What is the energy security shock?

At the centre of the current energy crisis is a severe energy security shock. Leading energy companies that rely on imported or otherwise procured energy have suffered from skyrocketing prices and supply chain disruption. We need to build more robust, independent energy systems that can respond to peaks and troughs in supply and demand.

Energy security has never been higher on the agenda, with three-quarters of sector leaders identifying the security of supply as the number one concern for their organisation.

Geopolitical tensions are a key contributor to insecurity, with international conflict putting those dependent on imported energy supplies and complex global supply chains at risk. Almost three-quarters of energy sector leaders (74 percent) report that geopolitical tensions are reducing energy security within their country. And the energy industry is feeling the pressure from governments to mitigate this shock: 62 percent of sector leaders say their organisation has never felt more pressure from national governments to maintain secure energy supplies.

Despite the pressure to boost security, on average, energy companies report they could continue to supply energy in line with normal demand for just 70 days if they were cut off from energy imports. Even more concerningly, ten percent of respondents indicate they would be able to maintain supply for 20 days or less in this situation.

Amidst rising geopolitical tensions and the digitalisation of energy systems, the energy sector is increasingly vulnerable to cyber attacks. Over three-quarters of sector leaders (76 percent) believe the decentralised nature of modern energy grids has increased the risk of cyber attacks. These attacks can result in supply disruption on an enormous scale, with devastating effects.

Energy companies are aware of the importance of robust online networks to maintain energy security. Sector leaders identify cybersecurity and digitalisation as the top two areas where their organisation has accelerated investment in the past 12 months, and 77 percent identify cybersecurity innovation as an effective strategy for improving energy security. For example, some companies are introducing AI-driven monitoring services into legacy systems to help detect and respond quickly to threats.

Cybersecurity and digitalisation are the top two areas of investment for energy companies in the past 12 months. 77 percent of sector leaders see cybersecurity innovation as key to improving security.