Written by Adam Aziz, Analyst at DAI Magister
Digital twin technology offers a way of revolutionising our approach to energy efficiency and will be a powerful complementary force alongside developments in the physical technologies driving the energy transition. These digital replicas of physical assets and processes, built on sophisticated mathematical models, go beyond static simulations by incorporating live data and allowing highly complex systems to be evaluated in real-time. The technology allows us accelerate design, predict failure & maintenance, and optimise the performance of energy assets much more effectively than conventional methods allow – digital twins have revealed that there is some low hanging fruit in the form of easily achievable energy efficiency gains, and will play a crucial role in achieving our net zero 2050 targets.
What’s next for digital twins in 2024?
Companies specialising in digital twin technology have attracted over $1.2bn* in funding over the past two years, with several companies securing funding rounds above the $10 million mark. Despite growing attention to the technology, the industry remains nascent, with few instances of rounds above $30 million.
With key players continuing to mature & demonstrate the impact of their technology against the backdrop of more favourable market conditions, we expect a more robust fundraising market with larger funding rounds as competitors build market share.
The companies poised to succeed in this market will be those with early commercial traction and seasoned management teams with domain expertise in their target markets. Such expertise is crucial given the complex nature of problems and solutions in play.
Energy generation and storage
Several pioneering companies are harnessing digital twin technology to revolutionise the optimisation of energy assets. The technology can be deployed throughout the entire lifecycle of an asset, enhancing design, predicting potential failures before they occur, and significantly prolonging asset longevity.
Energy transmission
Digital twin technology is also being applied to complex issues in energy transmission, tackling key challenges in energy infrastructure from network design to resilience requirements and maintenance challenges.
Harnessing the power of digital twins for a net zero future
Advances in artificial intelligence and greater access to data are key enabling factors in the development of digital twin technology, addressing a market that is expected to grow at over 40% per annum to $130 billion by 2030. As these trends continue to play out, we expect to see a substantial increase in the application of digital twin technology in the energy sector. The energy management system market alone (where digital twins are a key enabling technology) is expected to reach $60bn by 2025, driven by rising investments in renewable energy infrastructure and the growing adoption of digitalisation in the energy sector. This growth reflects the significant demand for solutions that enhance operational efficiency, reduce carbon emissions, and support sustainable energy practices.
Digital twin technology has a pivotal role to play in enabling our path to net zero by tackling the core problem, our consumption of energy, at the source. The technology can unlock efficiency gains throughout the value chain from the design of energy assets to the optimisation of energy systems in operation and life extension of critical infrastructure. The core technology is applicable to a wide range of optimisation problems and as a software solution, can easily be deployed across a broad spectrum of project sizes at minimum incremental cost – this enables asset owners and operators of all sizes to enhance the efficiency of their asset base.
Furthermore, the ability of digital twins to simulate various scenarios and predict performance outcomes allows energy companies to make informed decisions that align with sustainability goals. Whether it’s optimising the performance of renewable energy assets, improving grid management, or enhancing energy storage systems, digital twin technology offers valuable tools for driving efficiency and reducing environmental impact.
This dual benefit of reducing environmental and economic burdens will continue to fuel significant market interest in the coming years, with investors keeping a close eye on companies with seasoned management teams, a proven track record of commercial success, and a clear path to scaling profitably.