Why the energy sector is the cornerstone of a burgeoning industrial AI business

Everywhere you look around the global industrial and manufacturing complex, artificial intelligence (AI) solutions are routinely emerging to service as well as improve efficiencies for a diverse range of tasks from back office to core plant operations.

From predictive analytics to interactive user manuals, downtime reductions to process optimisation, and much else in between, AI is contributing to a more efficient industrial estate.

With that being the inexorable direction of travel, inevitably attention has turned to how big a business opportunity this could be. Last year, the industrial AI and automation business was worth around $180 billion to $190 billion, based on a range of valuation methodologies deployed by multiple consultancies and data aggregators.

While a sizeable chunk of this industrial AI spending was in sectors such as automotive, pharmaceuticals and urban planning, and another sector is rapidly growing in stature as a huge driver of business growth – energy.

"That’s because being static was simply not an option. We are finding the initial circumspection on deploying AI solutions for strategic infrastructure is gradually subsiding because energy companies fully recognise the technology industry can work with them to put in place robust safeguards and cybersecurity for AI solutions."
- Nate Harris, Global AI Sales Lead, Data and AI at Microsoft

Spending on industrial AI is tipped to reach $400 billion, if not more by end of the current decade, depending on which forecaster you rely on. That would imply a compound annual growth rate (CAGR) of 8% to 10%.

Things can only get bigger

How much “more” may well depend on the energy sector’s embrace of it. Current trends suggest energy companies are not holding back, but rather just getting started after a conservative start.

All of the world’s top 20 integrated oil and gas, power and utilities, and renewable energy companies by market capitalisation have an AI working strategy or ambition in place.

Some state-owned energy giants like the UAE’s ADNOC and Saudi Aramco are pouring billions of dollars into AI, and in many use case scenarios appear to be ahead of the curve of their public-listed international oil company counterparts.

For the uninitiated, the twin strands of AI are generative AI and agentic AI. The former refers to AI systems capable of using models that learn inputted data characteristics and structure to produce bespoke outputs. The latter goes beyond merely reacting to instructions but being proactive and capable of complex problem-solving with limited human intervention. 

"The sector is noticing the winds of change and is perhaps looking to make-up for lost time. Leveraging ever-increasing amounts of structured and unstructured data, industrial AI improves visibility into operations and delivers insight into the future. We see a clear trend of energy companies – both large and small – proactively looking into this."
- Heiko Claussen, Chief Technologist of Emerson’s Aspen Technology

Deployment of bespoke generative AI solutions are growing by the day. But last year, ADNOC stole a march on its peers by announcing a developmental drive for agentic AI, taking the energy world by storm.

Overall, AI is seen to be driving sustainability and efficiency in traditional energy and appears to be at the heart of clean technologies. Improved throughput at refineries, predictive maintenance at power plants, optimised flow rates of oil from offshore rigs to pipelines and smarter electricity grids are some demonstrable cross-sector use cases.  

Winds of change

Speaking at Emerson Exchange in San Antionio earlier this year, Lynn Comp, Global Head of Sales for the AI Center of Excellence at Intel, told Energy Connects the sector had gone past the “fear of missing out” stage even though there is much work to be done.

“We have moved on from the hype about AI adoption to companies methodically seeking practical solutions for specific use cases and getting results from their cautious use of AI. This will only get bigger, and hopefully better.”

Nate Harris, Global AI Sales Lead, Data and AI at Microsoft, concurred that energy companies were proactively embracing AI.

“That’s because being static was simply not an option. We are finding the initial circumspection on deploying AI solutions for strategic infrastructure is gradually subsiding because energy companies fully recognise the technology industry can work with them to put in place robust safeguards and cybersecurity for AI solutions.”

And Heiko Claussen, Chief Technologist of Emerson’s Aspen Technology business, said: “The sector is noticing the winds of change and is perhaps looking to make-up for lost time. Leveraging ever-increasing amounts of structured and unstructured data, industrial AI improves visibility into operations and delivers insight into the future. We see a clear trend of energy companies – both large and small – proactively looking into this.”

"We have moved on from the hype about AI adoption to companies methodically seeking practical solutions for specific use cases and getting results from their cautious use of AI. This will only get bigger, and hopefully better."
- Lynn Comp, Global Head of Sales for the AI Center of Excellence at Intel

Living proof of this maybe found in the highly visible and growing presence of a veritable who’s-who of the Silicon Valley and the industrial software world exhibiting at major energy events like Gastech and ADIPEC. That’s because their existing and prospective energy clients now view prevailing competitive pressures to be a powerful catalyst for AI adoption.

Operational imperatives

Uncertainty around global energy prices and input cost inflation, coupled with the rapid development of generative AI, seem to have converted many sceptics.

It will likely contribute to the headline growth of industrial AI as a business. Such growth may even come from segments of the energy sector that many forecasters deem too insignificant to include in their current forecasts.

More so, as the energy industry perhaps moves away from unstructured or ad hoc acts of digitisation to a more organised and clearer program of technology-based competency development, incorporating human oversight elements and safeguards given the strategic nature of energy infrastructure.

And this drive to create value and growth for energy companies in a world of growing energy demand is just getting started.