The answer – as it should always be with big questions like this – is: “It depends…”
I’ve tried to ignore pie-in-the-sky predictions here and focus on real trends both inside the energy industry and those driving innovation elsewhere.
For example, ask ChatGPT what will drive digital adoption in energy and it’ll tell you ‘volatile energy prices’. Ugh. They haven’t and they won’t.
So, here are five questions that could decide whether 2025 will be a turning point for an industry that, all-too-often, shies away from the digital world:
1. Will the green transition stop holding us back?
Splutter… Cough… Wait… WHAT? “Surely the green transition is the main driver of digital innovation in energy?” you say.
It certainly should be. But I’m going to play devil’s advocate and say it can also be a hindrance because the industry has always struggled to put ESG (economic, social, and governance) issues above fiduciary duties (or even equate them).
The green transition is essential, but too often the messaging around it has focused on ‘doing the right thing’, which can put it in conflict with the duty to make money.
But I’ve noticed a subtle shift in that messaging recently, which I think is crucial.
In the tech context, people are increasingly talking about practicality and reality, underpinned by trends driven by green regulation, rather than ‘the environment’ being the primary call to action.
A meeting I had recently with an energy tech firm, which has just raised millions in investment, is instructive.
Their CEO told me sustainability and ESG concerns have dropped from the company’s top message to third or fourth, behind more practical considerations like cost saving and optimising operations. They are not alone.
This isn’t a problem, from an environmental or tech perspective. Digital innovation must be a crucial ingredient in the green shift. But if more prosaic and practical considerations drive that – rather than well-placed idealism – then that’s all well and good.
This is particularly evident in renewables – the flagbearer for the green shift – where the once-new is set to become the (new) old.
Richard McGowan, from digital twin specialists Fathom Group, recently pointed out to me that operations and maintenance contribute about 25-30% lifetime costs.
As windfarms age these costs only hit harder and predictive maintenance is going to be crucial, he believes, and that requires an accurate prediction model.
That requires tech like digital twins and is another example of idealism taking a back seat to pragmatism.
2. Can we stop falling into the one-size-fits-all tech trap?
“I was promised that one size fitted all and it did nothing of the sort,” growled one ONS attendee back in August, at me. “Now I’m stuck with something I don’t use 80% of the time and needs a team to implement and maintain it. That’s before I even try to get people to use it.”
This is a story as old as tech. Firms buying software that promises the world but fails to deliver.
‘One-size-fits-all’ tech rarely works because its does not solve your specific problem or fit with your operational habits.
I recently heard of one tech provider that had to buy another company, just to get the manpower to implement its platform for its poor, long-suffering customers.
And these “revolutionary, paradigm-shifting” behemoths aren’t just the cause of much delay and cost and gnashing of frustrated teeth.
They also stop you being able to implement real game-changing innovation. For example, they can inhibit AI solutions from getting their poor robot brains around your digital infrastructure.
All the cool kids are talking about Domain-Driven Design these days, which basically means building specific solutions to specific problems in specific environments.
Ironically, it’s the rise of AI that means these bespoke solutions have become affordable and highly desirable because they can be delivered so efficiently and effectively.
And this driver towards a more bespoke, user-friendly, and dynamic tech model leads us neatly into our third question…
3. Can the energy industry be more down with the kids?
Being old enough to remember people saying ‘cowabunga’ (without a shred of irony) means I am not qualified to make judgements on fashion, language or almost anything people under 30 like.
However, I can tell you one thing for sure (because everyone knows it): the younger talent the energy industry so desperately needs are all digital natives who demand a workplace experience that is dynamic, engaging and shorn of tedious, unnecessary manual tasks.
More than that, they want to feel a sense of purpose; to discover, drive and shape opportunities, moulding themselve to the industry and the industry to them – often with far greater work-life balance, for good measure.
Digital tech can deliver all this.
The energy industry has no leverage here. It’s short of people and that shortage is only going to get worse.
Not only do we need to attract more people, but we also need to give both the newbies, and the people we’ve already got, the tools so they can work much more productively.
Those same digital tools will let them garner the insight to spot the opportunities that will futureproof your business. (You can read about an example of tech doing just that, here.)
4. Will executives’ love of ‘shiny things’ finally come good?
We all have nightmare-inducing stories of senior execs, well-meaning as they may be, latching onto something they’ve heard is important and telling you to get stuck into it.
But this rush to adopt the latest shiny thing could be very helpful for ambassadors of digital innovation in energy. That’s because those over-enthusiastic execs are most likely to be latching onto AI right now.
AI is going to be (even more) huge and even the energy industry can’t stand in its way. Support for its adoption, from the highest levels, is crucial.
And, for once, the industry’s slower adoption of tech is a good thing. It’s allowed a lot of people to make a lot of mistakes with AI that we can learn from.
The main lesson is AI is only as good as the context in which you use it and the data you feed it.
In short, you’ve got to use the right AI models in the right way. One example is harnessing the data in your business, analysing it, and turning into business insight – an incredibly powerful application of AI.
But to do that properly, you’ve got to employ Optical Character Recognition (OCR) models, classification models, machine learning and generative AI – and in that order.
So, AI not a panacea, but it offers huge opportunities. And we’re going into 2025 with a lot of well-funded goodwill pointing at AI. It’s up to us to make the most of it in the new year, before the next shiny thing comes along and steals the attention.
5. Will delayed pain finally hit home?
I probably don’t need to tell you The Corporate Sustainability Reporting Directive (CSRD) is a European Union (EU) regulatory framework that requires companies to report on (and audit) their environmental and social impact.
Some companies are going to have to start reporting this year, while others need to start gathering data for next year.
For those with complex supply chains this could be a god-awful nightmare. How will they do it?
They could be chasing 1,000 suppliers to fill in forms – and you know at least some of those will insist on faxing their reply.
The tech community has stepped up. Take Compera, for example, which automates the whole process, meaning you could send hundreds, even thousands, of supplier requests in seconds, and get them back just as easily.
The universal nature of this regulation could be an inflection point, in terms of wider digital adoption in the energy industry.
It’s about more than firms finding they can’t fulfil this one obligation without tech.
It’s an opportunity for digital ambassadors to CSRD as a case study to show just how much benefit digitalisation can make and spread that mantra beyond sustainability reporting.
As a herald of this structural shift, I look forward to hearing reports of ceremonial smashing of fax machines as 2025 progresses.
Michael Millar is co-founder and partner in SmplCo, empowering the energy industry to find new ways of working, improve performance, and drive the energy transition, using digital platforms, products and services.
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