Why AI and Energy are the New Power Couple for Green Transition and Transformation

AI and energy, the "new power couple," are already reshaping how value is created in the industry with innovative solutions and policies driving sustainable growth.

In brief

• Artificial intelligence (AI) and energy policies are evolving in parallel affording opportunities in both sectors.
• Identifying the value case in the early stages of AI adoption can help utilities and other energy sector stakeholders to accerate the benefits of this fast-paced technology.
• These steps aim to address the evolving relationship between AI and energy and keep businesses competitive on their decarbonisation and digitisation journeys.

AI and energy, named the “the new power couple¹” by the International Energy Agency in 2023, has ignited interest in C-suite discussions. Multiple business cases have already identified the potential of AI across the industry value chain. The young but revolutionary branch, Generative AI (GenAI), also shows potential to transform practices across how we generate, process and utilise our energy.

Policy landscape for AI and Energy

AI and energy policies are accelerating alongside one another at a rapid pace. In 2021, the EU regulatory framework for AI was published and on 1^st August 2024, the European Artificial Intelligence Act (AI Act)² entered into force. The EU AI Act aims to foster responsible AI development and deployment in the EU and ensure AI systems respect fundamental rights. These AI Frameworks will empower and enable the delivery of key EU policies in the energy sector including the REPowerEU³ Programme, and the Fit for 55 Package⁴ setting EU member states on a path to reach our climate targets in a fair, cost-effective and competitive way.

At a national level, the Climate Action Plan 2024⁵ outlines Ireland’s roadmap to reach our national climate objectives and transition to a resilient, biodiversity-rich, environmentally sustainable and climate-neutral economy. When used in an effective and efficient manner, AI can accelerate these initiatives by enabling tasks such as controlling the charging time of electric vehicles, managing interconnector flows and analysing data and inputs, to name a few. A great step was also taken in 2021 when the National Artificial Intelligence Strategy for Ireland was introduced articulating strategic cross-government actions where AI would have a role through skills, infrastructure, and appropriate governance.

The business case for AI across the energy sector

The move towards decarbonisation of the energy system is driving the rapid transformation of electricity and gas networks. A systems thinking approach and the growth of distributed power generation, energy storage and advanced demand-response capabilities will create opportunities that require multilateral coordination, cooperation with stakeholders and smart solutions.

AI will have many applications across the value chain which have the potential to drive transformation in the sector. Some of these include:

5 Steps to shape your AI and Energy journey

AI can be seen as an encompassing solution for solving issues related to the power system, but it is imperative that ethical concerns are addressed from the outset. By taking a proactive rather than reactive view, risks can be mitigated, and potential issues identified at early stages. At EY, we are passionate about helping companies champion human-centred digital transformation and scale new business models to drive their sustainability and growth agenda through energy transition and beyond.

EY is working with clients to determine where AI can help within their energy and utilities businesses, what data is required to implement these changes and associated roadmap implementation.

1. Identifying the AI value opportunities: As the requirements of each organisation are different within the energy sector, opportunities for value creation should be identified by prioritising initiatives and their associated solutions across the electricity, gas and water sector. Widget link – EY Value Accelerator
2. Planning your AI journey: Organisations should establish roadmaps that give consideration to both new and existing capabilities by leveraging emerging digital technologies. Therefore, it is key to have a holistic understanding of roadmap deployment and implementation and best practices for risk, governance and data management to deliver comprehensive AI evaluation and monitoring. Widget link – EY.AI Confidence Index
3. Determining data availability and requirements for your transformation journey: Although AI has the ability to assist us in the energy sector, without the correct quantity and quality of data, there are limitations on the usefulness of this technology. Organisations should look to understand and leverage their data and data transformation methods to solve business problems.
4. Taking a Humans@Centre approach: Transformative value drivers are key factors that create market value and guide firms in aligning their structure, systems, and culture. A human-centric approach is key to building adaptability, preparing the workforce for change and a future-ready workforce.
5. Adhering to Responsible and Ethical Design: As concerns grow over data privacy, misinformation, and intellectual property rights around AI, effective regulations and a balanced approach to AI governance will grant all stakeholders a voice in deciding how technology is used. Ultimately, this creates a healthy information ecosystem likely to optimise better outcomes for everyone, while incentivising the new ideas that drive economic growth.

At EY, we’re partnering with Irish energy businesses to realise the power of AI.

Taking clients from strategy to solution seamlessly, sustainably, responsibly.

It’s time to get beyond talk. It’s time for action.