Digital twins as a digital priority in ESD

Claire Smith and Lauren Parnaby
09 Jun 2022 Time to read: 3.5 MIN

As governments and businesses at all levels make pledges to achieve net zero, net positive or nature positive targets, getting there will involve some interface with, and adoption of, technology. As the digital economy continues to burgeon, businesses need to stay abreast of both developments in tech and the environmental considerations and risks involved with tech adoption. This article looks at emerging applications of digital twin technology as but one intersection between technology and the environment. In future articles, we will look at other technologies, such as blockchain, and consider their applications in supporting transition efforts and broader environmental aims.

Digital twins for sustainable futures

A digital twin describes a near identical virtual representation of a physical asset or system (such as a building, a city or some business process) using a real-time simulation of real-world data. The technologies underpinning digital twins are complex, and include sensors, cloud-computing and other artificial intelligence systems which are capable of monitoring and testing how objects or processes will perform under specified conditions for the purposes of optimising the physical counterpart of the modelled twin. These digital twins can reduce environmental impacts by improving operational efficiencies and prospectively identifying and removing errors. For example, urban developers could apply digital twin modelling to an asset, including retrofitting existing assets, to test the asset’s performance over its lifecycle and optimise that performance according to predictive patterns or outcomes. In effect, predictive modelling can inform asset decisions designed to significantly reduce both operational and embodied carbon arising from a building's construction and use.

Internationally, we are seeing several examples of digital twins being applied in various settings – from city planning to supply chains. In the environmental space, use-cases include the European Commission’s Destination Earth (DestinE), announced in March 2022 as a component of its Green Deal and Digital Strategy. DestinE imagines a digital twin-Earth and incorporates real-time observations with predictive modelling to assess weather patterns and climate change related impacts, enabling proponents to plan effective climate mitigation and adaptation activities that build resilience into human domains. Eventually, platforms such as DestinE will allow both public and private sector participants to apply climate change related scenarios to their decision-making e.g. in respect of retrofitting existing infrastructure and buildings to ensure they are more climate resilient or planning for future sustainable precincts or infrastructure. The European Commission aims to gradually develop DestinE to full maturation by 2030. Localised applications include National University of Singapore’s use of digital twin models to map and identify the best locations for trees to take root as part of their initiative to become a carbon neutral campus by 2030 which includes ambitions to plant 100,000 trees.

Supporting the energy transition through virtual power plants

Another use-case, this time in the commercial space, is a virtual power plant, which harnesses open source and digital twin technologies to manage and co-ordinate the influx of renewable energy sources coming online. Previously, energy systems have depended on a centralised grid to provide a reliable and on demand supply of electricity generation. However, conventional grids are fossil fuel dependent and have limited control points to manage sudden changes in supply and demand. They are also ill-designed, by themselves, to manage the effects of new distributed energy resources – such as rooftop solar.

Indeed, as new forms of decentralised energy are operationalised, the market must find new ways to ensure supply reliability given practical limitations of aligning peak demand with peak renewable generation, which is subject to specific weather conditions. This is where technology can provide solutions to effectively balance supply and demand in real time. One example is virtual power plants (VPP), which combine energy storage hardware, such as Tesla Powerwalls, with supportive intelligent software programs to aggregate distributed energy sources into a single power plant. VPPs can encourage green energy markets by managing stored energy and responsively distributing that energy across the grid as demand requires, alleviating fossil fuel dependency. Consider this in the context of grid disruptions: detecting the disruption, VPPs can immediately respond by injecting additional energy into the grid from distributed sources, reinstating supply stability - and, as such, carry other social benefits for consumers.

For example, Ampol is currently piloting its own virtual power plant in partnership with Tesla and Enerven as part of their Future Energy and Decarbonisation strategy. Among other things, the project aims to reduce Ampol’s Scope 2 emissions with its longer-term ambitions to create earning opportunities through aggregated electricity markets. The project involves installing solar panels and Tesla Powerwall batteries at retail petroleum service locations which captures energy for use to reduce Ampol’s operational emissions in line with its target of net zero emissions on an absolute basis by 2040.

Commercial uptake of VPPs is only set to intensify, with Origin Energy announcing in March 2022, plans to expand its Origin Loop VPP program from 200MW capacity to 2000MW. Projects such as Origin Loop offer consumers shared benefits through opportunities to earn reductions in energy bills by resupplying energy stored in home batteries on the distributed market.

Opportunities for the future

Investment in digital twin technologies and architectures, such as Singapore’s world-first country-wide digital twin project, is likely to continue in the short-tomedium term. This is particularly so given the globe’s pressing need to transition to net zero in line with Paris Agreement targets and the potential for industries to use digital twins to decarbonise. Indeed, a 2020 report projects significant market growth, from $3.1 billion (USD) in 2020 to $48.2 billion (USD) by 2026. Governments and energy intensive industries are likely to fuel this growth through significant investments in digital twin architecture. These investments and principled frameworks are broader initiatives to enable future innovation, rather than constraining the technology and its potential applications. Such applications could see digital twins widely used to test and meet ESG goals – particularly environmental and social aspects. These opportunities will only grow as the associated technologies gradually become mainstream over the coming years.


Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.