Utilities are recalibrating their investment priorities as aging infrastructure, rising energy demand, affordability pressures and extreme weather increasingly compete with long-standing sustainability and decarbonisation goals, according to new research commissioned by IFS.
The global study of 850 C-level and senior utility executives, conducted by Censuswide, finds grid reliability and resilience emerging as immediate operational priorities. Hardening existing infrastructure against extreme weather and cyber threats ranks as the most critical operational challenge, with 26% of utilities actively re-evaluating asset portfolios to prioritise investment in existing grid infrastructure.
The pressure is being amplified by data-centre load growth, electrification and increasingly volatile operating conditions. Utilities are therefore looking beyond new generation capacity to extract greater performance from assets already in service.
“The pendulum in the energy sector has swung fast. Sustainability continues to be a critical objective for utilities, but evolving operational and geopolitical realities are driving a more balanced investment agenda.”
— Carol Johnston, VP, Energy, Utilities & Resources, IFS
Industrial AI is emerging as an important enabler of this approach. Fifty-seven percent of utility leaders see AI as critical to reducing operational costs, while 47% say it is critical for optimising asset performance and managing demand growth driven by electrification. Another 46% view AI as critical to accelerating renewable and distributed energy integration.
However, data fragmentation remains a major constraint. Nearly half of respondents, 49%, say operational data silos hinder real-time decision-making. Only 33% describe their asset lifecycle management capabilities as advanced, while 51% have asset management systems that operate in silos with limited predictive capabilities.
The research also points to growing interest in grid flexibility. Battery Energy Storage Systems and Distributed Energy Resource Management Systems are gaining importance as utilities seek to manage demand volatility and protect against prolonged outages.
Looking further ahead, 22% expect advanced geothermal and 18% anticipate Small Modular Reactors to have the greatest long-term impact on securing continuous clean baseload power.
The findings suggest utility modernisation is moving toward a more balanced equation: strengthen existing assets, invest selectively in new capacity and use Industrial AI to connect operational data with decisions that improve reliability, affordability and resilience.
