and renewable adoption similarly exist on a planning horizon, subject to checks and milestones as they are patiently brought into reality. Over the coming years, we will see how the ripple effect of accelerated digitalisation cascades through all of our essential systems, leaving us with a very different, much greener approach to the world.
Host In Ireland would like to thank Ciaran Forde at Eaton for this brilliant article & contribution.