/>iFourth annual survey shows energy suppliers are launching new projects and embracing AI, with commercial consumers looking to energy efficiency and savings in the push to reach net zero goals
(October 10, 2024) – Womble Bond Dickinson (WBD) has released its fourth annual survey report, Energizing Tomorrow: Global Energy Transition Outlook 2025. The report finds energy suppliers, investors, and commercial consumers enthusiastic and committed to low-carbon transition strategies as the world strives to meet the objectives of the energy trilemma: security, affordability, and sustainability. While this optimism poses a contrast to the more cautious outlook from the firm’s 2024 report, respondents to this year’s survey also note ongoing challenges, including concerns about market stability, infrastructure, and the critical role of government support.
The survey provides insight into international progress on the clean energy transition at a time of rapid change. It draws on responses from 1,351 energy suppliers, investors, and commercial consumers in 26 countries, expanding the scope of past research to capture feedback from that third group, for a more comprehensive view of the global energy landscape.
“Our survey results showcase a global energy sector at a pivotal moment in the transition to cleaner energy. With improving financial conditions and a growing emphasis on decarbonization for energy suppliers, investors, and commercial consumers, the energy economy's commitment to climate change goals remains strong,” according to Jeffrey Whittle, Head of WBD’s Global Energy and Natural Resources Practice and Richard Cockburn, Head of WBD’s U.K. Energy and Natural Resources Practice.
“However, while the short-term outlook looks positive, more crucial work needs to be done – particularly in encouraging further government support to develop infrastructure and refine regulations,” Whittle and Cockburn say. “Amid the ongoing narratives of geopolitical tension, supply chain challenges and evolving energy policy, it is more important than ever to de-risk investment and drive innovation to facilitate a climate resilient future.”
“Our survey results showcase a global energy sector at a pivotal moment in the transition to cleaner energy. With improving financial conditions and a growing emphasis on decarbonization for energy suppliers, investors, and commercial consumers, the energy economy's commitment to climate change goals remains strong. However, while the short-term outlook looks positive, more crucial work needs to be done – particularly in encouraging further government support to develop infrastructure and refine regulations. Amid the ongoing narratives of geopolitical tension, supply chain challenges and evolving energy policy, it is more important than ever to de-risk investment and drive innovation to facilitate a climate resilient future.”
Improving financial landscape drives new projects and outlook for M&A
The sustained push for the energy transition among respondents comes as improved access to capital and increased government support drive a wave of new projects and generate fresh optimism around ongoing mergers and acquisition (M&A) activity. This year more than three-quarters (76%) of energy suppliers and investors have started new projects, and nearly two-thirds (63%) say their company’s decarbonization goals have accelerated.
"This is a critical time for dealmakers in the energy space,” says Lisa Rushton, Co-Head of WBD’s U.S. Energy and Natural Resources Practice. “Strong corporate profits, rising executive confidence, and stabilizing inflation rates are driving M&A recovery after a sluggish 2023. Early movers in this transforming market may have their choice of targets now and could strike transformative deals. Companies that stay on the sidelines risk being left behind.”
"This is a critical time for dealmakers in the energy space. Strong corporate profits, rising executive confidence, and stabilizing inflation rates are driving M&A recovery after a sluggish 2023. Early movers in this transforming market may have their choice of targets now and could strike transformative deals. Companies that stay on the sidelines risk being left behind.”
AI/innovation is a leading focus for energy suppliers and investors
The report also found that energy suppliers and investors are both embracing broader change, including artificial intelligence (AI), while also acknowledging the challenges it can bring, including security of data and high energy consumption. Eighty-five percent of those respondents are either investing in and using AI applications (45%) or considering AI usage (40%); and 61% rank innovation management as the most important skill for effective leadership.
“The allure of AI is undeniable, from its ability to predict consumption with unprecedented accuracy through to its capabilities in demand response management, which can ensure a balanced supply, or to offer predictive maintenance, minimizing breakdowns and control costs,” says Caroline Churchill, Partner at WBD. “For renewable energy, AI could potentially be even more transformative, whether forecasting the availability of wind and sun or facilitating the more efficient integration of renewable energy into the grid.”
However, the sector must also balance AI’s benefits and risks, she says, noting, “The repercussions of an AI misstep for a major energy supplier can range from reputational damage to catastrophic consequences.”
