Recent global shifts have highlighted how critical it is for companies to focus on resiliency.
Key takeaways
Whether in the oil and gas, power and utilities, or renewable sectors, companies need to adapt.
From the evolving energy mix to the rise of artificial intelligence, we look at the top issues.
Through 2025, companies in the energy sector will need to adapt their operations proactively to thrive in today’s evolving landscape. This applies across the energy ecosystem, whether oil and gas, power and utilities, or renewable/clean energy companies.
The ups and downs of oil and gas prices, the impact of the evolving energy mix on the power industry, and new energy policies are just some of the factors that businesses in this sector must face. Global shifts of the past few years have also highlighted how critical it is for energy companies to focus on resiliency.
Here are the top six trends RSM has identified for the energy sector:
1. Evolving energy mix and growing electricity demand
The North American energy landscape is undergoing a significant transformation, driven by a surge in electricity demand far greater than what the region has seen in decades. This increase is due to multiple factors, including rising data center demand, electrification, electric vehicle adoption, and new industrial manufacturing and energy facilities with increasing electricity needs.
That rising demand, combined with the continued growth in clean energy sources, is reshaping the industry. There are implications to environmental, social and governance (ESG) goals; tax incentive qualification; and speed to market, among other areas. We expect to see increased partnerships between major technology companies and utility companies to manage this demand spike. It remains to be seen the extent to which the Trump administration’s changes to energy regulatory policy will affect renewables. Their significant advantage in build speed over other sources like natural gas or nuclear, however, means that renewables paired with battery storage are likely to continue their rapid growth. Similarly, hydrogen continues to have a long-term opportunity as a fossil fuel alternative, but uncertainty has increased on near-term progress.
The continued rise in clean energy sources will complement—rather than replace—oil and gas, which will continue to see strong demand for decades. Natural gas especially is positioned to be a key energy source as a lower-carbon coal alternative to fuel increasing power demand. Increases in demand for liquefied natural gas (LNG) globally will drive increases in gas production and LNG export capacity.
Energy sources are evolving as the energy transition continues, and this in turn requires employees with new skills to manage newer energy technologies while also supporting existing processes.
Anne Slattery, industrials senior analyst, RSM US LLP
2. Shifting energy policies and market dynamics
The U.S. economy is undergoing structural change as the era of inexpensive and widely available capital has come to an end. In its place, companies face a higher cost of capital and tighter access to capital. This is driving energy companies toward consolidation and streamlining; it is also causing them to preserve cash and to have a more strategic focus on improving enterprise value through margin expansion and additional revenue opportunities.
The Inflation Reduction Act (IRA) and the CHIPS and Science Act of 2022 shaped a new era of industrial policy that drove increased domestic investment, including in green technologies that support the energy transition. The early days of the second Trump administration signaled a policy shift, with initial executive orders that are more favorable for fossil fuels companies and less so for solar and wind. Still, energy prices and other market factors are major drivers in production, and it is too early to tell just how significant the impact of early executive orders may be. The significant capital investments needed for energy projects mean that uncertainty in how early messages translate into executive and legislative policy will slow final investment decisions until more clarity is available.
Canada is shaping its policies to attract investments in priority sectors, such as clean technology, the electric vehicle supply chain and critical minerals exploration. Governments at both the federal and provincial levels offer investment tax credits and incentives, funding and grants through various innovation funds and programs, government financing, and targeted support negotiated directly with manufacturers.
Energy companies need to understand how to take advantage of these opportunities. This will be especially important as businesses navigate challenges around capital cost and availability, increased scrutiny around carbon emissions and other ESG issues, evolving qualifications for clean/renewable energy credits, and power grid strain from electrification and AI growth. While decarbonization initiatives seem to be deprioritized by the new administration, global regulations around carbon emissions (e.g., the European Union’s Carbon Border Adjustment Mechanism) will keep the issue in focus, especially for global companies.
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3. Supply chain shifts
While delays and cost increases from the pandemic are easing, a variety of complicated factors continue to affect energy companies. Many aspects of the energy supply scramble that started in 2022 continue, but now face additional uncertainty related to announcements of new tariffs, which could send ripple effects through supply chains. Those tariffs could pose a risk to oil demand if it slows down economic growth, even as China’s decreased oil consumption dampens global demand overall and certainly may affect regional or global oil flows. Tariffs on the metals that are used heavily in the energy sector, as well as on countries producing some of our infrastructure equipment, are likely to affect trade flows too.
