Energy security concerns outweigh clean and affordable energy on the list of priorities for energy companies globally, as the industry says the energy system will not resolve the energy trilemma in the next decade, according to DNV’s research analyzing the views of more than 1,300 senior energy professionals, based on a survey conducted in December and January.
Energy security will take center stage for oil and gas and power sectors in the year ahead. Renewables players are maintaining their clean-energy focus, while the priorities of industrial energy consumers contrast with their suppliers and partners, as they prioritize accessible and affordable energy.
Just 39% of energy professionals said they are confident about meeting decarbonization and climate targets, yet progress in the energy transition appears to be the greatest driver of confidence among energy professionals for the year ahead, and a majority of respondents said they believe the energy transition is accelerating.
Resolving the energy trilemma—delivering secure, clean, and affordable energy—is viewed by the energy industry as a long-term goal, according to “Trilemma and Transition: The Momentum To Break Barriers,” the latest edition of DNV’s annual research on the outlook for the energy industry. Few in the industry (17%) said they believe the transition will deliver secure, clean, and affordable energy in the next decade to all parts of the energy system in their country. Most (41%) said they see this being achieved in 10–20 years, while a sizable group (32%) said they believe this crucial outcome of the energy transition will not be realized until well into the 2040s. There is general agreement on this outlook across regions, with only energy professionals in North America being slightly more conservative on the timeline.
“The energy trilemma is in focus in 2023 as the energy system struggles on all three aspects,” said Ditlev Engel, CEO of energy systems at DNV. “Russia’s invasion of Ukraine has reminded the world how fragile energy security can be. Coal plants are being fired up while renewables projects come under pressure, and energy consumers are being pressed on the cost of energy.”
“The trilemma is also in transition,” he added. “In a complex and difficult year for the energy industry, we see the trilemma leading to competing priorities. But, in a decarbonized energy system, energy sustainability, affordability, and security actually all pull in the same direction, and the public and private sector can resolve the trilemma through a new approach to scaling and implementation.”
Some 80% of responding professionals in the renewables sector said they believe energy security concerns will lead to increased investment in renewables in the year ahead, while a majority of respondents (61%) from across the energy industry said their company can become more profitable by improving sustainability.
In contrast, a record year of profits for the oil and gas industry has redefined what acceptable profits look like for the sector. In 2022, 52% of surveyed oil and gas executives said that their organization would make acceptable profits if the oil price averaged $40–$50/bbl. For the year ahead, just 39% of respondents said they feel the same. Half of respondents from the oil and gas industry (53%) say that their organization will increase investment in gas in 2023, up eight percentage points year-on-year. Some 43% of the oil and gas industry respondents said they expect to increase investment in oil, up nine percentage points. Oil and gas companies are slowing their shift into areas outside of core hydrocarbons businesses and holding back their focus on decarbonization compared with 2022.
In 2023, responses suggest that the energy industry as a whole expects to increase investment in clean energy sources and carriers. Half of energy professionals responding said they expect their organization to invest in low-carbon hydrogen/ammonia (52%), with similar proportions in wind (49%) and solar (46%). Over a third said they expect their organization to increase investment in carbon capture and storage. In enabling technologies, six in 10 said their organization is increasing investment in energy efficiency and digitalization, and half of the industry respondents said their companies are investing in energy storage technologies.
“The energy transition has accelerated through both a pandemic and an energy crisis, and this has left markets striving to keep up across transmission and distribution systems, supply chains, permitting and licensing, financing, infrastructure, and the workforce,” Engel said. “In the year ahead, we may see a slowing in the scale-down of fossil fuels but potentially also a slowing in the scale-up of clean energy—if barriers aren’t overcome. Governments and policymakers must step up and remove barriers to implementation, and everyone in the energy industry must push forward in the transition.”
DNV’s research found signs that barriers could slow the pace of the energy transition in the year ahead but that momentum is building to break these barriers as societies increasingly feel the effects of climate and energy crises and as bottlenecks become more acute in holding back progress.
There was strong agreement in the power sector about an urgent need for greater investment in the grid, while just one-fifth of respondents in the renewables sector say current transmission capacity planning is sufficient to enable the expansion of renewables.
Three-quarters of the energy industry respondents said that supply chain issues are slowing down the transition, while less than half the industry respondents (44%) said they expect a significant improvement in the availability of goods in 2023.
For the renewables sector, lack of policy/government support and permitting/licensing issues appear to be the greatest barriers to growth, and a strong majority of respondents (88%) say accelerating permitting and licensing is critical to meeting climate goals.
Some 40% of energy company respondents globally said their companies are finding it increasingly difficult to secure reasonably priced finance for projects. Regionally, finance is easier to access for organizations in North America and Europe. By sector, almost half of respondents from power companies (47%) say they are finding it increasingly difficult to secure financing, along with 62% of industrial energy consumers.
About the Research
DNV’s Energy Industry Insights research—now in its 13th year—explores the confidence, sentiment, and priorities for the energy industry in the year ahead.
“Trilemma and Transition: The Momentum To Break Barriers” draws on DNV’s global survey of more than 1,300 senior energy professionals. This is complemented by a program of in-depth interviews with leaders in the energy industry. It is developed and created by teams from DNV and FT Longitude, a Financial Times company.
The research was conducted in December 2022 and January 2023. Survey respondents were drawn from across the energy industry, spanning electrical power, renewables, oil and gas, industry specialists (e.g., in technology, finance, or policy), and industrial energy consumers. The survey respondents represent a range of functions within the industry, from board-level executives to senior engineers.