Almost half of senior executives in the energy sector are preparing to incorporate AI-powered applications into their operations in the coming year, according to a new report by DNV, an independent energy advisory and certification body. The survey of some 1,300 senior professionals throughout the industry also found growing scepticism as to the digital proficiency of their organisations, with 37% stating that their employers were not meeting their decarbonisation targets as opposed to the 28% who said that they were.
“As the energy sector navigates the twin challenges of digitalization and decarbonization, the ability to adapt and innovate will define success,” said Lucy Craig, DNV’s director of Growth, Innovation and Digitalization, Energy Systems. “Digital Leaders distinguish themselves by embedding digitalization at the core of their strategy, fostering a culture of innovation, and investing in the right technologies. Over the next year, these organizations are poised to build on their progress and maintain their advantage by focusing on further digitalization and cyber-resilience.“
DNV’s digital leaders vs. digital laggards
The report, titled “Leading a Data-Driven Transition,” found that those organisations it termed ‘digital leaders’ were significantly ahead in the adoption of technologies designed to measure and reduce carbon emissions. According to the survey, 68% of these firms possess high-quality data with 80% already seeing tangible benefits from digital tools, compared to only 21% and 33% among those organisations it describes as ‘digital laggards.’
As per the study, by 2050, AI could help reduce clean energy generation costs by $1.3 trillion and lower grid equipment expenses by $188bn, leading to an overall reduction in power system costs by between 6% and 13%. Most of the ‘digital leaders’ encountered by DNV in its survey found that the most impactful AI and data-driven applications in their experience were deployed in areas that included process optimisation, system and database integration and operational automation. Between 50% and 60% of these firms, moreover, reported reaping productivity benefits from the deployment of similar data-centric innovations in the areas of predictive maintenance and supply chain management.
Overall, this category of respondents was not only more optimistic about meeting their decarbonisation targets but also equipped with clear plans to meet those goals, with 90% reporting that digitalisation is core to their operational strategies. By contrast, the so-called ‘digital laggards’ DNV encountered reported considerable shortfalls in this respect, and particularly in system integration, operations automation, and consumer empowerment.
Significant hurdles in using technology to accelerate decarbonisation were also encountered in both groups, including a palpable resistance to the deployment of new technological innovations. Cybersecurity risks as well as compromised data quality and management issues were also identified, as were high costs associated with digital transformation projects overall.
AI disquiet
Overall, DNV found that ‘digital leaders’ were more likely to increase their investment in digitalisation and cybersecurity over time, seeing these areas as critical to maintaining their competitive edge. The extent to which AI, particularly generative AI, remains central to these plans remains unknown, especially in light of growing market scepticism as to the rate of return on investments that utilise the technology. According to a report by Lucidworks, AI investment is slowing down, with only 63% of companies planning to increase spending in the next 12 months, a decline from 93% in 2023.
Similarly, a study by Hitachi Vantara and Enterprise Strategy Group finds that more than 70% of companies will need to substantially overhaul their systems to accommodate generative AI. Despite these challenges, the survey of IT leaders reflects continued enthusiasm for the technology, even as many firms recognise they are not fully prepared for its deployment.
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