2018 Energy and Resources Industry Outlooks
Perspectives on energy industry trends
The dynamics of the energy business are continuously evolving as technologies progress, economies grow or shrink, consumer behaviors and expectations shift, geopolitical events come and go, and companies strive to maintain reliability and service in an uncertain world. To help think about what is important in the energy landscape, Deloitte’s Energy & Resources industry leaders give their unique and individual perspectives on what to watch out for in 2018, whether you are in oil and gas, electric power and utilities, or in renewable energy. The annual release of these outlooks is timed to give food for thought as we go into a new year.
- Energy trends in 2018
- Oil and Gas Industry Outlook
- Power and Utilities Industry Outlook
- Renewable Energy Industry Outlook
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What does the world of energy look like as we close out 2017 and move into 2018?
There are many challenges but also new opportunities opening up—and energy companies will need to find the right balance between continuity and adaptation to thrive going forward.
Market conditions have been tough in recent times. The oil and gas sector has faced three and a half years of depressed commodity prices, slashing cash flows and investment capacity, and needing to favor short-term cost-cutting over long-term planning. The electric power sector has faced stagnant demand in the US and moderate power prices, resulting from the abundance of low-cost natural gas, but investment needs remain high, whether for protecting the grid against storm damage or cyber threats, for integrating distributed and variable generation resources into operations, or for meeting customer aspirations for more choice and more control. How can this tension be resolved? The renewable energy sector has certainly experienced impressive growth in the market and impressive success in driving down costs, but regulatory and policy uncertainty has paradoxically increased rather than diminished with its greater presence in the market.
In 2018, we will see many of these uncertainties resolved (to be replaced, of course, by more, and perhaps different, uncertainties—which is why we refresh these outlooks on an annual cycle). In oil and gas, the long-awaited price recovery could gain momentum in 2018 with OPEC, supported by some key non-OPEC countries, continuing its production restraint policy, demand growth strengthening, and global inventories finally reverting to their more normal historical range. This will provide much-needed relief, particularly for the upstream segment, and can allow more certainty around investment planning. In the electric power sector, we may be on the cusp of a new source of demand, as electric vehicle sales expand and may be on the cusp of becoming mainstream. New revenues provide utilities with more ability to finance the adaptation and modernization of operating assets to prosper in the new world of more distributed generation. In renewable energy, the growing demand for more choices, clean energy, and “behind-the-meter” solutions has a momentum that acts as a strong counterweight to the regulatory and policy challenges that emerged in 2017. Corporations are playing an important role in driving this trend, viewing energy procurement as an indispensable pillar of their sustainability and corporate social responsibility objectives.
Although all segments of the energy business are by their nature technology-rich and have always used innovation to drive improvements in productivity, reliability, and efficiency, we see, perhaps for the first time moving into 2018, a common technology theme that will impact all energy value-chains. The promise of digitalization is becoming a reality as improvements in the cost of sensors and digital communications, the performance of analytical software and its ability to make sense of big data, and the advances in areas such as artificial intelligence, machine learning, predictive algorithms, robotics, and drones look set to allow the energy business to both improve the performance of its existing assets and to design new assets in a different, more connected way. We are optimistic that this trend will gain momentum in 2018 and that it will be good news for the industry, its customers, and for the safe, efficient, and reliable delivery and use of all forms of energy.
Oil and Gas Industry Outlook
"My take" by John England, US Energy & Resources leader and US and Americas Oil & Gas leader, Deloitte LLP
With the oil and gas industry in its fourth year of this extended downturn, OPEC policy, the future of unconventional oil, and the strength of demand determining prospects for recovery, we focus on trends for 2018 that likely have staying power. These include the confirmation of the United States as a globally important oil and gas exporter, continued progress on cost reduction and efficiency in US unconventional oil drilling, rising natural gas demand in more sectors and geographies, and the onset of the digital age—bringing perhaps a step change in the oil and gas sector's ability to boost productivity while also reducing cost.
Power and Utilities Industry Outlook
"My take" by Scott Smith, US Power & Utilities leader, Deloitte LLP
The power and utilities industry is on a journey of important change. It is experiencing changes in technology, generation choices, customer empowerment, regulations, and risk. These changes could gain even more momentum as we move into 2018, in a world where the expanding potential of digitalization allows utilities to be more nimble and adaptable.
Renewable Energy Industry Outlook
"My take" by Marlene Motyka, US and Global Renewable Energy leader, Deloitte Transactions and Business Analytics LLP
Recent years have seen accelerating market presence for renewable and distributed energy, driven by technological progress, declining costs, and evolving societal and consumer preferences. As renewable energy adds scale, the favorable underlying forces look set to remain strong; although, we may see near-term headwinds in a more uncertain regulatory environment.
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Oil & Gas
- 2017 Oil and Gas Industry Outlook
- 2016 Oil and Gas Industry Outlook
- 2015 Oil and Gas Industry Outlook
Power & Utilities
In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.