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Energy & Utilities 2025 White Paper

The document discusses the future of energy and utilities, emphasizing the importance of AI and renewable energy in achieving net-zero emissions. It highlights the challenges of decarbonization, the rise of prosumers, and the need for robust supply chains in the renewable sector. Additionally, it addresses water scarcity and the role of advanced technologies in improving asset management and public trust in water companies.

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0% found this document useful (0 votes)
40 views18 pages

Energy & Utilities 2025 White Paper

The document discusses the future of energy and utilities, emphasizing the importance of AI and renewable energy in achieving net-zero emissions. It highlights the challenges of decarbonization, the rise of prosumers, and the need for robust supply chains in the renewable sector. Additionally, it addresses water scarcity and the role of advanced technologies in improving asset management and public trust in water companies.

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betas.samples0z
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Defining the future

of energy and utilities:


AI, Renewables, and the Path to Net Zero
Energy and Utilities in 2025
As countries around the world grapple with the dual challenge of
stabilising energy production and the need for decarbonisation, it is a
pivotal time for the energy and utilities sectors. Climate commitments,
machine learning, AI tools and ongoing geopolitical tensions are fueling
a shift in how energy is produced, distributed and consumed.

Climate commitments setting long Following Trump’s return to the White House, the US
has once again begun the process of withdrawing
term direction of travel
from the Paris Agreement and reducing financial
At the G20 Summit in November 2024, leaders support for developing countries transitioning


reaffirmed their commitment to the Paris to renewable energy. The latter was one of the
Global emissions Agreement, maintaining focus on limiting breakthrough agreements from COP 29, where
temperature increases to 1.5°C. While some attendees committed to tripling the finance given
have not yet peaked, countries may prevaricate, the long-term global to developing countries, from $100 bn annually, to

despite greenhouse direction remains clear: decarbonisation is non-


negotiable.
$300 bn by 20352.

gas levels reaching a

“ “ Energy
record high in 2023...
demand is forecasted to
rise by 2% annually for at least

11.4% the next decade .



1

in 20 years
Tariffs and trade barriers present challenge Renewables giving more power to the
to global decarbonisation people
The supply chain chaos of the recent energy crisis offers valuable Renewable energy production is increasingly giving traditional
lessons to the renewable energy sector on the need for robust and consumers a bigger stake in the energy industry. More and more
resilient supply chains. However, research from the International consumers are beginning to produce some of their own electricity,
Energy Agency (IEA) shows a sharp increase in trade measures becoming what is known as ‘prosumers’. This is driving the
affecting clean energy technologies. Since 2020, almost 200 global use of decentralised local energy generation, presenting
measures – many of them restrictive – have been introduced challenges to traditional grid models that the next generation of
globally, compared to just 40 in the previous five-year period. AI-powered technologies are attempting to solve.


Take wind energy supply chains: China dominates approximately
90% of the global production of rare earth elements needed for
the permanent magnets used in wind turbines3 and manufactures Renewables surpassed
60% of the world’s wind turbines4. In December 2024, China
placed export controls on materials including germanium,
30% of global electricity
gallium, graphite and antimony to the US, sparking concerns of generation for the first
a potential trade war similar to the 2018 tariffs and other trade
barriers imposed on China by the USA.5 time in 2023, with solar
power leading the charge—
Momentum and capital firmly behind
producing over twice as
renewable energy


Right now, the world invests almost twice as much in renewable
much electricity as coal7.
energy as fossil fuels, with annual investment in renewables
approaching $2tn.6

A milestone in this shift was the closure of the UK’s last coal-fired
power plant in September 2024. The UK was the first country
to use coal to generate electricity and after 142 years of near-
constant usage, it is the first G7 country to completely phase out
coal power8.
Defining the future of energy and utilities
This white paper explores these trends ahead of

TAC Insights’ 11th SAP for Energy and Utilities Conference.


We’ve spoken with several industry experts who’ll be attending the conference to better
understand the future of these industries, including:

Decarbonisation and the energy transition

Transformations in the water industry

Advances in asset management

A new customer experience


Decarbonisation and the energy transition
Contributor: Henrik Ostermann, Business Development Lead Utilities at SAP
To successfully address climate change, decarbonisation and the energy transition are
critical. However, the public and private sectors still have different ideas about what that
future looks like.