U.S. companies are also paying more attention to reshoring certain production activities, whether to take advantage of tax incentives or reduce tariff exposure. Recent U.S. industrial policy aims to resolve the supply chain weaknesses of the past few years for technologies and resources critical for the energy transition, whether related to critical minerals, electric vehicles or the semiconductors that are a key part of numerous “smart” devices today used across the energy landscape.
4. Continuing urgency of cybersecurity
Like it or not, companies across the energy value chain are becoming digital companies, and with that comes more opportunities for cybercriminals to compromise businesses. This has contributed to a shifting view on the value of cybersecurity for energy companies; once a cost center that largely focused on reducing risk, mature cybersecurity programs have become a source of competitive advantage.
Energy companies play a key role within critical infrastructure globally, providing the fuel that people, companies and countries depend on—this also makes them the target of nation-state attackers and cyber warfare. As we’ve seen in recent years, successful cyberattacks on critical energy companies can have a crippling effect that spreads quickly.
According to the 2024 RSM US Middle Market Business Index special report on cybersecurity, 28% of middle market executives said their company experienced a data breach in the last year. Thirty percent reported having at least one ransomware attack or demand in the previous 12 months, a small decrease from 35% last year, but a 7% increase from 23% two years ago.
Energy companies—and any third parties they work with—need to raise the bar on protecting themselves in this new world where workers, machines, supply chains and organizations are becoming ever more digitally connected. While energy companies may not have vast troves of personally identifiable information, ransomware attacks can still be costly to operations. Understanding which critical information and processes need protection from potential cyberattacks will be increasingly important.
Energy companies—and any third parties they work with—need to raise the bar on protecting themselves in this new world where workers, machines, supply chains and organizations are becoming ever more digitally connected.
David Carter, industrials senior analyst, RSM US LLP
5. Digitization and the rise of AI
The energy sector faces new pressures and opportunities from the ongoing energy transition and the digitization of industrial processes. To remain competitive and resilient, energy companies are increasing their adoption of automation in business and operational processes, providing improved efficiency, reliability and safety. This will become critical as IT/operational technology networks advance, as Internet of Things-enabled facilities proliferate, and utilities enter a phase of refreshing smart grid infrastructure put in place 15 to 20 years ago to more modern advanced metering infrastructure.
Analytical artificial intelligence technologies, including machine learning, have come front and center as companies digitize their business with use cases ranging from the back office and cybersecurity to field operations and process optimization. Middle market energy companies can benefit from the lessons learned and investments made by early AI adopters—typically larger energy companies—to chart their own adoption journey. To take full advantage of AI, organizations should understand their existing capabilities, determine how to manage new risks and challenges, and collect and refine the data—something energy companies have historically struggled to do.
AI also brings challenges and solutions for the industry from an energy-use perspective. The availability of energy to power data centers is putting pressure on electric utilities to serve the increased demand on the grid, even turning hyperscaler companies into utility investors. Fortunately, AI-enabled hardware and software may also help optimize the performance of the grid and other resources supplying and requiring power across the value chain.
6. The battle for talent
As the energy sector grapples with technology’s increasing role, the impact on its workforce will be significant. The dynamic and fast-paced environment created by today’s advanced technologies combined with the digitization trend—from intelligent robotics to big data and the industrial Internet of Things—will require the current workforce to adapt. Energy sources are evolving as the energy transition continues, and this in turn requires employees with new skills to manage newer energy technologies while also supporting existing processes.
We expect a renewed emphasis on cultivating new skills for an environment where analytics increasingly drive business decisions and humans more commonly coexist with robots. Energy companies will need to reassess and update their training and workforce development strategies to keep pace with this industry shift. Companies will also need to have a clear understanding of which core offerings to focus on and which might make sense to outsource.
As the labor market remains tight, companies will need to be more intentional and creative in attracting and retaining talent, especially amid shifting employee values and demographics.
RSM contributors
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