Digitalization in the energy industry:
The views of the C-suite
DIGITAL TRUST by DNV
The world's energy systems are transforming rapidly. Digital technologies are driving and underpinning much of this transformation, but is the industry keeping up with the pace of technological change? We conducted a global survey of c-suite executives in the energy industry to find out.
Digitalization is driving optimism in the energy sector
DNV's Energy Transition Outlook shows that global energy-related emissions are still climbing and are only likely to peak in 2024. In the last few years energy security has also moved to the top of the agenda. Worldwide, energy produced locally is being prioritized over energy imports, which is adding to supply-chain complexities and costs already strained by inflation. Despite the upheaval in the industry and the extensive work that lies ahead, 79% of C-suite respondents working in the energy industry say they are optimistic about their company's growth prospects for the year ahead.
The strongest drivers of optimism:
Progress in the energy transition
National or international energy policy changes
Digitalization and technology advances
Digitalization: Progress and opportunities
Digitalization and technology advances are strong drivers of optimism in the energy industry. Realizing the energy transition will depend on successful digitalization:
- Automating tasks
- Making day to day activities more efficient
- Harnessing technology and
- Using human resources where they are most needed.
Our research revealed that digitalization is well and truly on the C-suite agenda, with an increase in focus and investment expected in the year ahead.
My organization has increased focus on digitalization over the past year
Believe that digital technologies are enabling the energy transition for their organization
Will increase or maintain investment in digitalization in the year ahead
The leading technologies
We asked respondents what stage of development their organization is at with respect to the following technologies. The responses show a clear uptake of new technologies being piloted.
The AI opportunity
The rise of artificial intelligence is about to become a game-changer for the energy sector. Undoubtedly, various AI solutions will be crucial for digital transformation. The energy sector has already developed good modelling systems to handle advanced data. However, it's difficult for humans to get all the relevant insights from the modelling systems. By using artificial intelligence, we can get more value from the data we already have, and it will be possible to discover connections that are difficult for humans to identify.
Organizations in advanced stages of AI development Although only 12% of the industry's C-level respondents say they are in an advanced stage of development – or have live AI projects – this is set to change.
Organizations piloting or planning AI activities 73% stating they are piloting or planning activities for the future.
Trusting the data
For AI to truly fulfil it's potential, the data it processes needs to be trusted. As the energy transition moves forward, data transparency in the energy sector's value chain has become a top priority.
Advanced use of data is changing the way we work at my organization
In the year ahead, my organization will prioritize improving data quality and availability
Securing the data
Each new technological innovation increases the potential for a data breach or cyber-attack. With energy assets defined as critical infrastructure, it’s not surprising that today cyber security is an important focus of digitalization
A growing appetite for cyber security
Our research revealed a growing appetite for cyber security, with 90% of C-suite executives saying that they plan to increase or maintain investment in cyber security in the year ahead.
The energy sector's vulnerability gaps
This boost to spending comes as heightened geopolitical tensions and the accelerating adoption of digitally connected infrastructure spark concerns over the sector’s vulnerabilities to emerging cyber threats.
Two thirds of energy professionals (64%) believe that their organization’s infrastructure is now more vulnerable to cyber threats than ever and say that their focus on cyber security has intensified as a result of geopolitical tensions.
Among the c-suite, 52% say that cyber-attacks are a major threat to their organization
The biggest barriers to digitalization
We asked respondents, to select the biggest digitalization barriers for their organization in the year ahead.
Turning a complex and highly advanced industry fully digital is not a straightforward journey. There are pitfalls, obstacles, and barriers along the way – some of which are harder to overcome than others.
34%, cite the cost of digital transformation and technologies as one of the main barriers. Knowing that 91% will increase or maintain investment in digitalization – with substantial investments seen already, it's not surprising that seeing a return in these investments is top of the agenda.
One of the most prominent barriers is resistance to change. This is a common challenge in all structural changes. People generally do not like changes and want to keep working as they're used to.
Lack of digital skills comes third on the list. However, it's promising that only 31% of respondents cited this as barrier. A similar survey carried about by DNV in 2019, revealed that a lack of digital skills and internal barriers related to company culture and mindset are was hindering digital progress for 91% respondent organization's.
About the survey
DNV's Industry Insights research was conducted in January and May 2023. We surveyed 390 C-suite executives from across the energy industry.