Oil and gas sector sending mixed messages Some oilfield companies are also diversifying their operations to
include carbon capture, usage and storage (CCUS) and hydrogen
on decarbonisation
generation. For example, Baker Hughes is developing supercritical
In May 2021, the IEA said that if the world is to keep temperature carbon dioxide turboexpanders for NET Power’s groundbreaking
rises below 1.5C by 2050, all new fossil fuel exploration must stop. power plants, which aim to deliver clean, efficient and cost-
Despite this, the oil and gas industry is set to spend $104bn in effective electricity while capturing CO₂ emissions.12
deepwater drilling this year (forecast to rise to $140bn by 2027). 9

“ 41%
In fact, the new oil and gas licenses awarded in 2024 are forecast
to generate 11.9 bn tonnes of emissions, more than all three
intervening years combined.

Research by EnerBlue, based on Nationally Determined


Contributions and other national pledges, suggests that even by
2050, 41% of energy consumption will still come from fossil fuels.10
There are, however, ongoing efforts from the fossil fuel industry
of energy consumption
to operate in a greener fashion, with efficiencies being made to will still come from


reduce emissions. For example, Shell’s new Vito oil rig 150 miles
south-east of Mexico produces barrels with among the lowest
fossil fuels.10
greenhouse gas emissions in the world.11
Balancing returns with commitment to International Climate Finance
between 2021/2 and 2025/6, the UK announced
decarbonisation creating
a funding package at COP 29 to help developing
challenges for firms nations transition away from fossil fuels. Likewise, the
For oil and gas companies, there are significant EU is accelerating its adoption of renewable energy
pressures to balance near-term shareholder returns through the REPowerEU Plan, which plans to invest
with the need to decarbonise. As such, currently, €210bn in the public and private sector by 2027.16
major oil and gas companies typically allocate
less than 25% of their new investments into new Several oil-rich Middle Eastern countries have also
energies. This isn’t necessarily the best business accelerated efforts. By 2031, the UAE plans to build
approach. McKinsey research has suggested that two carbon capture, utilisation and storage projects
significant financial gains, so far as company to capture emissions from gas-processing plants
valuations are concerned, are seen when more than and is seeking to produce 1.4 million tons of green
40% of leading oil and gas companies’ operations (from electrolysis) and blue (from steam reforming)
are directed towards low, or no-carbon energy. 13 hydrogen annually. It is also planning the world’s
largest single-site photovoltaic array. Meanwhile,
Currently, the costs of producing renewable energy Saudi Arabia’s $1.5bn NEOM project hopes to
at sufficient scale to fully transition are too high for build futuristic cities wholly powered by renewable
traditional companies to stomach, particularly when energy.17
scaling technologies such as green hydrogen and
CCUS. Global investment in clean energy now significantly
outpaces fossil fuel investment but there’s still
considerable work to do.
Green hydrogen production More governments worldwide

$80bn
costs are highly sensitive to pledging to transition away from
energy prices, especially in
Europe where energy prices
carbon
For governments, however, transitioning away from
“ Over
per year of investment is
fossil fuels remains the priority. The UK, for example,
are high. Even with proposed aims to reduce its emissions by 81% by 2035. Its
required worldwide from
subsidies of around €3/kg,
green hydrogen often fails to
government has set out the Clean Power 2030
plan, which aims to build an energy system that will
bring down bills for households and businesses. 15
now until 2050 to reach
net zero emissions. “
be cost-competitive with grey According to the IEA.18
UK Energy Secretary, Ed Miliband, said this was
(produced from fossil fuels) or the ‘most ambitious reforms to the UK energy
blue hydrogen.14 system in generations’. And, as part of its £11.6bn
Better energy forecasting and storage is already pioneering an innovative approach to grid balancing,
rewarding consumers for optimal energy use and discharge
central to achieving decarbonised world
while exploring vehicle-to-grid technology. These technologies
A key technology for the post-fossil fuel era will be battery storage, are optimising energy costs for the consumer by charging when
through which energy companies and governments can stabilise electricity prices are low and discharging when the prices are high.
networks that increasingly rely on the peaks and troughs of
renewable energy generation. In November 2024, the IEA stated In the not too distant future, this could mean a fundamentally new
that grid-scale energy storage is now the fastest growing of all approach to how we consume and store electricity in our day-
energy technologies, estimating that 80 gigawatts of new energy to-day lives, says Henrik Ostermann, Business Development Lead
storage capacity will be added in 2025 (8 times the amount added Utilities at SAP. ‘You’ll come into the office with your EV and charge
in 2021).19 it at the office, using electricity generated by huge photovoltaic
plants. Then take the electricity back with you and discharge it to
Currently, renewable energy production relies on the right weather power your home.’
conditions, with accurately forecasting the weather a prerequisite


