In the face of headwinds, five market trends are quietly re-making energy and transportation

Here in the U.S. it has been a month of disruption, characterized by trade protectionism, climate denial, and the privatization and even erasure of information, which in turn are causing uncertainty and sclerosis in supply chains everywhere. Yet while the energy sector has been preparing for risk, it is also trusting in market forces that will inexorably advance the “clean energy revolution.”??

In early February I attended the Bloomberg NEF Summit in San Francisco, where business leaders and investors in sustainable energy and transportation confirmed my observations of human behavior. What I heard at BNEF suggests a complex and evolving landscape in the energy and transportation sectors, where collaboration and innovative business models are becoming essential for success despite potential political and economic headwinds.?

Despite regulatory uncertainty and political shifts, the market itself is driving innovation. BNEF’s research confirms that deployment of clean technologies is reducing emissions. Even considering the looming specter of AI’s carbon footprint, the most lucrative new technology ventures not only contribute to decarbonization but are profiting from it. Companies are seeking to create value for customers by offering more sustainable options, which in turn drives revenue and supports the growth of the clean energy market.

The cleantech market cannot be stopped. Here are some of the trends I am more sure about than ever:

1. Collaboration

There’s a Chinese proverb, “A single tree does not make a forest; a single string cannot make music." The energy sector knows that this is no time for hogging technological breakthroughs. It takes too long to make progress, without a significant competitive advantage. Even stodgy utilities and automakers are embracing partnership and innovation. PG&E’s CEO Patti Poppe has said that “We need to make the smartest investments in the right way at the closest cost for customers. To do this, we need solutions and ideas from all sources and players… We need breakthrough thinking, collaboration, and swift execution.”?

Utilities don’t need to be in the business of cars, AI, or battery storage innovation, but they can partner with those experts to create solutions together. Ford, GM, and Toyota all have venture funds exploring battery, EV charging, and materials manufacturing solutions. They are looking to advance the entire industry with joint ventures like Ionna, which brings together eight of the world’s top automakers to align on EV charging infrastructure needs. By creating a new driver experience, Ionna fosters a new market in which all auto companies can compete fairly and profitably.?

The battery industry is booming, as everyone acknowledges the crucial need for storage to achieve our desired future grid capacity. But the manufacturing of materials and batteries is too complex for anyone to do alone; it requires coordination between countries and supply chain stakeholders. In the shipping arena, the story is similar. Ship builders, engine manufacturers, owners, and cargo companies all share an interest in working together to create demand and adoption of alternative fuels in the shipping sector.

2. Data sharing and transparency?

The list of stakeholders with shared values is expanding. Both policy makers and business leaders agree that, in order to achieve market transformation goals together, they need more transparency and data-sharing between regulators, energy suppliers, and private industry - particularly around GHG reporting and supply chain data. With regard to the U.S.’s ability to meet growing power demand, JP Morgan’s Executive Director of Clean Mobility, Julia Grinshpun, highlighted our once-in-a-lifetime opportunity today to harness vehicle-to-grid, smart grid, and behind-the-meter technologies to ease friction and fill the gaps caused by our current interconnection backlog; but that juggernaut of solutions necessitates efficient collaboration and aligned goals across OEMs, utilities and regulatory agencies. This suggests a move towards a more open and collaborative ecosystem, where information is readily exchanged.

In any system, a degree of standardization and definition is critical for interoperability and benchmarks. The AI Energy Score is an example of a framework that encourages transparency with a standardized way to measure and compare the energy efficiency of AI models.

In all this, the burden still rests on humans to choose to disclose, and share information.

3. Flexible supply chain management

Flexibility, rather than tariff restrictions, is proving to be key to manufacturers’ competitiveness and profitability. In U.S. policy, both the Infrastructure Investment and Jobs Act (IIJA) and now tariffs aimed to prod a shift to domestic supply. IIJA created resiliency and independence for U.S. manufacturers by incentivizing global companies to move operations and materials production to the U.S.?

Gotion has been manufacturing batteries for 18 years and is the 8th largest global player in this space. Although they started in China, they have facilities all over the world, including an operation outside Chicago that produces both batteries and battery materials for the U.S. market. Gotion’s ability to accelerate its U.S. productions was made possible with Investment Tax Credit (ITC) funding from the IIJA.?

As several battery manufacturers pointed out, there is no getting around the fact that China has the readiest and highest grade materials for production. Sometimes, the IIJA’s stringent sourcing requirements created some inefficient practices in cases where U.S. supply was not at sufficient levels of quality or capacity - like one company that imported whole Taiwanese chargers with the chips they needed, only to strip and rebuild the entire housing with American materials to ensure that the percentage of foreign parts met U.S. requirements.?

Supply independence is important, but must be balanced with flexibility as we bolster domestic supply chains. That flexibility comes in the form of smart supply chain management. With the current volatility and uncertainty in the movement of materials, manufacturers in the automotive, battery, and materials sectors need supply-chain management solutions to accelerate workflows, automate logistics, and gain real-time insights on asset and resource availability.

