As upgrade of the energy industry begins, edge computing — a new industry many are unaware of — is an opportunity to be seized. In the future, the application of edge computing in digital transformation will create smarter energy industry.

How can an enterprise ensure its place and achieve continuous development in a fierce market? This can be answered by examining three factors: efficiency, cost, and security. This is to say that if an enterprise ensures high production and operation efficiency, low overhead, and high security, it will be successful. Digital transformation is the only way to reliably achieve this, and edge computing is indispensable in digital transformation.

Industry Transformation Method: Digital Transformation

Before 2014, the energy industry was a peaceful market for development. Though the new energy industry emerged and integration of IT application and industrialization was frequently mentioned, a superficial prosperity disguised risks. Since June of 2014, the price of international crude oil had been in decline. This triggered a storm of industry revolution and significantly affected the traditional patterns of the industry over the course of only a few months. The method of industry transformation needs to be explored.

In recent years, Nigeria, Africa's largest economy, has been focusing on investment in four energy sectors: electricity generation, electricity transmission, electricity distribution, and renewable energy. Ikeja Electric is Nigeria's primary electric service provider. The company recently faced the following challenges: electricity theft control, high line loss rate, electricity fee collection, and payment arrears. Up to 20% of users had stolen electricity on at least one occasion. Line loss rate reached 40%, far higher than that of Europe and America (8%). Collection of fees took up to four months, and manual meter reading did not meet requirements for account querying, fault reporting, and complaint handling. Ikeja Electric has since solved each and every one of these problems.

Ikeja Electric deployed Huawei's AMI Solution to improve efficiency of energy use. Huawei's AMI Solution increases metering success to 100% and achieves real-time bidirectional metering services. It reduces line loss rate from 45% to 14%, increases the number of users that pay electricity fees, improves fee collection efficiency, and shortens the fund withdrawal period from between three and four months to instantaneous. User satisfaction is also improved.

Digital transformation is the new driving force for energy industry development.

Concern of Developing Industry: Big Data Load Sharing

Currently, IT technologies, such as Internet, Internet of Things (IoT), Big Data, and cloud computing, continuously converge with industrialization. New business models are on the rise, significantly increasing production efficiency. IoT products have been implemented in multiple energy fields, including digital oilfield, smart grid, and industrial monitoring. IoT products enable smarter development of the energy industry, significantly increasing efficiency.

An example of this is the use of IoT technology in the oil and gas sector. Automated collection of production data significantly reduces required personnel and achieves the smart operation of oil and gas fields. The sensor network provides comprehensive coverage, and oil and gas wells and pipeline network devices are automatically controlled, implementing automated natural gas balancing and smart peak load adjustment. IT technologies optimize refinement, distribution, oil depot management, and gas station management, and enable smarter refining. Collaboration between the Internet, sales, and payment options improves sales efficiency significantly.

This has however created a new problem. In the Big Data era, if all data is processed by the cloud data center, the cloud is heavily burdened. To implement Big Data load sharing, the concept of edge computing has been proposed.

As an example, consider a smart factory with many production devices connected to the cloud platform through the network. The devices implement production based on scheduling and optimized instructions provided by the cloud platform. What happens if the network is disconnected or devices are powered off? In reality, after devices are used to build a network, some functions are executed by the cloud platform while others are executed by local devices. The functions executed by local devices are called edge computing functions.

If edge computing technology makes breakthroughs in the IoT field, some functions will be executed by local devices rather than the cloud. This process will be completed at the local edge computing layer, significantly increasing processing efficiency and reducing load on the cloud. As distance to users is then shorter, edge computing provides quicker response to user requirements at the edge computing layer.

Application of Edge Computing: From Efficiency to Security

According to the China Manufacturing IoT Forecast and Analysis 2016–2020 released by IDC, in the next two years, IoT platform competition will intensify and edge computing will become the focal point of China's manufacturing industry.

As large numbers of IoT terminals are deployed, data generated by IoT will increase exponentially. Dispersed terminals and IoT gateways filter and process data, which is an important developmental direction of IoT application in the manufacturing industry. Additionally, data is an enterprise asset of increasing importance. Edge intelligence ensures data security when network or data center faults occur — a benefit to risk prevention. It is believed that rise of edge computing will empower the digital transformation of the energy industry.