for forecasting energy generation. In late 2024, Google Deepmind
presented GenCast in, an AI-powered diffusion model, that in Grid-scale energy storage
testing was found to be more accurate than the European Centre
for Medium-Range Weather Forecast’s ensemble weather models
is now the fastest growing
97.2% of the time. With lead times of greater than 36 hours, it was of all energy technologies,
more accurate and 99.8% of the time.20
estimating that

80 giga
This advancement in medium and long-range forecasting is
essential for managing grid reliability, especially as consumer
energy consumption habits change as electric vehicles (EVs)
and heat pumps become increasingly commonplace. More
sophisticated battery technology will enable energy transfers
watts
independent from traditional grid infrastructure.
of new energy storage
These sorts of energy transactions will require AI tools to better capacity will be added in
predict novel flows of energy generation and consumption,
particularly if high-capacity batteries enable energy movement 2025 (8 times the amount


independent of the traditional grid infrastructure. Sweden’s Tibber added in 2021).19
Water scarcity and a new approach to distribution
Contributor: Miquel Carbo, Director of Water and Waste Management at SAP
Water scarcity is a growing concern, exacerbated by aging infrastructure and new
environmental regulation. As a result, water companies are having to implement costly
measures such as buying water from neighbouring countries or municipalities, desalinating
water from the sea or reusing treated wastewater to make it drinkable again. For water, it’s
also created what Miquel Carbo, Director of Water and Waste Management at SAP, calls a
consumption paradox: ‘The only income water companies get, if it’s not from the regulatory
authorities or the taxpayer, is from selling water. But simultaneously they are proactively
campaigning for citizens to consume less.’ Today, water companies and the public are having to
significantly alter their approach to sourcing and distributing water.
Recycled wastewater crucial in future New technologies central to combating
balance of water supply water scarcity
For centuries, water companies were generally able to transport Battling water scarcity is complicated by aging infrastructure and
water to consumers using gravity-fed systems, especially in regions the fact that ‘there is still a very significant lack of understanding
with favorable topography and mountainous water sources. about the composition, status, and in some cases the exact
Climate change means this is increasingly challenging. location of water companies’ own assets, as water networks
For Carbo, the solution is simple: ‘recycling wastewater is the are underground and many companies do not have the right
future.’ However, this is costly and ‘microplastics and new information’, says Carbo. Water companies aren’t naive to this,
pharmaceuticals in the water supply present challenges that and are adopting new technologies such as advanced acoustic
wastewater plants are not yet equipped to address’. The EU’s sensors to fully understand the status of their pipes. The issue, says
response has been to implement extended producer responsibility, Carbo, is that ‘many companies are implementing isolated proof
requiring pharmaceutical and cosmetic companies to cover at of concept technologies – resulting only in a host of disaggregated
least 80% of the costs for advanced wastewater treatment. There use-cases, not a systemic overhaul.’
is a long way to go, as currently 80% of all wastewater worldwide
remains untreated.22 However, concepts such as Integrated Water Management (IWM)
– an approach that acknowledges the interconnectedness of

