2023 - a year for optimism amid uncertainty

If you ask any business owner or consumer what’s on their mind at the start of 2023, I’m sure the cost of living, concerns for energy costs, security and blackouts, world geopolitical instability, climate change, global uncertainty and potential global recession, would all be at the top of the list.

?

Following the events of the last few years, and how in reflection, the pandemic actually marked the end of a period of stability, it’s understandable why these topics are front of mind. However, we should also recall that in these last few years, we’ve also seen heroic efforts from industry, governments and society to quickly adapt to change and the unexpected, constrain costs, and rethink strategies in the face of unplanned events.

?

Based on this demonstrated experience, and despite change fatigue, I believe there is reason to look ahead in 2023 with optimism and not underestimate our resilience and adaptability as a collective world where uncertainty is now the new normal.

?

So what are some of the themes to watch in this year ahead? Here are my thoughts…

?

Climate and sustainability

There is no doubt that climate change and sustainability will, rightly so, remain top of the agenda this year, and a fundamental driving force behind global actions. The Paris Agreement and 2030 Sustainable Development Goals (SDGs) now have just eight years remaining to be achieved. Whether or not this target is achievable is another discussion, but what is clear is that we cannot keep pushing back the deadlines to turn things around to ensure a sustainable future. Every effort must be made now to continue the efforts to mitigate the effects of climate change.

?

The transition to clean energy is possibly the biggest challenge we have, but a critical part of this. The ever increasing pressure and need to take decisive action in this decade will create a clear and immediate catalyst for change and ramp up the transition in 2023, to cleaner and more sustainable energy generation. I hope that this year we will also see investment and further regulation catching up to public sentiment, and more consistently across all regions, regarding the energy transition as it needs to happen much faster. As renewables are by their nature less consistent in supply than fossil fuels, there is the additional challenge of developing technologies for harnessing energy storage, to ensure security and reliability particularly at peak times. In light of this, redoubled efforts across industrial sectors to increase supply chain visibility and accountability are expected to create advantage in the coming year.

?

Economy and international relations

Over the coming 12 months, the recognition, understanding and effects of the real-world impacts of the post pandemic recovery will also further unfold. The devastating war in Ukraine, coupled with political, economic and industrial matters in China, Europe and the US will continue to influence investment, business decisions and society. The ripples from these will continue, such as high food and energy prices.

?

Some say a significant global recession is inevitable. I believe a recession and slow down in some economies is still likely given the ongoing high inflation, prices and uncertainty, but that the risks are becoming more balanced. We also know that progress and investment in sustainable development and critical infrastructures, which includes energy, is planned and prioritized by a significant percentage of businesses. So geopolitical and economic challenges do not necessarily have to be a distraction from ensuring a low carbon society and social progress. Economic uncertainty will also mean that countries and regions will increasingly chart their own course to addressing disruption and reviewing trading relationships.

?

Leadership and culture

Recent upheavals, coupled with the global megatrend of changing demographics and ways of working provide a good opportunity to rethink corporate culture, leadership and equality. The share of population aged 50+ is predicted to rise to 45% by 2050 in OECD, leading to an even more multigenerational workforce and more diverse ways of working, supported by technology. Going forward, I believe that effective leaders will not only need to connect with their teams in the traditional sense and on an intellectual IQ level, but with a more evolved and empathetic emotional EQ level. Achieving genuine equality, diversity and inclusion will challenge more traditional approaches to leadership and culture and push the boundaries further about how companies and workforces bend, flex, interact and respect differences, whilst maintaining efficiency in operations and company policies.

?

Employees rightly want their voices to be heard, and their views understood and will increasingly choose companies whose demonstrated values, behaviours and working practices align with their own. Everyone should feel safe to be exactly who they are and not have to hide any element of their identity, or compartmentalise their values, in order to feel they ‘fit in’, be that in general society or in work. This approach also makes good business sense as I see companies benefitting from the wider life experiences and skills that employees can offer, making workplaces richer with increased opportunities by breaking down barriers and potential biases. But this also requires quite a shift in traditional management and leadership thinking, as well as challenging cultural norms, which I see will become higher on the business agenda during this year.

?

Technology, Digitalization and Connectivity

The relentless drive for, and pursuit of, technological developments in both industry and the consumer world, is now seismic. We’ve seen the eras of desktop computing, the consumer internet, the smart phone and some evolutionary inventions such as wearables, the internet of things and the cloud. However, the computing industry is past due its next big thing. Digitalisation and connectivity are now commonplace the world over and global megatrends are influencing everyday life around us. But what’s next? The metaverse? I believe this coming year will indicate whether the metaverse – an iteration of the internet that gives us a far more immersive and interconnected experience - will become a reality and be the internet of the future.

?

The ‘online-everything’ acceleration during the pandemic paved the way for the metaverse to gain momentum. This has implications for consumers, but also very much for industry, both for the better but also with challenges we need to consider. A metaverse will also transform the way we create new things. Engineers, entrepreneurs and creators are already using digital twins – virtual replicas of objects – to simulate what things will look like in the real world. Cyber security is clearly a potential challenge, but the further development of technology, digitalisation and connectivity between computing and engineering could see industry and customers being able to capture real value from conducting business in a digital world. This could be from programmes designed to engage customers in a brand, to full testing of new products and solutions in an immersive virtual sphere. With increased digitalisation, connectivity, AI and machine learning, datacentres will evolve further although more and more data will be in the cloud. Digital technologies, harnessed correctly, are a significant enabler to progress. Increased reliance on digital technologies for real time information as well as enhanced connectivity with a company’s suppliers and customers, could also create further agility and resilience.