4. Customer experience innovation?

What is the point of all this collaboration, data sharing, and opening up of supply chains? In the energy sector, it is to evolve our system of generating, distributing, and consuming energy. In the transportation sector, driving, flying, and shipping experiences will likewise look different too. These transformations are changing our experience as consumers.

Energy and transportation companies are starting to focus more on creating customer value and differentiating themselves not with commodities but with their service offerings. Companies are improving customer experience, which includes simplifying processes, offering personalized services, and ensuring reliability. They're thinking bigger than just the way we've always done things, too.

As Southern California Edison (SCE) accelerates its pace of planning, the utility brings its customers along. SCE is paying closer attention to more granular segments in their territory - like ports, shipping routes, warehouses, bus fleets - and engaging them to give the utility a true understanding of "pending load" and the future connection pipeline, and to get feedback on customer acceptance of new technology capabilities.

Ionna is helping automakers, fuel providers, and retailers to create new paradigms for charging station customer experience, with the goal of winning the loyalty of EV drivers. I personally will be happy enough if I am not relegated to a dark corner of a WalMart parking lot drinking cheap coffee for an hour, but these new stations have bookstores, local artisanal bakers, nice restrooms, and other amenities that might make me appreciate my slow-charging Bolt. Companies like Ionna and Pilot make me think of the early days of gas stations, when oil companies dreamt up ways to inspire fascination and delight in motoring as they created a whole new consumer category.

Moreover, automakers are using software to personalize the car experience to build consumer trust. Kristin Welch, a venture builder and investor who advised Ford Motors’ investment initiatives, was asked about how automakers can combat the loss of trust in software-defined vehicles in the wake of recent catastrophic failures and fatal accidents. Her response recalled how companies in many other industries have dealt with loss of trust. She advised using that same software to customize the driver experience, so people love their cars.

We can all resonate with these plays to gain our loyalty - because nothing makes us feel so good about a product like being known.

5. AI and Digitalization

Panelists at BNEF agreed that AI and digitalization are key to the future of the energy and utilities industries. Companies that are focused on leveraging data and AI to improve operations, customer experience, and workforce management are likely to succeed in this market.?

Blackhorn Ventures’ Melissa Cheong reinforced my own hunch that the big opportunity for applying AI in the workforce right now is assistive AI. Blackhorn focuses on industries that have not engaged very much in digital transformation, and who need to make quite a leap to modernize. In the energy sector especially, where the industry is facing a wave of retirement and a new underskilled labor force, Cheong sees value in the “copilot” model that keeps humans in the loop. She also pointed out that just because a process should be automated does not mean it needs to be done by autonomous AI.

Cheong also echoed my employer's point of view that models should be trained on a company’s own proprietary data and workflows, automating its own processes and generating relevant knowledge on a deeply unified platform, to make its own workforce more effective. She saw the greatest opportunities in layering AI agents on digital twins and automating interconnections. Toyota Ventures Founder Jim Adler sees a huge opportunity in the oil and gas industry to leap ahead in AI adoption using proprietary industry datasets that are much more powerful, relevant, efficient and valuable than learning from the Internet. I would add that targeted, industry-specific modeling is also much more sustainable with regard to energy usage.

Essentially, in any situation where humans cannot process paper fast enough and are overwhelmed with messy, unstructured data and unorganized workflows, AI can significantly improve throughput and accuracy.

Playing so we all win

“A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play.” ― James P. Carse, Finite and Infinite Games: A Vision of Life as Play and Possibility

These movements toward collaboration, transparency, and sharing indicate to me that the zero carbon race is not a zero-sum game. Transitioning to a cleaner energy system can be beneficial for all stakeholders and can drive economic growth and opportunity.

Companies that can build partnerships, share data, innovate, and focus on customer experience are most likely to stay competitive, regardless of political headwinds. The use of technology and digital tools to break down data silos, manage assets and operations, and provide personalized service will be crucial in this rapidly evolving landscape.

Let's continue the play. What's your next move?

Side Trails

• Re-imagine AI in energy. I just finished reading Playground, by Richard Powers. It inspired love, awe and a desire to connect. It made me appreciate the ocean as much as his novel The Overstory made me deeply respect trees. And, it gave me a different vision for the possibilities of AI.
• Feed your neuroplasticity. Playground pointed me down another trail, and this book is on my list now: James P. Carse's Finite and Infinite Games: A Vision of Life as Play and Possibility We'll see if it helps me to be flexible and generative when I'm tempted to be rigid and combative.
• Play the game together. Contribute to AI benchmarks for our industry and submit your model and use case to be evaluated by the AI Energy Score tool.
• Keep data transparency alive. Public Environmental Data Partners has taken the initiative and stood up a copy of the Environmental Justice Screening and Mapping Tool (after it was taken down from sites that our taxpayer dollars funded.) Justice and equity still factor in to the success of any energy transition project.

My coverage of solutions or products are meant to expand awareness and should not be construed as endorsements. The views expressed in my newsletter and posts represent my own opinions and not necessarily those of my employer, Salesforce.

?? This post was aided by Writer.com helping me condense copious notes and references and Google Gemini turning them into pictures.