Restoring public trust in water companies a water systems to optimise water usage – is building momentum
and bringing a holistic approach to deploying new technology.
key focus worldwide Foundational IT infrastructure systems (e.g. SCADA, GIS) have
With millions of litres of raw sewage being released into waterways reached a sufficient level of maturity. IWM aims to aggregate
every year, persuading consumers that recycled water is safe to the data and connect it all together to drive what Carbo calls ‘a
drink poses a tough PR challenge for water companies. A study data driven organisation’, one which takes decisions based on
published in Nature Communications found that 52.3% of adults real-time current data. Real-time data about the location and
worldwide expect to be seriously harmed by their drinking water condition of pipes not only ensures efficient maintenance of aging
within the next two years.23 systems but also enables water companies to strategically plan
new infrastructure closer to emerging sources of water, such as
Regaining the public’s trust is vital for helping them overcome desalination plants and recycled wastewater facilities.


the ‘yuck’ factor around recycled water. This requires significant
education and awareness campaigns as well as proactive
regulation from the necessary governing bodies. San Diego, for
Regaining the public’s
example, recently began reusing its wastewater directly into its trust is vital for helping
potable network, hoping to have 18% of its water from this supply
by 2045.24 Vital work in a city that experiences fewer than 12 them overcome the
‘YUCK’ FACTOR
inches of rainfall a year.


around recycled water.
AI and asset management
Contributors:
Miquel Carbo, Director of Water and Waste Management at SAP
Mateu Munar, Senior Director, Industry Business Unit Utilities at SAP
Henrik Ostermann, Business Development Lead Utilities at SAP
Effective asset management is vital in maintaining reliable and efficient
networks, especially when many of these run on infrastructure that’s
decades or even centuries old. A new approach to real-time maintenance
and management, powered by AI technology, is helping companies
optimise their assets.

AI powering shift from reactive to Researchers in China recently developed a model


for anomaly detection in smart power distribution
predictive maintenance
systems by combining two advanced machine
AI has the power to transform asset management in learning techniques: Transformer deep learning
the energy industry. Its potential can’t be realised, models and Generative Adversarial Network
however, without further digitalisation. Fortunately, (GAN) technology. The Transformer model excels
that work is slowly but surely underway. The IEA’s at reviewing data to identify long-term patterns
2024 report, ‘Tracking Clean Energy Progress’, found in power flow. The GAN generates synthetic data
that worldwide grid-related investment in digital based on normal power distribution, training the
technologies has increased by over 50% since 2015, system to recognise normal and flag abnormal
with the EU, for example, investing €170bn in grid states. Combining these technologies, this model
digitalisation by the end of 2030. can accurately detect anomalies and alert networks
to faults or issues before they become critical. It has
Once networks are sufficiently digitalised to allow achieved an accuracy of over 95% in identifying
for real-time data collection and aggregation, abnormal grid states, significantly outperforming
AI-powered tools can be layered on top to detect traditional methods.25
anomalies in power systems and develop solutions.
But arguably, where AI will have the biggest impact is precipitating a
transition from following maintenance plans to carrying out predictive
maintenance.

‘For large investments – transformers, IoT devices aren’t new, but proper
for example – predictive maintenance integration will unlock their full
can save a lot of money as the potential
maintenance happens when it is This transformation is being further aided by a
necessary, not when the manufacturer shift in how Internet of Things (IoT) technologies
says you have to.’ in consumers’ homes monitor usage patterns,