“The allure of AI is undeniable, from its ability to predict consumption with unprecedented accuracy through to its capabilities in demand response management, which can ensure a balanced supply, or to offer predictive maintenance, minimizing breakdowns and control costs. For renewable energy, AI could potentially be even more transformative, whether forecasting the availability of wind and sun or facilitating the more efficient integration of renewable energy into the grid.”
Industry is committed to decarbonization
Decarbonization initiatives are backed by diverse funding strategies across the “energy economy,” with government support considered an important but not primary source of funding. More than half of energy suppliers and investors plan to finance their efforts through strategic investors (58%) and operating income (55%); followed by private capital (48%), corporate transactions (38%) and government support (38%). Only 17% of energy suppliers and investors view government support as pivotal to accelerating decarbonization plans.
Respondents in the Middle East, Asia-Pacific, and Western Europe signaled the most intent to use ongoing operating income, while U.K. energy suppliers and investors suggested they would be equally likely to seek support from strategic investors (52%) and government support and incentives (52%). Contrastingly, commercial consumers are looking inward rather than to government support and subsidies to finance decarbonization plans, with 63% planning to fund decarbonization through operating income despite reported increases in operating costs; 80% of U.S. consumers plan to fund decarbonization through operating income, with just 30% leveraging public support.
Commercial energy consumers favor efficiency measures over sustainability
Meanwhile, energy efficiency remains a cornerstone strategy for corporate decarbonization and cost management. More than six in 10 (61%) of commercial consumers identified energy efficiency and consumption resumption as their primary means of decarbonization—significantly outpacing other strategies, including streamlining and process re-design (43%) and sustainability initiatives (42%).
Here, the advent of AI could complicate companies’ plans—and put further strain on energy suppliers’ energy transition plans—given the enormous amounts of power required to support generative AI.
“Data center demand driven increasingly by AI is transforming electric utility planning in the United States. Major utilities that for decades have seen demand growth in 1% range have recently increased near term demand projections by 10%-20% due to data center loads,” says Belton Zeigler, Co-Head of WBD’s U.S. Regulated Utilities Team. “This creates increased opportunity for renewables but is also impeding utilities’ ability to sustain reliability while retiring and replacing coal units. The 24/7 nature of data center energy needs places an emphasis on adding new, dispatchable, round the clock generation which as a practical matter today must be gas-fired, nuclear or battery storage.”
“Data center demand driven increasingly by AI is transforming electric utility planning in the United States. Major utilities that for decades have seen demand growth in 1% range have recently increased near term demand projections by 10%-20% due to data center loads. This creates increased opportunity for renewables but is also impeding utilities’ ability to sustain reliability while retiring and replacing coal units. The 24/7 nature of data center energy needs places an emphasis on adding new, dispatchable, round the clock generation which as a practical matter today must be gas-fired, nuclear or battery storage.”
Overall, the survey reveals a resilient and forward-thinking mindset across producers and commercial consumers of energy, as well as those who invest in energy-related assets. The industry's determination to overcome obstacles and drive positive change suggests that even as challenges persist, so too, does the ingenuity and resolve to meet them head-on.
WBD’s Global Energy Transition 2025 Outlook was completed by more than 1,350 decision-makers in the energy industry, including CEOs and C-suite officers, legal counsel, and business, operations, and project managers in key regions around the world. Respondents included suppliers and investors with interests in oil and gas (34%), renewables and decarbonization technologies (34%), utilities (25%), mining (3%), nuclear (2%) and EVs/electrification. Commercial consumers represented the following sectors: technology (22%), energy-intensive industrial/manufacturing (21%), retail (13%, non-energy intensive industrial/manufacturing (11%), government/public sector (8%), transportation and logistics (5%), real estate (5%), and infrastructure (4%), and other (12%).
Energy supplier and investor participants were located in Asia Pacific (8%), Latin America (16%), the Middle East (4%), North America (23%), and Western Europe (48%), of which nearly two-thirds were based in the UK. Commercial consumers were located in Asia Pacific (3%), Latin America (6%), the Middle East (5%), North America (34%), and Western Europe (51%), of which more than three-fourths were based in the UK.
To read the complete report and methodology, please click here.
Peter Snaith and Christé Spiers also contributed to this article.
