Post - Blog
Powering the future: transforming energy, utilities, and resources in 2025
- 10 days ago (2025-02-11)
- Junior Isles
Carol Johnston , VP Energy, Utilities, Resources, IFS
All Energy 2025
The Energy, Utilities, and Resources (EU&R) sector faces a critical period shaped by geopolitical challenges, the urgency of climate change, and rapid technological evolution. In 2024, the industry tackled securing critical metals for renewable energy, saw consolidation in oil and gas, and embraced AI-driven utility solutions. With 2025 underway, the stakes are now even higher, presenting both challenges and opportunities for this sector. From addressing wildfire-related investment gaps to advancing data-driven asset management and virtual power plants, there is a real opportunity for significant transformation.
Global spending will continue to fall short
An intense wildfire season in 2023-2024 highlighted the urgent need for effective prevention and response strategies. Despite growing investments, funding for wildfire mitigation in 2025 is projected to fall short of the target for wildfire prevention. Recent fires, spanning regions such as Greece, Canada, South America, Hawaii, and Chile, caused devastating destruction, with carbon emissions rising 16% above average. This ongoing crisis damages infrastructure and weakens critical assets, such as transmission and distribution lines, which exacerbates the risk of future wildfires.
Utilities are stepping up mitigation efforts. For example, Pacific Gas & Electric plans to invest approximately $18 billion over the 2023-2025 Wildfire Mitigation Plan (WMP) cycle, while Southern California Edison plans to spend about $5.8 billion. Yet, according to the recent ICF report , Resilient Power: How Utilities Can Prepare for Increasing Climate Risks, there is an estimated investment gap of approximately $100 billion needed to mitigate wildfire risks to utility grids.
To address this, the sector is leveraging advanced technologies, including artificial intelligence to identify high-risk areas, automated shutoff systems to prevent ignition during hazardous conditions, drones and satellites for hazard detection, and smart sensors for real-time fault monitoring. These innovations not only enhance safety but also provide cost-effective alternatives to traditional methods, offering partial solutions to the funding deficit.
Data-driven decisions will transform asset optimisation
Data-driven decision-making will revolutionise asset optimisation in 2025. Historically, large-scale investments in the EU&R sector faced challenges due to limited data availability, leading to reliance on rough estimates and intuition. This approach proved inadequate, with over 91% of major projects exceeding schedules or budgets . To overcome these inefficiencies, the industry is adopting comprehensive asset lifecycle management systems that integrate industrial AI, predictive maintenance, and advanced investment planning.
This shift allows organisations to gain detailed insights into their assets’ conditions, maintenance histories, and costs. By analysing this data, companies can make better-informed decisions that prioritise long-term sustainability and resilience.
Predictive maintenance is becoming particularly valuable, enabling companies to forecast equipment failures and schedule maintenance proactively, reducing downtime and extending the lifespan of critical assets. These tools also improve risk management, regulatory compliance, and scenario planning, which are essential for navigating the complexities of the sector.
Virtual Power Plants will reshape energy management
Virtual Power Plants (VPPs) are also set to disrupt the industry, as demand is estimated to reach $6.2 billion by 2028 with a CAGR of 21.5% .
The steep decline in solar photovoltaic module costs, coupled with the rapid expansion of renewable energy capacity, is driving this growth. Different regions are deploying VPPs to tackle specific challenges. In the United States, VPPs are part of efforts to improve grid flexibility and resilience. Germany uses them to integrate renewable energy into the grid, while the UK employs VPPs to balance supply and demand during peak periods.
Australia’s widespread rooftop solar installations make VPPs essential for managing variability and providing grid services like frequency regulation. Japan leverages VPPs to enhance grid stability and energy security while supporting renewable energy integration. This rapid adoption requires significant investment in asset lifecycle management to support the complex and interconnected networks created by VPPs.
Advanced technologies will drive resilience and competitiveness
As 2025 approaches, the EU&R sector continues to grapple with uncertainties, including shifting geopolitical dynamics and the intensifying impacts of climate change. However, the integration of advanced technologies, such as industrial AI, and the investment being made in building resilient infrastructures are equipping the industry to build flexible and adaptive business models. These models are critical for seizing emerging opportunities and addressing challenges effectively.
Innovative technologies like virtual power plants illustrate how the sector can reimagine traditional systems to promote sustainability and reliability. Addressing the wildfire funding gap through advanced solutions demonstrates the industry’s commitment to resilience and environmental stewardship. At the same time, data-driven strategies are ensuring that companies remain competitive in a fast-changing environment.
Over the next year, the EU&R industry is poised for transformative change. By leveraging cutting-edge technologies and making strategic investments, it is well-positioned to navigate the challenges ahead, building a more sustainable and reliable energy landscape for the future.