– Henrik Ostermann, Business improve asset maintenance and enable smarter


energy systems. While IoT devices facilitate demand
Development Lead Utilities at SAP
response and efficiency, their real value lies in
supporting better asset optimisation and predictive
Manufacturers are building cloud systems, such as insights for energy providers.
SAP’s Business Network Asset Collaboration, to give
an overview of all their installations worldwide. This However, ensuring seamless interconnectivity among
allows them to monitor their assets in real-time these disparate IoT devices remains a significant
and check an individual installation against its peer challenge. ‘There is an ecosystem of vendors and
group. When something goes wrong AI is also being devices,’ says Mateu Munar, Senior Director, Industry
used to streamline maintenance work with route Business Unit Utilities at SAP, ‘some of which are
optimisation for technicians, reducing costs and owned by the utilities companies, some of which
network disruptions. are owned by third parties. And they have different
protocols and communication methods among
Companies such as sees.ai are now using satellite them.’
imagery or drones to monitor their assets and
feed the data into AI models to interpret the data
they collect. These drones can assess vegetation
encroachments and some are capable of trimming
back branches, detecting ground subsidence around
critical assets and use infrared cameras to detect
wiring errors or failures in solar panels.
Once this integration challenge is overcome, IoT systems can For water companies safeguarding aging infrastructure, acquiring
provide consumers with better insights into their energy data, quality data about their network is a critical issue. In any given
such as how much energy individual appliances consume, helping water network ‘there are tens of thousands of leakages occurring
optimise their energy use, shift tasks to off-peak hours and align permanently’, says SAP’s Miquel Carbo. A digital twin solves this
personal habits with grid efficiency. problem, providing a high level of accuracy about any given pipe.
‘Water companies are able to create a network of algorithms
For utilities, integrated IoT systems promise to enhance asset based on existing data from their Supervisory Control and Data
management by providing real-time diagnostics and predictive Acquisition (SCADA) systems and monitor all those leakages across
maintenance, reducing downtime and optimising resource thousands of kilometers.’
allocation. Collaboration between utilities, technology providers
and regulatory bodies will be essential to standardising protocols Through the use of digital twins and simulations, together with
which will unlock the full potential of interconnected systems. generative AI, utilities companies can offer their customers
personalised advice on energy saving, make proactive service

Digital twins, augmented by AI, mean better adjustments, or even help them plan new installations. AI has
a huge role to play here, says Ostermann. ‘It could act as a
real-time asset management consultant for consumers and do a proper job of analysing their
Digital twins are virtual replicas of the power grid, water networks infrastructure and coming up with proposals.’ This shift will
and utilities pipelines which help provide real-time data on a improve the offering of utilities companies to their
number of assets. They can help companies clarify cause and customers and at the same time free up the
effect of events within their supply chain by running simulations time of their service technicians.
to predict future power consumption, or peak load times and
balancing options and uncover potential defects – without the
need for real-world outages. AI integration into a digital twin helps
combine disparate data sources, providing a comprehensive view
of operations in real time.

“ Water companies are able to create a network


of algorithms based on existing data from
their Supervisory Control and Data Acquisition
(SCADA) systems and monitor all those


leakages across thousands of kilometers.
Changing customer experience and
rise of the ‘Prosumer’
“ Decentralised
renewable energy Contributors:
Mateu Munar, Senior Director, Industry Business Unit Utilities at SAP
producing assets are Henrik Ostermann, Business Development Lead Utilities at SAP
known as Distributed The fundamental requirements for generating and using renewable
Energy Resources energy remain the same worldwide, but distributed renewable energy
(DERs) and they technologies are changing the game for consumers and companies.
generate, store, or Renewable energy technologies are giving consumers more control over
their energy production and consumption, but pose a variety of challenges
manage energy at to legacy infrastructure and utilities companies around the world.
or near the point of


consumption. Microgrids and Distributed Energy Resources addressing energy
challenges across developing economies
Research from the Oxford Institute for Energy Studies found that DERs are seen as the preferred energy
alternative in low-income economies, especially in areas where it is difficult to access reliable grid-
connected electricity.26

For example, Ethiopia, supported by a World Bank-funded initiative, is establishing microgrids, some
independent and others semi-connected to the main grid, to provide essential electrification in regions
where traditional grid expansion is not feasible.27 And in Ukraine, decentralised energy systems have
become crucial for maintaining energy supply in the face of infrastructure attacks.

DERs changing consumer behaviour challenging traditional grid models


in Europe and the USA
The DER market in the US is projected to nearly double in capacity by 2027, with capital expenditure
reaching $68bn per year.28 The rise of DERs is requiring energy businesses to adopt models and
tailor customer engagement to incentivise end-user participation in energy markets, enabling
the buying and selling of energy to and from the grid.
“ ‘Prosumer’ is a
portmanteau of
‘producer’ and


‘consumer.’

