The energy industry is braced for short-term uncertainty caused by global instability, but remains optimistic in the long-term, according to DNV’s annual Energy Industry Insights survey.
The report finds that political risk is seen as the leading barrier to growth for the year ahead, with the perceived momentum of the energy transition slowing.
According to the survey, only 55% of energy professionals now believe the transition is accelerating, down sharply from 72% last year and 79% the year before.
Moreover, 51% of respondents believe that ultimately, a successful energy transition may negatively impact some communities, this could include economic displacement, uneven distribution of benefits, and prohibitive costs.
Workers in traditional energy sectors may lose jobs without retraining opportunities, and poorer regions might struggle to adopt new technologies, the report found.
In order to address this, respondents stressed the need for affordable, accessible clean energy technologies to be implemented by using innovative funding models to ensure the shift to sustainable energy creates real, lasting benefits for all.
Short-term volatility, long-term optimism, DNV’s 15th annual survey of the industry, has compiled the views of over 1,100 senior energy professionals.
It also revealed that in the short term, businesses, particularly clean energy developers, are concerned they won’t hit revenue or profit targets.
In addition, less money is flowing into projects, with the majority of respondents are deferring investment decisions or choosing smaller projects.
However, long-term industry confidence is underpinned by powerful megatrends including electrification, the urgency of decarbonization, and steady technological advancement.
Ditlev Engel, chief executive of energy systems at DNV, said: “A successful energy transition is not impossible, but the urgency to accelerate action has never been greater.
“The path to a cleaner, more sustainable energy future is inherently complex and uneven, but delay is not an option.
“Immediate, coordinated efforts are essential to ensure momentum is not lost. Geopolitical instability, including trade disputes and economic concerns, is pressuring global energy markets and causing uncertainty.
“These challenges pose threats to progress and require strategic navigation.
“Despite this uncertainty, our industry remains focused on the long-term vision.
“As a whole, we are committed to building a resilient, low-carbon energy system that minimizes emissions, is affordable and sustainable, while meeting the world’s growing energy demand.”
There is notable caution in the renewables sector, with revenue and profit outlooks particularly pessimistic, according to the analysis.
Just 50% of respondents expect to meet revenue targets and only 43% are optimistic about profits, a steep decline from the 75% and 67% reported three years ago.
The result of the economic picture, geopolitical conflicts, and policy uncertainty is that the industry is deferring investment decisions or choosing smaller projects for the time being, with only 39% in renewables expecting their businesses to increase investment in the coming 12 months.
A majority (64%) believe a whole systems approach is impossible without a fully digitalized infrastructure.
Digitalization plays a crucial role in the energy transition. It’s encouraging for the industry that, despite short-term fluctuations, 59% of respondents plan to boost their spending on digitalization-a trend that has remained steady over the past four years.
This investment encompasses technologies such as artificial intelligence (AI).
Aging power grids are proving a major bottleneck, with over three-quarters of power sector professionals citing outdated infrastructure as a barrier to renewables adoption, while 96% call for urgent investment to modernize the grid.