The trilemma facing the energy industry and how it's dealing with it 

The energy industry is facing a trilemma. Russia’s invasion of Ukraine has exposed the energy industry and the world to the fragility of energy security. Coal plants are being fired up and renewables projects are coming under pressure. And, energy consumers are being pressed on the cost of energy. This trilemma is also in transition. In a complex and difficult year for the energy industry, we see the trilemma leading to competing priorities. But, in a decarbonised energy system, energy sustainability, affordability and security all pull in the same direction and the public and private sectors can resolve this threefold problem with a new approach to scaling and implementation.

DNV has just conducted its thirteenth global survey of more than 1,300 senior energy professionals, plus in-depth interviews with industry leaders from across power, renewables, oil and gas and energy-consuming industries. This research explores the confidence, sentiment and priorities for the energy industry across the world in the year ahead. It includes participation across the value chain, from oil and gas producers and renewables generators to the power sector and end users.

In a complex and difficult year for the energy industry, the trilemma is leading to competing priorities. Few in the industry believe the transition will deliver secure, clean and affordable energy in the next decade to all parts of the energy system in their operating countries. Perhaps the most concerning finding of this research is that only 39% feel optimistic about reaching their organization’s decarbonisation targets, with as much as 29% feeling pessimistic about this goal.

The energy transition has accelerated through the COVID-19 pandemic and the energy crisis. This has left markets striving to keep up, across transmission and distribution systems, supply chains, permitting and licensing, financing, infrastructure and the workforce. Barriers could slow the pace of the energy transition in the year ahead, but 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.

Optimism remains strong across the energy industry, but only the oil and gas sector shows improved sentiment.

The oil and gas industry has increased expectations for oil and gas investment in the year ahead, as a record year refines what acceptable profits look like for the sector. Oil and gas companies are slowing their shift into areas outside of core hydrocarbon businesses and holding back their focus on decarbonisation compared to 2022.

The renewables sector is expanding at speed, despite the challenges of power grid capacity, energy price volatility, inflation, supply chain failures, regulatory red tape and delays in supporting infrastructure projects.

There has been a sharp drop in the proportion of electrical power respondents optimistic about industry growth for the year ahead. Half now say they are more focussed on short-term than long-term strategies, up from 34% a year ago.

The energy industry has strong expectations to increase investment in clean energy sources, carriers and enablers, however. Half of the energy professionals involved in the research expect their organizations to invest in low-carbon hydrogen/ammonia (52%) in the year ahead. There are similar proportions when it comes to wind (49%) and solar (46%). Over a third (37%) expect their organizations to increase investment in carbon capture and storage (CCS), while 57% say CCS will scale up rapidly in the next five years.