The European Union, for example, is making sure that there is Aggregation technology central to
collaboration and connectivity across all types of DERs. One such
optimising energy usage worldwide
project is BeFlexible, with energy companies such as Iberdrola from
Spain, Enel from Italy and EON Sweden partnering together to Despite differing contexts, the technical requirements for these
build an energy flexibility platform across the different countries in systems remain consistent, says Munar. ‘Storage is fundamental
the European market. in order to make sure that you use energy when it is convenient.
Whether at the neighborhood level or with individual batteries,
To overcome regulatory barriers, BeFlexible proposed updated having a proper storage system is absolutely required for
roles for emerging actors like aggregators and energy balancing distributed energy resources.’
communities, alongside innovative flexibility acquisition
mechanisms, including dynamic network tariffs and local Standardisation will help considerably here. ‘We cannot survive
flexibility markets. These regulatory and market adaptations aim with everyone bringing their own technology to connect with
to enhance interoperability, ensure secure data exchange and things. There needs to be protocols and standardisation—just like
establish fair remuneration schemes. Bluetooth allows different devices to communicate. Right now,
that’s a major challenge for our customers,’ explains Munar.
‘Prosumer’ is a portmanteau of ‘producer’ and ‘consumer.’ Energy


prosumers typically remain connected to a central grid, but are
also capable of producing and storing energy. There needs to be protocols
The future for many consumers is transitioning into ‘prosumers’ who
and standardisation—just like
hold a small stake in their respective energy networks. Prosumers Bluetooth allows different
generate their own power – typically through rooftop solar panels
– and sell excess energy back to the grid, often investing in battery
devices to communicate.
storage systems for increased self-sufficiency.
In the future, these virtual power plants will play a critical role in
balancing supply and demand across increasingly decentralised
energy grids. Further advancements in AI, IoT, digital twins and
even weather forecasting will enable providers to better predict
and manage fluctuations in renewable energy production. This will

100
also cement more efficient and resilient energy systems, providing

households will a smoother transition to a clean energy future.

rely on rooftop
million solar by 2030.
“ Further advancements in AI, IoT,
digital twins and even weather
Across the world the number of prosumers is expected to grow forecasting will enable providers
significantly in the next few years, with the IEA estimating that
approximately 100 million households will rely on rooftop solar to better predict and manage
by 2030.29 A key challenge with DERs is the small scale of the
individual resources, says Henrik Ostermann at SAP. ‘Machine
fluctuations in renewable


Learning and neural networks can be used in order to optimise the energy production.
energy flow and find out where – with network simulations and
a digital twin of the physical infrastructure – more wind turbines
make the most sense, or where further battery storage needs to be
added to the system.’ This requires energy providers to aggregate
a huge number of smaller DER assets into a virtual power plant,
helping utility companies to better understand their networks
and plug any gaps, mitigating the volatility of renewable energy
production and consumption.
Defining the future of energy
Whether you’re a policymaker, business leader, or consumer, we must work together to fuel the
transition to a more sustainable, resilient and equitable energy and utilities future.

Decarbonisation is a global imperative Tech-driven innovation


The global commitment to net zero is driving significant Advances in AI, digital twins and smart grid technologies are
investment in renewable energy. However, the path to transforming asset management, optimising energy distribution
decarbonisation is fraught with obstacles, including geopolitical and enabling predictive maintenance. These technologies are
tensions, trade restrictions and the need for massive infrastructure critical for improving efficiency and integrating DERs into existing
investment. systems.

Addressing water scarcity Empowered consumers


Water scarcity and ageing infrastructure are pressing challenges The shift from consumers to “prosumers” is redefining the
for utilities companies. Innovations in desalination, wastewater energy landscape. Households and communities are increasingly
recycling and integrated water management, supported by digital generating their own power, participating in energy flexibility
tools, are essential for ensuring future access to potable water. markets and taking control of their energy consumption through
AI-powered tools and dynamic pricing models.
Knowledge. Connection. Community.

At TAC Insights, we inspire, educate and connect professionals


worldwide through impactful events and engaging content.

For over 20 years, we’ve focused on sharing knowledge, fostering


collaboration and helping our communities maximise the value of
their technology investments.

www.tac-insights.com

WHO WE ARE
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