Currently, edge computing has been successfully implemented in fields such as: efficient energy management of public infrastructure, smart energy, and smart manufacturing. Streetlight is an excellent example of this, as 352 million streetlights exist worldwide. Traditional lighting consumes and wastes large amounts of energy, and has high O&M costs. This contradicts the concepts of smart city construction. In comparison, in the Czech Republic streetlight reconstruction project undertaken by Huawei, application of edge computing technology increased energy efficiency to 80% and lowered operating expense (OPEX) by 90%.

Edge computing is indispensable for energy equipment intelligence. Edge computing improves production efficiency and facilitates equipment maintenance. Statistics show that if IT application in the global oil and gas industry increases pump performance by just 1%, the production of crude oil per day will increase by 500,000 barrels — an additional US$19 billion in revenue per year. Moreover, predictive maintenance can assist enterprises in preventing accidents and ensuring normal production. Apache Corporation, an oil and gas exploration and production company, predicts pump faults through predictive maintenance, minimizing production losses.

Edge computing improves enterprise efficiency, and is expected to increase intrinsic safety. In the past, enterprises empowered management to ensure security. In the smart factory era, higher automation increases risk, something management alone cannot prevent. Enterprises must shift their security focus to technology.

IoT technology plays a critical role in the secure management of oil and gas pipelines. IoT technology can be used in the entire process which includes pipeline design, construction, operation, maintenance, and management, facilitating complete pipeline management and failure control, improving pipeline operation security, and increasing profits. Use of edge computing technology increases the response speed of each production link in comparison with single cloud control mode.

Requirements for Technology Promotion: Concept, Partner, and Organization

Currently, edge computing is gradually rising technology. Further understanding of edge computing is required, and the large-scale application of edge computing requires implementation. For the energy industry, popularity of the concept must be increased, and valuable partners are required.

According to observations of the author, many enterprises hope to use IT technology and digital transformation to increase revenue. They do not however understand digitization, how to achieve it, or its implementation.

The preceding situation is an indication that the intelligent transformation and upgrade of China's energy industry is just beginning. It is crucial that concepts concerning edge computing be popularized and promoted. Enterprise CEOs may be keen on applying mature technologies. However, acceptance and understanding of the latest IT technologies are typically slightly behind. As such, governments, planning departments, solution providers, experts, and energy enterprises must collaborate to establish an integrated application interconnection platform for edge computing in the energy industry. This will be the driving force for sustainable development of the industry.

Moreover, digital transformation cannot be accomplished in a single move. All systems require continuous optimization and completion after establishment. During digital transformation, an enterprise must choose a like-minded strategic partner among solution providers after clarifying the strategic goal. This is the accepted opinion of many experienced enterprise CEOs in intelligent construction.

When seeking an excellent partner, there are key traits to look for. An enterprise CEO once said, "We expect a partner to have its own core technologies, provide good products and services, and have sustainable development capabilities. More importantly, the partner must have the same or a similar enterprise culture and development concepts as us. They must be able to establish a long-term strategic partner relationship with us, rather than being merely a solution provider."

Additionally, edge computing requires more technical communication within the industry and requires unified industry standards and regulations in the future. Without these, edge computing will not become an independent industry. Moreover, rapidly developing edge computing technology requires an industry organization for administration. The organization will act as the organizer of large-scale application of edge computing and play a mediator function in administration, production, academics, and research.

It is reported that Huawei Technologies Co., Ltd., Shenyang Institute of Automation of Chinese Academy of Sciences, China Academy of Information and Communications Technology (CAICT), Intel Corporation, ARM Holdings, and iSoftStone joined together to form the Edge Computing Consortium (ECC). ECC is responsible for promoting in-depth industry collaboration and accelerating the digital innovation and industrial application of edge computing. It is believed that new partners will emerge for the energy industry in the future. As the major factor of the digital transformation of traditional industries, edge computing plays a crucial role in constructing smart energy.