• Andreea Vasilescu, Partner |
4 min read

The energy sector is ahead of most in introducing new technology into its operations and less risk averse, as detailed in the recent publication: KPMG global tech report: Energy insights (based on KPMG’s Global Tech Report 2024). Nevertheless, investment is still critical for energy companies to keep up with the competition, given the rapid evolution of technology, in particular, AI. The survey covered a wide range of sectors, drawing on the views of 2450 global technology leaders in total. Its Energy Sector perspective covered 122 technology leaders from 19 countries and territories from the energy industry (including power and utilities, oil and gas, natural resources, and chemicals).

At a crossroads

More than many other sectors, energy is at a key transition point as the drive to net zero and the eventual phasing out of fossil fuels progresses. It is a time of challenges, but also opportunities, as the use of clean energy develops. Addressing the challenges and seizing the energy transition opportunities will require a unified approach that integrates technology, data and strategy across the entire business. 

Energy companies are bolder than most in introducing technology

Our research finds that the energy sector is more resilient and willing to take risks than other sectors. Compared with the cross-sector average, the energy industry is less likely to say that market influences such as economic uncertainty and market competitiveness have damaged their confidence about investing in new technologies. Twenty five percent of the energy sector technology leaders said that say that risk aversion rarely makes senior leadership in their organizations move more slowly than the competition, compared with a cross-sector average of seventeen percent. 

But approach to AI is gradual and methodical

The majority of energy firms are in the top two maturity stages of AI, and sixty seven percent of energy businesses say they are achieving business value from their active AI use cases. But a sizeable proportion are taking a cautious approach and are still at the proof-of-concept stage of AI experimentation. Three main factors are tempering the pace of AI development. Firstly, many companies in the sector made significant investments in previous generations of enterprise resource planning (ERP) systems, and now face a large task in bringing this entrenched infrastructure up to date. Secondly, many companies which have introduced AI are struggling to scale it across the organization and hence gain the full benefits. Thirdly, many firms in the sector have yet to establish unified data foundations, and this makes it difficult to deploy AI to full effect. 

Sector lags on data management

The majority of energy executives in the survey say that their organization is satisfied with the value it gets from technology. But measuring its effects is a different matter. In every data management category measured in the research, the energy industry is lagging behind the cross-sector average on data maturity — especially in relation to data interoperability, security and extracting meaningful insights. On average, energy technology leaders are 11 percentage points less likely than the cross-sector average to say they are confident in their organization’s ability to quantitatively measure the value being generated by its technologies. Customer, employee and environmental metrics are the areas where confidence is lowest.

Energy sector executives show good understanding of the value of cyber security

The energy sector’s operations are on a large scale and hence the potential damage from cyber security breaches is high. Many of the technology leaders surveyed appear to understand this well- energy company executives are 9 percentage points less likely than the cross-sector average to say that cyber security is frequently treated as a box-ticking exercise in staff training and is not embedded as extensively as it could be. Moreover, there seems to be a good understanding that cyber security is not simply about protecting against attacks, but also adds value to the company by preventing data breaches and sending a positive message to stakeholders that the company is secure. 

The future for energy

The KPMG publication KPMG global tech report: Energy insights lists seven key recommendations for companies in the energy sector, focusing on investing in and developing new technology, managing legacy technology systems, taking advantage of the benefits of AI, fostering partnerships for innovation, developing the workforce, and effective testing of new technologies. 

How KPMG in Romania can help

KPMG in Romania has a highly qualified and experienced team of professionals who can support energy sector companies in navigating current challenges and preparing for the future. We offer a wide range of services related to digitalization, including our KPMG Trusted AI framework, as well as the support that a client needs to have in place required prerequisites, such as; standardization of processes, good quality of data, effective data architecture and data skills, definition of AI use cases and support during PoC & implementation which helps companies gain the benefits of AI, while also addressing its challenges. Moreover, our energy sector team can support with the transition to clean energy, using our detailed understanding of EU and Romanian legislation, as well as our considerable experience in assisting clients in the energy sector.

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