2025 marks a new phase in the global energy transition — one defined by divergence. L.E.K. Consulting’s 7th Annual Global Energy Study, with insights gained from more than 300 senior executives worldwide, reveals how spending priorities are fragmenting across oil and gas (O&G), utilities and renewables as leaders balance ambition with execution realities.
This article kicks off our series on the realities of the energy transition in 2025 and the priorities shaping energy’s next phase. The series is supported by an infographic that distills this year’s survey data, with further articles to follow on grid resilience, AI adoption and flexibility in energy infrastructure.
Diverging investment priorities
Our 2025 Global Energy Study shows a sector pulling in different directions, revealing as much about each segment’s constraints as it does about their opportunities.
O&G companies maintain modest investment plans, with capital expenditure expected to grow by around 3%-6% in 2025, balancing selective expansion with strict discipline amid geopolitical uncertainty and fragile supply chains. Utilities, meanwhile, are expected to increase annual investment by roughly 9%-12% over the next decade as they accelerate transmission and distribution expansion and upgrades to meet surging electrification and data-center demand.1 Renewables players continue to expand but face rising costs and regulatory volatility.
Oil and gas: Disciplined growth, targeted transition
O&G majors remain cautious investors, keeping capital discipline at the center of strategy. Projects with predictable returns are prioritized, and acquisitions continue to be used as levers for scale and capability.
Caution is likely to persist given macroeconomic uncertainty, project ambiguity and shareholder return priorities. As a result, selective spending is directed toward international and offshore projects, while efficiency gains and brownfield optimization remain paramount.
Within that spend, companies are gradually increasing investment in energy transition initiatives — after only modest growth last year, spending is expected to nearly double by 2030, to 18% of total budgets, as confidence in proven decarbonization technologies builds.
Transition bets, though, remain highly selective, with only around 1 in 10 companies ranking carbon capture and storage or alternative fuels among their top investment priorities. These focused plays are most common in Europe and the Middle East, where regulatory clarity is firmer and where investment strategies tend to align more with national energy and decarbonization goals (see Figure 1).
For O&G, capital discipline has regained prominence after a brief period of diversification pressure around the energy transition.
Utilities: Grid resilience under pressure
Utilities, by contrast, are in an acceleration phase. Load growth from electrification, electric vehicles and data centers has exposed the limits of aging infrastructure. Nearly 40% of utility executives rank grid modernization as their top investment priority, well ahead of nuclear or storage (see Figure 2). Yet reliability concerns are intensifying: 59% see a growing risk to power stability as renewables expand, prompting greater investment in battery storage, network flexibility and dispatchable power.
The challenge is timing. Turbine availability, interconnection queues and permitting delays continue to slow progress, forcing many operators to use energy efficiency, nonwire alternatives, and increasingly behind-the-meter (BTM) power for large, high-load customers until grid upgrades catch up.
Renewables: Growth meets reality
Renewables developers remain the most growth-oriented group, but their confidence is tempered by policy uncertainty and rising costs.
Supportive policies in Europe, and generation needs in the U.S., continue to attract investment, yet permitting constraints, tariffs and supply-chain inflation have raised barriers. The outlook remains constructive for solar, storage and onshore wind, but developers acknowledge that commercial discipline now matters as much as policy support.
Gas and grid: Flexibility becomes the bridge
Natural gas continues to underpin system reliability and remains critical to the energy transition. Eighty percent of energy executives view gas as indispensable to the renewables transition, providing dispatchable backup for intermittent generation.
However, constraints are mounting. Only 22% of utilities express strong confidence that sufficient gas-fired power build-out will be achievable under current conditions, while 58% say a significant investment in gas infrastructure is required to meet the demand.
The result is a pragmatic response: BTM gas solutions are scaling rapidly as a bridge for power-intensive users such as data centers. Nearly half of new data center megawatts are expected to be powered off grid by 2030, mostly as temporary (less than two-year) solutions, though some may stay on longer depending on local interconnection costs and power prices. But BTM is too subject to potential constraints on equipment availability, and penetration growth will require a mix of solutions (e.g., turbines, reciprocating generators and fuel cells) to be available.
AI moves from pilot to performance
AI is shifting from the lab to the field. More than 60% of utilities now use AI for demand forecasting and 53% for predictive maintenance, while over half of O&G companies deploy it for performance analytics and downtime reduction.
Yet most firms acknowledge they are only scratching the surface, with data quality, return on investment measurement and governance continuing to pose challenges. Even so, 80% of energy leaders expect to achieve full value realization from AI within the next decade — a notably confident view given the sector’s current implementation maturity.
The message is clear: Scaling AI will depend on embedding it into operational decision-making, not treating it as a stand-alone digital experiment.
Navigating energy’s next phase
The global energy sector is entering a phase where execution precision defines progress. Each segment faces distinct pressures, but all share a common challenge: balancing investment discipline with the urgency to modernize and decarbonize.
What unites them is a pragmatic approach. Growth continues, but selectively. Capital flows, but toward proven solutions. Innovation advances, but with a focus on performance and resilience.
How L.E.K. can help
Our teams advise energy leaders on where to invest, how to build resilient infrastructure and when to accelerate transition bets. L.E.K.’s 2025 Global Energy Study provides the data and insight; our consulting expertise helps clients translate these findings into decisions that create value today and secure a position for tomorrow.
For more details on the full study or to learn how these insights apply to your business, please contact our global energy team.
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