"The Energy Transition is a Technological Revolution," reads a recent headline from the Rocky Mountain Institute, a non-profit, non-partisan organization focused on accelerating the clean energy transition. 

They’re right. As pressure to meet net-zero goals mounts, so too does the need for innovative digital, automation, and data-driven technologies – be it software tools to improve carbon capture, smart meters designed to give consumers greater control over their energy usage, connected devices that enable predictive maintenance, automation that drives renewable energy production and efficiency, and even learning systems through Artificial Intelligence (AI) – the list continues to grow.

AI will also play a significant role in renewable energy forecasting, accelerating the energy transition. Programs have been developed by global technology company IBM, as part of the United States (U.S.) Department of Energy’s SunShot Initiative which combines self-learning weather models, data of historical weather, real-time measurement from local stations, sensor networks, and cloud information from satellite imagery and sky cameras. These refined forecasts, when combined with a grid management system that balances supply and demand, can be used to increase, and optimize the output of solar and other renewable resources.

But, as with all new technologies, leveraging these tools comes with its share of risks which need to be carefully managed. Key areas that executives should keep top-of-mind include:

  • Cybersecurity: Heightened interconnectivity and digitalization can leave organizations increasingly vulnerable to cyberattacks. Be it an attack on Colonial Pipeline or Ukraine’s power grid, hacks by bad actors in this space can have significant economic and national security consequences, creating additional risk for all. This explains why in the EU and U.S., new laws and standards regulating the protection of critical infrastructure (e.g., new power plants, grids, etc.) have intensified compliance pressures for energy producers.
  • Product liability: New technologies that are increasingly geared towards the consumer market – such as solar panels, electric vehicle batteries, and smart meters – can pose safety risks with inevitable legal consequences. It is for this reason that companies involved in the manufacturing and supply of these types of products need to take additional care to follow the regulatory requirements (as well as, where relevant, take supplementary steps such as additional testing protocols and the like) to ensure that their new technologies do not lead to the types of lawsuits already being seen against various manufacturers, for example, EV batteries for alleged risk of combustion and fire. The risk of such liability only increases for companies using AI when one looks to new proposed legislation, like the EU’s AI Liability Directive which seeks to apply to any type of damage (covered under national law) caused by AI systems.
  • AI regulation: As AI gains traction around the world, evolving regulations could pose new challenges for companies that have already bravely embraced the technology in the energy sector. For instance, the EU has already put forward comprehensive legislation and requirements, like the EU AI Act, while the U.S. has invested in a new AI risk management framework – though has yet to designate a federal authority to oversee AI-related risks.
  • Greenwashing: Litigation related to claims of “greenwashing” are on the rise – particularly as environmental, social, and governance reporting requirements take hold – embroiling several high-profile companies in complex disputes. As technologies continue to create new ways to lower emissions, companies could eventually find themselves facing shareholder claims, arguing that they should have taken steps (e.g., by adopting new technologies) sooner to fight climate change.

      The energy transition won’t happen without advancements in digitalization, automation, and data. To ensure their organizations are staying abreast of these developments, today’s business leaders must balance the adoption of new technologies with effective risk management and compliance processes.

      As artificial intelligence gains traction around the world, evolving regulations could pose new challenges for companies that have already bravely embraced the technology in the energy sector.