Rising data center demand, electrification and EV adoption are driving electricity demand up.
Key takeaways
Energy companies are increasingly adopting analytical AI technologies, including machine learning.
The energy transition is driving investment and a variety of actions across the industry.
Energy sector trend #1: Energy sector companies navigate surge in electricity demand
Energy sector companies navigate surge in electricity demand
The North American energy landscape is undergoing a significant transformation. Here we explore the trend in more detail, including the growth drivers, constraints and potential solutions.
The North American energy landscape is undergoing a significant transformation, driven by a surge in electricity demand far greater than what the region has seen in decades. This increase is due to multiple factors, including rising data center demand, electrification, electric vehicle adoption and new energy technologies like green hydrogen. Rising demand, combined with the emphasis on clean energy sources to help companies meet environmental, social and governance goals and qualify for tax incentives, is reshaping the industry.
Energy sector trend #2: The top 5 renewable energy trends shaping the sector
Today’s energy landscape continues to evolve as countries around the world increase their focus on decarbonization and shift from fossil fuels to renewable energy sources. The energy transition is driving significant investment and a variety of actions across the industry, from wind and solar energy startups to legacy oil and gas companies and the manufacturing and technology companies supporting the ecosystem.
Energy transition investment is on the rise, with $303 billion invested in the U.S. in 2023, according to BloombergNEF, up 22% from the prior year. Still, that is a fraction of the $1.77 trillion that was invested globally. The business case for adopting renewable energy is making more sense for companies, even with today’s higher cost of capital.
The top 5 renewable energy trends shaping the sector
Here are the top five renewable energy trends shaping the sector.
Energy sector trend #3: Navigating oil and gas consolidation
Navigating oil and gas consolidation: Insights for middle market companies
As oil and gas sector consolidation surges, we share insights for middle market energy companies.
The oil and gas sector has experienced a remarkable surge in merger and acquisition activity recently, with over $155 billion in deals in the fourth quarter of 2023, according to Bloomberg. That’s more than the prior five quarters combined. Faced with challenging market and economic conditions, oil and gas companies—particularly upstream, midstream and oil field services companies—are poised to continue this consolidation wave into 2024. Middle market companies are especially likely to be involved in this M&A activity, so it is crucial for them to proactively position themselves for strength in this cycle.
Deals that do occur will require special attention to valuation, as deal types and conditions in the oil and gas ecosystem vary widely. In the last couple of years, we saw companies with atypical spending and contract terms that companies—buyers and sellers alike—will need to analyze and model as part of the valuation for any deal.
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