Investigating the Effect of Digital Transformation on the Energy Sector: Saudi Arabia’s Case

Abstract

In many countries of the world the demand for energy and reliability of renewable energy has risen remarkably with the digital transformation of modern times. For instance, digital technologies such as the Internet of Things, adoption index, and big data analytics are applied to increase efficiency and productivity in the energy sector, along with identifying important interfaces and infrastructure necessary for the efficient and smart functioning of operators and operations, as well as curating an increase in the reliability of tasks and operations while optimizing costs. The purpose of this study is to explore how the integration of digital technologies in the energy sector in Saudi Arabia has led to increased productivity and sustainability on a larger scale. The study focuses on reducing operational costs and improving asset management through digital solutions for monitoring and maintenance. The study covers the period from 2015 to 2022. The findings of the study show that the digital adoption index positively affects GDP growth in the short term with error correction term, but not in the long term without error correction term. Furthermore, the findings indicate that there is no statistically significant relationship between independent variables and GDP growth according to estimates of the long-term results. The null hypothesis is accepted indicating no cointegration between independent variables and GDP growth based on F-statistics being less than I (0) at a 1% significance level. Finally, the trail to explore the nexus of digital technologies and the energy sector in Saudi Arabia is, so far, a new attempt in this area. This is an indication of the originality of this research paper.