AI to LNG: top themes for the energy sector in 2024
From artificial intelligence to US-China tensions and LNG’s growing role in the global gas market, Eve Thomas offers an outlook on the themes set to shape the energy sector in 2024.
Credit: Golden Sikorka via Shutterstock
The energy sector is preparing for another year of change, as industries globally look for cleaner energy solutions and grapple with fluctuating market prices impacted by the ever-evolving geopolitical scene.
The diversity of AI’s use cases will see the technology continue to be a mainstay of energy companies’ digitalisation strategies into 2024 and beyond.
Gavin John Lockyer, CEO of Arafura Resources
GlobalData analysts have tracked the themes disrupting the industry, assessing which are set to cause the most impactful change. Amongst them, a changing liquified natural gas (LNG) scene promises to remain in the spotlight, whilst developments in artificial intelligence (AI) and cybersecurity are creating a stir.
Artificial intelligence in the spotlight
AI became a key topic across industries in 2023: in a survey conducted by Globaldata, 52.9% of 223 respondents said that they expected to see an increase in investment in AI.
GlobalData analyst Francesca Gregory offers an explanation: “AI has become pervasive in recent years, but the hype surrounding this technology reached new heights in 2023 with the popularization of generative AI. More broadly, AI uses software-based systems and data inputs to make decisions, enabling machines to perform tasks that typically require human intelligence.
“This technology represents a significant opportunity for the energy industry, and in 2024, we can expect new use cases to emerge. AI can provide tangible benefits, with companies in the energy sector investing in areas such as predictive maintenance, renewable forecasting, identification of CCUS storage sites, grid optimisation, as well as predicting energy demand.
The need for skilled cybersecurity professionals in the power sector is driving hiring.
Gavin John Lockyer, CEO of Arafura Resources
“For example, Iberdrola is using AI within its photovoltaic plants to identify anomalies and product faults as well as integrating AI within its customer services to detect fraud. The diversity of AI’s use cases will see the technology continue to be a mainstay of energy companies’ digitalisation strategies into 2024 and beyond.”
Emerging threats drive cybersecurity investment and hiring
As conversations around technology continue to change, cybersecurity is also moving further into the spotlight. “GlobalData forecasts the cybersecurity revenues in energy to reach slightly about $9bn by 2024, a 9.1% increase compared to 2023,” says GlobalData analyst Andres Reyes.
Among the major oil and gas companies that are investing in new cybersecurity measures, Reyes named Exxon Mobil, Baker Hughes, Tullow Oil, Equinor and Repsol as some of the biggest names.
Whilst the cybersecurity theme is set to be prevalent in 2024, there is still misunderstanding and confusion in the sector, with a GlobalData survey finding that only 40% of 354 respondents fully understood the cybersecurity technologies.
As a result, the subsumption of renewable technology into the precarious US-China tech war could spell untold disruption for the global energy sector.
The need for skilled cybersecurity professionals in the power sector is driving hiring. GlobalData’s analysis of jobs trends reveals that hiring activity for cybersecurity roles is consistently increasing. In the six-month period between December 2022 and June 2023, there was a 33.9% increase in tracked active roles in the sector from 3,614 to 4,838.
China’s dominance and the tech war
Geopolitics will remain a disruptive theme for the energy sector, as well as other industries. Considering the impact on the energy sector specifically, Gregory notes that developers have looked to protect their supplies from changing political scenes through diversification. In this way, geopolitics is driving progress in the renewables industry.
“This will boost the momentum of increasing renewable capacity, with GlobalData estimating that renewable installed capacity will reach 4.9TW by the end of 2024, which represents a CAGR of 8.8% between 2018 and 2024,” she says. “However, geopolitics could still impact the renewables sector in 2024, with the manufacture of technologies such as solar PV panels being heavily geographically concentrated.”
Next year, gas demand is expected to return to moderate growth driven by emerging Asian Pacific and gas-rich African countries.
China currently dominates the solar market, with exports of modules increasing 34% year-on-year, according to data collected by Ember.
Gregory continues: “China has succeeded in becoming a world leader in the renewables space and holds an 80% market share in solar cell manufacturing. As a result, the subsumption of renewable technology into the precarious US-China tech war could spell untold disruption for the global energy sector.”
LNG’s role in the global gas market
LNG is one of the markets also developing as a result of diversification. Since the Russian invasion of Ukraine, the EU has looked to decouple its reliance on Russian gas, turning instead to other providers.
“In 2024, LNG will play a key role in the global gas market,” Reyes explains. “Next year, gas demand is expected to return to moderate growth driven by emerging Asian Pacific and gas-rich African countries. In Europe, a cold winter, the near-end production of the Groningen field (one of the main sources of European domestic gas supply since its discovery in 1959), and a further decline in Russian imports, could increase the market tensions near the end of the 2023-2024 winter.
“On the other hand, the ongoing conflict in the Middle East has raised concerns about whether gas production will increase next year in the region. According to GlobalData, compared to 2023, a higher number of LNG liquefaction plants are expected to begin operating in North America and Africa, reducing the volatility of the international gas prices.”
The energy sector will continue to evolve against a backdrop of geopolitical shifts likely driving unpredictable change. Technology themes – specifically cybersecurity threats and AI advancements – will offer new opportunities alongside new threats for the industry to adapt to.