The energy, utilities, and resources (EU&R) sector stands at a transformative crossroads as we navigate the complexities of geopolitical shifts, accelerating climate change, and rapid technological advancement.
In 2024, the sector witnessed the race to secure critical metals for renewable energy, high-profile consolidations in oil and gas, and the rise of AI-driven solutions in utilities. As we look toward 2025, the stakes are even higher.
This year will bring unprecedented challenges and opportunities, from bridging massive investment gaps in wildfire prevention to leveraging data-driven decision-making and expanding virtual power plants. Here are the top trends and predictions set to define the future of the EU&R sector.
Prediction #1 – Global spending on wildfire prevention, mitigation, and response will fall short by over $100B in 2025
After an intense 2023-2024 fire season, investments in wildfire prevention, mitigation, and response will increase substantially – but will remain an astonishing 100 billion below the target for wildfire prevention.
While slightly below the average of previous years, wildfire events were unprecedented in terms of fire carbon emissions (16% above average) and increased in scope, spawning the largest wildfire in the European Union (Greece), record-breaking fire extent and emissions in Canada, drought-driven fires in South America, and deadly wildfires in Hawaii and Chile where hundreds of people died.
Wildfires present a double-sided risk to the industry. Along with significant damage to equipment in the field, the same infrastructure may cause a fire, such as transmission and distribution lines making contact with vegetation to trigger an event.
In 2025, many utilities will invest proactively in wildfire mitigation. For example, Pacific Gas & Electric plans to invest approximately USD 18 billion, while Southern California Edison will spend about USD 5.8 billion. Yet even these substantial budgets fall short, with an investment gap anticipated of approximately USD 100 billion.
Offsetting budget gap with environmental technology
Many EU&R companies will rely on technology to bridge the gap, from existing systems such as enterprise asset management (EAM) to ensure equipment is running and maintained optimally, to innovative advances that leverage operational data, automation, and remote monitoring. Examples include:
- Artificial Intelligence (AI): Identify high-risk areas for wildfires by analyzing weather patterns, vegetation, and historical data. Predict, prioritize, and proactively carry out maintenance and preventive measures. Learn more about Industrial AI.
- Automated Shutoff Systems: Immediately power down specific lines when conditions present the risk of wildfires, such as high winds or line faults.
- Drones: Remotely identify potential hazards (overgrown trees, etc.) that may come into contact with powerlines for a fast, safe, and more cost-effective model versus ground inspections.
- Satellite Monitoring: Maintain a broad view of large areas. Monitor vegetation growth and detect early signs of fires. Generate crucial data to support wildfire planning and response efforts.
- Smart Sensors: Install on powerlines to detect faults, monitor line sag, and identify early-stage issues that may lead to fires. Real-time data enables a rapid response to any anomalies before an event occurs.
Xcel Energy, an IFS client, conducts regular infrastructure inspections using drones and other advances to identify and address potential wildfire risks. The company’s comprehensive wildfire mitigation program keeps powerlines clear of vegetation. Learn more.
These and other technologies support additional efficiencies that will help offset 2025 budgeting shortfalls, extending the ability of EU&R companies to detect and respond to potential wildfire events before they occur.
Prediction #2 – Data-driven decisions transform asset optimization: Investments in asset optimization technology will increase by 15% to support data-based decision-making.
Many EU&R companies struggle to justify business case rationale when proposing new capital investment projects. With little data to put behind these decisions, gaining the support of investors and regulators is difficult at best.
Basing such big decisions on intuition and ballpark estimates is no longer adequate, especially when you consider that a staggering 91.5% of large projects go over schedule, budget, or both.
Some EU&R organizations leverage end-to-end asset lifecycle management, including Industrial AI, asset investment planning, predictive maintenance, and other technologies to better inform business decisions and investments.
Data-based decision-making ensures investment decisions are sound and that proposed projects are worthwhile. The model examines and considers every variable, for example, how to adjust if an unexpected event such as a wildfire or flood unbalances the budget.
