#USA #New York #Energy Sector #Technology Investment #Reskilling

The Skills Gap in Energy: A Persistent Challenge

In a landscape where 92% of energy companies express intentions to invest in digital technology, a stark reality emerges: barely 27% of these companies are engaged in retraining and reskilling their current workforce. This discrepancy highlights a pressing issue for the energy sector as it grapples with the urgent need for a skilled labor force amidst the rapid adoption of new technologies.

The recent EY Future of Energy Survey conducted by Ernst & Young LLP reveals crucial insights into how executives within the power and utilities as well as the oil and gas industries perceive the importance of reskilling. Despite 91% of power and utilities executives and 85% of oil and gas and chemicals executives acknowledging that their organizations’ capability to reskill employees will play a decisive role in determining success over the next five years, action does not align with intention. Only 26% of power utilities and 29% of oil and gas companies report active programs in employee retraining.

Turning Point: A Shift in Focus

Interestingly, the energy sector executives are shifting their dependency towards external resources, with 88% of power and utilities executives and 81% of oil and gas executives planning to increasingly rely on vendors and contractors. This signifies a critical turning point where businesses may prioritize short-term solutions over long-term skilling efforts, which could ultimately hinder their capacity for sustainable growth and adaptation.

The survey, conducted in late 2024, assessed more than 1,020 industry respondents about the pressing challenges and prevailing sentiments in an environment defined by rapid technological evolution. Timothy Haskell, the EY Americas People Consulting Leader, highlighted a renewed focus among energy executives on operational performance, stating: "The challenges to maintain competitiveness as new policies emerge is palpable."

The Role of Technology: High Investments Yet Low Returns

Examining technological progress, the survey points out that, while investments in digital technologies remain high—up 20 points since 2020, bringing the total to 49% of executives planning significant investments—there exists a notable gap concerning the realization of returns. Many executives report they have not yet seen the expected benefits from technological implementations such as artificial intelligence and cloud computing.

The disconnect between technological investment and workforce development indicates a systemic issue where even though leaders recognize the value of reskilling, they have not made it a priority. The vast majority of executives consider workforce agility crucial; however, they concurrently express concerns regarding cultural obstacles that hinder the adoption of these necessary digital transformations.

The Potential of Agility: A Workforce on the Move

Despite the challenges, there's a sense of optimism as 86% of power and utilities executives agree that their workforce is agile enough to adapt to evolving business needs—a considerable surge from 57% in 2021. Likewise, 81% of oil and gas executives affirm this agility. It suggests a readiness for change and adaptability within the existing workforce, yet this potential cannot be fully harnessed without a deliberate emphasis on retraining.

However, the tension between embracing innovation while mitigating risks lingers. Many leaders prefer to maintain stability, gravitating towards proven technologies that maintain predictable outcomes. Emerging technologies often come with uncertainty, requiring not just a shift in technology but in mindset, presenting challenges for organizations ingrained in traditional operational methods.

Bridging the Skills Divide: Strategies for Success

Haskell underscores the necessity of integrating continuous learning into organizational frameworks—critical for closing the skills gap. Whether through outsourcing or enhancing internal training measures, organizations must adopt a multifaceted approach to talent management. The future of the energy industry demands robust strategies for sourcing and developing talent capable of navigating the complexities of technological advancements and evolving market landscapes.

In conclusion, while the energy sector is on the brink of transformative change through technology, the realm of human skills must also evolve. Acknowledging that investments in people are as crucial as in technologies can pave the way for a successful transition into a future where empowered employees drive innovation and operational excellence.

For more detailed findings from the EY Future of Energy Survey, visit ey.com.