2023 Energy Trends: Renewable Energy and Oil and Gas Market Analysis


To learn where the renewable energy and oil and gas industries are situated as we begin the year, we spoke with Josh Fox, SparkCognition’s Director of Product Marketing.

What are some of the major trends driving the renewable industry right now?

Renewables is in a really exciting and healthy space. It’s on track to transform the global power mix in the next five years, with the potential to provide up to half of all generated electricity in the U.S. by the end of the decade. The most recent data has renewable energy generating about 25% of US energy this year, which is incredible.

And we see this in continued growth in CAPEX investments. Clean technology investments have been soaring. This has gotten a shot in the arm with the spike in oil prices coming out of the pandemic and the recently passed climate bill. The trend spans all renewable categories: solar, wind, and storage.

Where do you see storage heading?

Storage is such an interesting story because for renewables to take over the world’s generation needs, it will require adequate storage capacity to have that come to fruition. And so we’re seeing growth rates exceeding 30% annually in that space. A majority of new projects are now building solar with storage together right up front.

Another big storyline is oil and gas producers are starting to accelerate their transition plans to have renewables become a more significant part of their asset portfolio going forward.

What operating challenges are renewable energy operators facing on a macro level?

There are a number of operating challenges. In the U.S., one of them is cumbersome permitting regulations for interconnection, which has already been a headwind for many large projects. In many cases, it’s actually easier to build out a new project than it is to hook it up to the grid. Legislation targeting this challenge has stalled in Congress and will require bipartisan support to enact critical reforms.

Like other sectors, supply chain issues have also challenged the renewable industry. Deglobalization and re-shoring are factors to consider as well. Solar panel supply issues are a particularly worrisome threat to ongoing solar capacity growth in the U.S.

How are recent events, like the economic downturn and the war in Ukraine, affecting the renewables industry?

The ESG movement appears to have lost some steam with the refocus on earnings and stock market performance in the current economic climate. But energy security needs are still top of mind the world over, driven primarily by Russia’s invasion of Ukraine and the ongoing war there, plus lingering impacts from the pandemic that have also contributed to greater volatility in oil prices.

Having said that, renewable energy demand remains high. Operators are still very focused on improving their asset performance and production, getting more out of what they already have, and using advanced forms of decision intelligence across their operations to manage increasingly more complex fleets.

And this is exactly what SparkCognition Renewable Suite provides, as an AI-enabled, dedicated renewable energy management system that combines advanced analytics, predictive maintenance, asset performance management capabilities, and more for this incredibly fast-growing industry.

How do you view the O&G industry as we start this year?

O&G is very interesting right now, too. If you look at earnings reports, these companies are generating record amounts of cash. This would ordinarily motivate them to increase their CAPEX budgets. Yet they haven’t done so commensurate with the amount of money they’re generating–certainly not as much as they’ve typically done during boom cycles.

If you think about the forces that are affecting oil and gas—between what happened with the oil price energy crisis from the pandemic to the rise of ESG, the current focus on earnings, and the energy transition that is well underway for most of these large oil and gas companies—this actually makes sense.

How have recent events affected the O&G industry?

While sustainability and ESG have lost some momentum for some industries, it remains a top priority within oil and gas, especially in their mergers and acquisitions transactions. We’ve seen a number of divestitures over the past year made for the sake of rebalancing carbon portfolios and an increase in spending on low-carbon and net-zero initiatives. There’s a lot of attention on more efficient production and strategic development of fields that the supermajors are already focused on.

What operating challenges are affecting O&G today?

A major challenge we’re monitoring is the problem of replacing, training, and retaining talent—workers and subject matter experts. It’s a universal theme across industries these days. Talent scarcity is a real problem. The O&G workforce is getting younger. Some are leaving for green jobs. There are fewer mentors to go around. As the older and more experienced workers retire out, a lot of tribal knowledge is lost, and companies are not able to replace them with workers that have the same skill levels.

Artificial intelligence will help, enabling automation and fast and accurate knowledge sharing. SparkCognition has a track record of developing products that address this challenge. For example, natural language processing, visual AI, and predictive maintenance offer proven and scalable solutions to augment human intelligence.

Where is the industry investing right now?

Digging into some of the CAPEX spending, for example—two of the largest producers recently released their plans for the next several years. The numbers are on the higher end of the range they had previously given but still substantially lower than pre-pandemic investment levels. One is looking to spend about $17B this next year, although they were averaging about $30 billion in annual capital spending until recently. So it is quite a bit less, but where is that money going?

The answer is into very strategic areas, like 20% going into Gulf of Mexico projects and a sizeable amount for downstream initiatives. But a large portion is now going for projects with a low carbon focus. Another supermajor is sending 70% of its capital investment into highly strategic deployments. We can extrapolate from this that they have to extract more value from their existing fields and operate with greater efficiency. It’s going to come down to their ability to properly manage and maintain their assets and become more efficient in the workflows and operations around those assets.

How are they addressing asset performance and worker safety?

Spending in asset-intensive industries on AI/ML-based tools and asset performance management (APM) systems continues to grow at a healthy pace. The sector that spends the most in this APM category is oil and gas. They are adding AI-based solutions and deploying this technology at scale more and more.

Improving asset reliability and integrity is a high priority for oil and gas operators, along with health and safety. HSE is essentially a cultural cornerstone for the industry, and there is an appetite for intelligent solutions that improve worker safety. SparkCognition is well-positioned to help the oil and gas industry in these areas with our Maintenance Advisor product and our Visual AI Advisor product.


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