The quality of a funding or rate case proposal—and the likelihood it will succeed—is easily quantified by the data used to build it.
Full-cycle lifecycle management
An effective asset lifecycle management solution involves data that supports operational, tactical, and strategic decisions.
Key features include:
- Asset inventory: Assess the condition, location, and maintenance history for a clear overview of assets; prioritize spending and maintenance activities.
- Lifecycle cost analysis: Analyze the total cost of ownership across every asset’s lifecycle (acquisition, operation, maintenance, disposal costs, etc.); improve financial planning and decision-making based on long-term costs associated with assets.
- Predictive maintenance: Leverage AI and machine learning to predict asset failures; schedule maintenance accordingly.
- Regulatory compliance: Ensure asset practices align with regulatory and enterprise requirements; easily prove compliance during audits.
- Risk assessment and management: Assess the risks (operational and safety) associated with asset failures; identify high-risk assets and plan preventive measures to avoid failures and downtime.
- Scenario planning and optimization: Create and evaluate investment scenarios based on factors such as budget constraints, risk levels, and performance goals; make informed decisions based on the outcomes of different scenarios.
- System integration: Seamlessly source data from adjacent enterprise systems such as ERP, GIS, SCADA, etc.; enhance data accuracy and consistency.
- User-friendly interface: Provide users with easy access to the system; optimize adoption and increase productivity.
Following the acquisition of Copperleaf in 2024, IFS is delivering the market’s first truly end-to-end asset lifecycle management solution for EU&R organizations. Learn more.
Prediction #3 –The adoption of virtual power plants will increase over 20% by 2030
As the worldwide grid becomes more decentralized, EU&R companies are implementing virtual power plants (VPP) at an astounding rate. Market demand is estimated to reach USD 6.2 billion by 2028 with a CAGR of 21.5%.
“Virtual power plants have the potential to change the energy horizon by harnessing the electricity from local assets and redistributing that power to where it is most needed—all facilitated by cloud-based software that has a full panoramic view.” Ken Silverstein, Senior Contributor, Forbes
Attributed to the falling price of solar photovoltaic modules (down 80%) and gains in capacity (from 40 GW to more than 600 GW) over the past few decades, critical drivers behind the global VPP market include increases in:
- Renewable energy use in power generation
- Investments in adopting smart grids
- Global demand for electricity
By leveraging VPPs, EU&R companies aggregate or consolidate the increasing number of “prosumer” renewables connecting to the primary power grid. These connections are integrated into the larger control center, making it easier to manage the high volume of small interconnections while gaining important insights into the volume and frequency of the energy produced.
VPP implementations support different use cases across regions. Here are some examples:
United States: The Department of Energy supports VPP projects for grid flexibility, affordability, and resilience. Active projects incorporate solar panels, battery storage, and electric vehicles.
Europe: Germany uses VPPs to integrate renewable energy sources (wind and solar) into the grid.
UK: The UK uses the model to balance supply and demand, especially during peak times.
Australia: With the high penetration of rooftop solar, VPPs help to manage the variability of solar power and provide grid services such as frequency regulation.
Japan: VPPs manage demand response while enhancing grid stability. The country is also considering VPPs to improve energy security and renewable energy integration.
Virtual assets
The explosion of independent energy producers impacts the scope and scale of the operation, adding to the transformers, substations, poles, and millions of other assets already on the grid.
EU&R companies must go behind the meter to manage solar panels and other connected components, modeling and managing within the network to determine load profiles and to inform the projected supply of energy to offset demand.
Implementing VPPs necessitates further investment in end-to-end asset lifecycle management to adequately support such an expansive model.
Summary
As we head into 2025, many unknowns await including the geopolitical landscape and the progression of climate change. By leveraging advances in technology – including Industrial AI – and investing in infrastructure, EU&R companies benefit from a flexible and agile business model to help weather the opportunities and challenges that lie ahead.
