Powering the future: drivers of change in the energy sector

Demand is putting significant pressure on the energy sector. GHD’s SHOCKED report, with insights from 450 energy sector decision makers, found that supply remained the number one concern globally for their organisation. The research, conducted in 2023, also found that energy companies could supply energy at normal levels for just 70 days if their imports were cut off. Two years later, this challenge is being exacerbated by the dramatic rise in AI capabilities as tools such as ChatGPT and Microsoft Copilot have become mainstream. Estimates from Goldman Sachs forecast that AI will drive a 160 per cent increase in data centre power demand. These facilities require highly reliable, often self-generated power. 

 

Technology advancements also bring real benefit to the sector. AI-enabled tools are helping to identify efficiencies and new ways of working, and new technologies are creating opportunities for affordable, renewable energy.

 

The energy sector needs to balance the polarities of decarbonising and securing the reliability of the grid while expanding grid capacity to meet rising demand driven by digital infrastructure and energy independence. 

 

While energy providers remain committed to decarbonisation and the broader transition from fossil fuels to renewable energy, strategies are evolving in response to market and stakeholder pressure.  

Different countries need to approach energy challenges according to their unique circumstances and needs. Emerging economies are asserting their right to utilise their natural resources, and investment is needed to enable them to shift rapidly to more sustainable energy sources.

4. The energy mix:
Maintaining a diverse energy mix is seen as essential for the long-term stability of the market. For example, GHD’s Hassan Modarresi suggests that, when integrated with other renewable sources, ammonia can be a safe, low-emission power solution for data centres. 

The rise of AI and large data centres is a major driver of new electricity demand. These facilities require highly reliable, often self-generated power, creating opportunities for innovation in grid modernisation and behind-the-meter generation.

 

The intermittent nature of renewables means that new classes of customers, such as data centres, need either constant power sources or renewables combined with storage solutions. 

Regulatory processes often take much longer than anticipated, impacting the deployment of new energy solutions. Carbon capture and storage is still expensive, mainly due to the high cost of capture technology, despite storage itself being relatively straightforward.

 

Artificial intelligence is already being used to optimise energy demand, which is currently a cost-effective strategy for managing the energy transition. There is hope that AI could eventually drive breakthroughs in technology, such as nuclear fusion, but for now, its main benefit is operational efficiency.

 

There is an increasing understanding that effective stakeholder engagement is crucial, especially in communities who are directly impacted by technologies such as wind and solar. In Canada, we’ve seen a focus on bringing indigenous communities to the boardroom, moving beyond stakeholders to shareholders. 

 

Energy is an existential issue that deserves careful, strategic discussion at the highest level. The value chain for energy is evolving rapidly, with traditional energy companies often lacking the infrastructure to meet new demands, resulting in significant industry shifts.  As demand increases, business leaders must take a holistic view of energy expansion, considering all available forms and not treating it as a zero-sum game. 

 

Learn more: GHD’s SHOCKED report.