Industry 4.0: The Future of the Economy Lies in Sustainability and Digitalisation

Published on Monday, 25 January 2016

The term digital disruption comes from the theory of disruptive innovation, describing the moment in which a new technology changes production processes or services in a given sector, thus revolutionising its business model. Clayton Christensen, Professor of Business Administration at the Harvard Business School, coined the concept in 1995, and then went on to expand on it in what is considered to be a sacred text in the field of high tech economy, “The Innovator's Dilemma. When new technologies cause great firms to fail.

Over the last twenty years, the digital revolution (from the birth of the internet, to widespread connectivity and the Internet of things up to robotics), has advanced at an incredibly rapid pace, radically transforming the economy and the very nature of innovation.

New digital business models are the main reason why more than half of the companies listed in the 2000 edition of Fortune 500 have disappeared, thereby demonstrating the impact of digital disruption. This has given way to an unavoidable process that the World Economic Forum has called the “Fourth Industrial Revolution” (Industry 4.0), characterised not only by mass digital technologies, but by a continuous innovative drive in a number of sectors, from energy to bioscience.

The implications of digital disruption and Industry 4.0 were the issues that were recently discussed at the 46th meeting of the World Economic Forum (WEF) in Davos-Klosters, Switzerland. “Facing the fourth industrial revolution” was in fact the subject discussed by more than 2,500 business experts, political leaders, as well as representatives from international organisations, civil society, the academic sector, the media and the arts.

According to the study "Digital Disruption: the Growth Multiplier", which was presented at the WEF by Accenture, the digital economy now accounts for 22 percent of the gross domestic product (GDP). The “global” prospect growth also indicates that the optimisation of skills and digital technologies could generate up to an additional 2 trillion dollars in production by 2020. According to Accenture analysts, investing in this sector, will not only increase its digital value, but will have a multiplier effect for the whole economy, triggering a virtuous circle on companies and society as a whole.

The energy sector plays a key role in the growth of renewables and innovation, as well as in what were defined during the Forum as the priorities and challenges of 2016 and the coming years: these include risks related to climate change and the need to focus on clean energy production.

In recent years, stated former US Vice President Al Gore, there has been “a stunning development and a sharp decline in the price of renewables.” And that trend looks set to continue throughout 2016, he concluded, “to the point where it will be the cheapest source of electricity everywhere.”

But without investing in the digitalisation of energy infrastructures, renewable sources alone will not be enough to meet the challenges of decarbonisation, nor to provide sustainable energy worldwide, explained Enel CEO and General Manager Francesco Starace, who was appointed co-chair of the Energy Utilities and Energy Technologies Community WEF.

“The community’s work programme for 2016 will focus on the key changes shaping the power industry, including electrification, decentralisation and digitalisation across the value chain,” highlighted Starace. “These three main topics are causing deep changes to the electricity sector as the fourth industrial revolution brings about technological advances at a pace that we have never seen before. The aim of our programme is to raise awareness on the impact of digitalisation and decentralisation on electricity infrastructure, as the progressive decarbonisation evolution is carried out, and provide policy makers with recommendations that enable them to adapt their electricity systems to these changes and not be left behind.”
 
Enel is an “Industry Partner” of the World Economic Forum, a status reserved for members who are actively involved in the Forum’s mission at the industry level.

Communities of industry leaders, or “Governors”, such as that of energy technologies, were formed by WEF in order to provide platforms for debate on global strategic issues of common concern to each industry. The chairs and co-chairs of the Communities have the task of identifying important issues and themes for each sector, leading the group in its search for solutions and acting as “ambassadors” outside of the community. This important role will be carried out for Energy Utilities and Energy Technologies Community by our CEO Francesco Starace, alongside Schneider Electric CEO and Chairman Jean-Pascal Tricoire, as the other co-Chair of the Community.

One of the main topics discussed during the 300 workshops of the WEF 2016, included the challenges of providing global access to sustainable energy, as a key factor to bring the benefits of the digital revolution to every corner of the world. The issue was discussed during the “Catalysing Clean Power” panel, opened by Roberto Bocca, Head of Energy Industries and member of the WEF Executive Committee, and with the participation of our CEO Starace. The panel focused on a central theme regarding the future of our planet: how to invest in renewable energy and make it 'scalable' in the areas of the world in which millions of people still lack access to electricity (particularly Asia and Africa).

Enel is at the forefront of this sector – as a leader in the renewable technology sector and a promoter of growth strategies based on the creation of shared value – through a number of green energy development projects in several areas of the world, from Latin America to sub-Saharan Africa.