In 2022, the Energy Digitalisation Taskforce put forward a recommendation to develop a 'digital spine' across the energy sector. This digital spine is a proposed sector-wide data sharing mechanism, intended to enable the seamless and secure transfer of data and information between all participants in the energy market. The digital spine, or digital sharing infrastructure, has been the result of much deliberation on the future of the energy market and is considered key to the net zero transition.

The current siloing of data creates high barriers to entry for innovators and impedes progress and decarbonisation. By working towards a digital sharing infrastructure, the government will enable greater ease of entry into the grid for emerging energy and clean technologies.

Following the commissioning and publication of a feasibility study in 2023, the UK Government, via the Department for Energy Security and Net Zero (DESNZ), has endeavoured to progress the recommendations made.

DESNZ has agreed to develop a minimum viable product (MVP) and believes the ESO’s Virtual Energy System project, started in 2021, could provide a strong basis, as it is in part focused on developing a sector-agnostic, open source, distributed data sharing infrastructure alongside the National Digital Twin Programme. DESNZ has committed to delivering this pilot and using it to build out an MVP. It has also committed to assessing current data standards in the energy industry, developing a security framework for data sharing, and publishing further plans for data sharing governance.

Along with emerging energy technologies, the industry will likely see renewed interest in cybersecurity and IT services businesses operating in the energy sector – particularly those with AI and ML offerings given AI’s pace of progress in the last year. Strong cybersecurity that can keep up with the pace of innovation will be key for all energy players to transition into a digital infrastructure framework. Down the line, complex data analytics and AI data processing software will also be central to the adoption of a universal data sharing infrastructure, so that the available data does not go to waste.

Standardising sharable energy data will generate greater efficiency, enabling more cost effective and complex systems, the ability to hit net zero targets, and greater transparency across the energy industry, while also promoting innovation and greater opportunities for clean energy technologies.

We at Aalto Capital closely follow emerging policy in the energy sector in the UK and Europe. We offer ESG advisory services alongside our standard corporate advisory services.