The Rising Role RegTech Will Play In The Clean Energy Industry

The Rising Role RegTech Will Play In The Clean Energy Industry

The year 2021 has been transformative for RegTech, particularly for the energy industry. We have already seen Regtech playing a formidable role in ESG and sustainable investing. Now, this year will see renewable energy increase capacity by 200GW globally, with wind leading the way in growth. As innovation and investment booms in the clean energy sector, Regtech will also be taking center stage. Historically, the use of regulatory technology has always been limited to the financial industry and other sectors with higher risks of illegal activity. As competition heats up in energy markets around the world, the energy sector is quickly joining the ranks- and Regtech is rapidly proving its value in it.

Cybersecurity Continues To Escalate In The Energy Industry

Energy companies are facing increased cyberattacks, which means most of the power grid in the US and Western Europe remain especially vulnerable. A good example is the 2015 attack on Ukraine’s power grid by ‘Sandworm’. The International Energy Agency agrees cyberattacks are a growing threat in the energy industry. In fact, research by Hornet Security found that 16 percent of all cyberattacks in 2019 were targeted towards energy companies. In response, enhanced KYC compliance and regulatory technologies like enhanced authentication, built-in encryption, and cloud security will play a strong starring role moving forward if companies are to minimize the threat.

Regtech Will Drive Education Delivering Net-Zero Initiatives

Around the world, governments have committed to delivering on their net-zero agendas. In the UK, the government promised a net zero by 2050, which will see greenhouse gas emissions decrease by 80 percent. A key part of delivering on this promise is educating consumers on habits supportive of renewable energy. There is also a debate about whether introducing renewable energy lessons into the school curriculum would be beneficial in enlightening students about alternative power and sustainability including wind and turbo energy. Headteacher Julia Clarke and Kathy Hill agree with its use and have worked to develop Sunny Schools lesson plans which saw children design eco-friendly houses in design and technology classes. On a larger scale, the Malaysian government has launched REGTech2021, an online conference that seeks to provide networking opportunities and foster public awareness of renewable energy challenges- and their solutions.

Regulatory Technology Can Pave The Way For Innovation 

In the U.S., a study found that when state-level regulators were given more discretion on hydropower facilities, entrepreneurs received a license 22.5 percent sooner. Financially, faster licensing of hydropower ventures resulted in up to $7,745 more in renewable energy- or $2.8 million annually.

The introduction of clear, unbiased RegTech compliance guidelines not only removes gray areas in the energy industry but reduces the bargaining power of larger energy companies. Larger companies can easily influence lawmakers to create added barriers for new entrants into the industry. Therefore, the separation of regulators and legislators is critical. Companies with Regtech benefit from regulatory research, which often updates the business on new regulations set to be introduced. This ensures the companies can adhere to compliance at all times while remaining agile enough to survive in the competitive energy industry.

As the renewable energy sector continues to expand in the next 5 years, so will the need for regulatory frameworks- and technology to support these. The good news is, the RegTech industry is proving to be more than capable to meet the challenge with its growing range of tools and expanding influence.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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