?

Innovation and collaboration

I believe the global uncertainty and fragmentation of 2022 will foster even further innovation and cross industry collaboration in 2023, as the question facing companies is how, for another year, to plan for the unexpected and build resilience around organisational goals, operations and the workforce. At a time when energy security, the transition to renewable energy, and economic, environmental and social sustainability has never been more important, governments are focusing on developing new strategies able to tackle today’s energy, climate and geopolitical challenges.

?

Businesses and industry have a significant role to play however, with progressing decarbonisation, protection of resources and supporting social progress, in support of global sustainability. Devising and implementing a pathway that meets the needs of industry, society and the planet is a major transformation that cannot be navigated overnight, or in isolation. Collaboration across industries, with companies of all sizes and in different sectors, could help bridge the deficit to achieving sustainability pathways and goals in the coming years. The challenge and the opportunity now is how businesses share and combine knowledge and resources to optimise the stark ‘turning point’ the world is at.

?

How will some of these catalysts play out in electrification?

Whatever your concern, challenge or opportunity in 2023, an underlying cornerstone for society, industry, nations and the world’s sustainability, is the subject of energy. Specifically, energy efficiency, energy security and the energy transition.

?

The megatrend of the world going electric will not slow down, but further accelerate and, despite ongoing market challenges and global uncertainty, I believe the overall electrification market will grow. With this we will need stronger power grids and more renewable power generation, but this will come with longer term investment as we aim to reach our sustainability targets and grow the electrical infrastructure.

?

In the immediate term I believe we will see more focus on energy efficiency measures being put in place across industry and in our everyday lives to help mitigate rising energy costs and optimise the energy that we do have. While 2022 saw record amounts of investment into energy efficiency as businesses struggled to cope with higher energy prices, this year will see continued investment in this area. The best way to save on energy is to not waste our current supply in the first place - essentially preventing ‘throwaway energy’.

?

2023 will see a greater focus on updating and optimising ageing infrastructures and systems. We can expect more businesses to see the potential of retrofitting the latest digital technologies and adding real-time monitoring tools. One of the biggest opportunities for both emissions and cost reductions is upgrading existing electrical equipment so that it lasts longer, uses less energy and prevents downtime from breakdowns. Upgrading outdated components is where businesses can achieve the largest carbon and cost savings – reducing the cost of operating equipment and extending its lifecycle by as much as 30 years.

?

If we look at some practical examples of trends and evolving sectors, in almost every country we are seeing an increase in sustainable transportation – rail, ferries, cars, buses, scooters - and we’ve not even really started on the electrification of heavy vehicles and aircraft – so this is definitely an evolving sector.

?

From talking to our distributors and customers, one impact on renewables is that they are seeing their solar businesses booming in the home market. I believe we will see an increase in microgrids based on renewables to support the energy challenge, as people and communities start to look at ways to produce their own energy for greater self-sufficiency. So investment in renewables, from industry and private consumers, will increase. With the current rising energy costs, this makes the investment in renewables a sensible business driver as the payback will be shorter. Energy policies worldwide are changing in response to the unprecedented volatility of energy prices. Many countries are looking to find ways to either augment or replace their energy infrastructures with alternative generation technologies to reduce their dependence on fossil fuels and imported energy.

?

This means 2023 will need to see battery energy storage systems (BESS) become more of a focus. BESS is a necessity for utilities and businesses alike to improve energy resilience and save costs during peak hours. But BESS has the potential to do much more than it has so far, and coupled with Artificial Intelligence and innovative digitalisation, it could become one of the most critical underpinnings for global energy transformation.

?

While we can also expect to see continued growth in ‘new’ areas like smart buildings and data centers, we can also expect greater opportunities as more traditional segments speed up their sustainability journeys. We should see more investment in the electrification of commodities, metals and mining. Without investment in these industries, we cannot make the green transition which is now so desperately needed. Industry needs to ensure the sourcing of the key ingredients of the shift to electricity, such as lithium and copper, is made safe, smart and sustainable.

?

In summary

When you have an energy situation like there is currently, global disasters or occurrences such as the unprecedented floods, forest fires and heat waves of last year alone, people’s focus changes. Human nature is sometimes to not act as quickly as we should with situations we are already aware of. However often, when the brain, heart and wallet are connected, this is when you see people taking action – when things really start to affect communities or nations directly.

?

We’ve been talking about climate change for years, but now the effects are really starting to become evident and closer to home all around the world, we’re seeing more urgency and action being taken by governments and society.

?

If we can expect anything from 2023, it is likely to include continued uncertainty, but also, progress. Whilst many of our global challenges and developments cannot be fixed overnight, I’m increasingly optimistic there are paths forward for progress and accelerating the rate of this. These include better utilising the technology that is already available and developing new innovations that clearly support the global megatrends. However, most critical is for companies, industries, think tanks and more, welcoming and driving industry collaboration as we all work towards the same end game of a sustainable future.