Energy security used to be someone else's problem; governments worried about it, commodity traders priced it, and industrial and commercial companies assumed governments and utilities were taking care of it. Energy affordability and sustainability were concerns, but manageable ones – background pressures that rarely forced a boardroom decision. That has changed. All three forces are now bearing down on utilities and industrial and commercial users of electrical power globally:

• Energy security
  • From a pressing issue to an existential threat. Already the most pressing of the three forces for industry; the effects of the closure of the Strait of Hormuz have significantly heightened attention on energy security and resilience
• Energy affordability
  • Now a significant pain point. Structurally higher since the post-pandemic price shock, pushed higher by the Russia/Ukraine war and now exacerbated by the uncertainty of the immediate and longer-term effects of conflict in the Middle East
• Energy sustainability and carbon reduction
  • From ‘nice to have’ to ‘must do’. Regulators and customers continue to pile pressure on companies demanding transparent reporting and reduction of their carbon footprint.

Together, these three pressures define the energy trilemma that is reshaping how companies must think about their operations – and their competitive position.

Geopolitical shocks, aging infrastructure and rising energy demand converge at the operator level as production stoppages, escalating costs and capital decisions that can no longer be deferred. If the trilemma is the context, operational failure is the consequence of not responding to it.

Why do industries need to urgently invest in energy resilience or face the consequences?

Whether you represent utilities, manufacturing, heavy industry, oil and gas, mining, commercial buildings or data centers the governing logic is the same: extract more value, reliability and sustainability from the infrastructure that already exists, while building the capacity to manage what is coming next. 

The five pathways below represent decisions that cannot be deferred, together with the consequences of inaction.

1. Strategic asset management

   • Running critical equipment to failure costs up to 10 times more than proactive maintenance; every unplanned outage adds to a bill that compounds until it becomes a full-blown and costly crisis.
     

2. AI and digital solutions

   • Without condition-based monitoring and augmented by AI, maintenance remains calendar-driven and reactive – faults develop undetected, failures arrive without warning and the cost of fixing them is always higher than the cost of preventing them.
     

3. Energy storage

   • In the absence of storage, punishingly expensive peak demand costs are tacitly absorbed, on-site renewable investment underperforms, while carbon-heavy fossil-fueled backup remains the default.
     

4. Energy & Carbon

   • Industries that cannot quantify their emissions and reductions risk losing ground in supply chain qualification processes as customer sustainability requirements become more exacting, especially around Scope 3.
     

5. Advisory services

   • Tactical decisions made in the absence of a full assessment of current and future energy needs, may result in wasted capital expenditure on expensive replacement of equipment where modernization would have delivered more value.

THE FORCES DRIVING CHANGE

When energy supply becomes a strategic risk

The Strait of Hormuz is the world’s single most critical energy chokepoint, and its effective closure was the most visible reminder in a generation that energy supply is not a given. Roughly 20 percent of the world’s seaborne crude oil and 20 percent of global LNG exports pass through a waterway less than 40 kilometers wide at its narrowest point, with no functional alternative route. The effects of the US/Israeli military conflict with Iran will affect global supply chains for months with oil, gas and other specialty and commodity chemical prices elevated across Europe and Asia.

Restarting oil fields and gas processing plants also takes time – often many months – which continues to throttle supply and maintains sustained price pressure on these commodities well after immediate hostilities subside.

“When analysts have looked at the things that could go wrong in global oil markets, this [the closure of the Strait of Hormuz] is about as wrong as things could go at any single point of failure.” Kevin Book, Clearview Energy Partners (NPR, March 2026)

The sectors most directly impacted by the knock-on effects of the Strait’s closure also include chemicals and petrochemicals (feedstock and energy costs), pulp and paper, steel and cement (high energy intensity, uninterrupted process), food and beverage production (fertilizer and fuel) and logistics. 

But the secondary effects reach every sector: inflationary pressure on energy pricing, supply chain disruption for industrial raw materials, are a sharp reminder that energy security is a strategic risk – not a financial abstraction. That inflationary pressure compounds the affordability problem already embedded in industrial cost structures since 2021. And it arrives at a moment when the pressure to decarbonize is not easing. In this respect, regulators, investors and customers are all pulling in the same direction.

Operational dependency on a fragile energy supply is a strategic risk that can be addressed directly through the triad of conservation, substitution and innovation – a pattern that has defined every major energy shock in the past half century. The 1970s OPEC embargo forced an emphasis on conservation via fuel-efficient automobiles, while today, modern energy efficiency and smarter asset management now drive the systematic reduction of baseline demand. In the same way – also as a reaction to the OPEC shock – France pursued substitution via nuclear power to reduce reliance on fossil fuels, today’s resilience centers on businesses investing in decentralized on-site generation and behind-the-meter storage, providing a vital hedge against volatile and expensive power markets. Ultimately, high-efficiency innovations - like heat pumps replacing gas boilers, the widespread electrification of industrial process, application of energy-efficient motors and drives – all serve as a modern ‘resilience dividend’, transforming supply-chain vulnerability into a locally managed, high-performing asset.

Aging infrastructure: a structural deficit on both sides of the Atlantic

This geopolitical shock and its collateral effects are playing out at a time when the underlying electrical infrastructure in many developed markets was already under significant strain.

In Europe, a European Court of Auditors report published in April 2025 found that grid operators’ investment plans through 2050 total €1.87 trillion – well short of the European Commission’s estimated need of up to €2.29 trillion. Almost half of all distribution lines are more than 40 years old, while Europe’s electricity demand is expected to more than double by 2050. As ECA’s Keit Pentus-Rosimannus stated: “To ensure the EU’s competitiveness and autonomy, we need modern infrastructure that can support our industry and keep prices affordable.”

In the United States, the American Society of Civil Engineers has consistently rated energy infrastructure a D+ in recent infrastructure report cards, reflecting decades of underinvestment in transmission and distribution networks.

The Lawrence Berkeley National Laboratory reported that at the end of 2023, over 2,600 GW of generation and storage capacity was waiting in grid interconnection queues – more than double the entire installed US generating capacity. Permitting delays, materials shortages, and a shortage of qualified electrical engineers compound the challenge.

For companies operating aging electrical assets within this environment, the infrastructure deficit is a direct operational risk. But there are solutions: strategic modernization delivers cost savings of up to 30 percent compared to outright replacement, defers major capital expenditures by extending asset lifespans by 20–30 years, and allows phased upgrades that keep operations running throughout.

Rising demand and the problem of impulsive loads

Against the backdrop of constrained infrastructure, industrial electricity demand is growing in ways that existing systems were not designed to handle. The growth is not primarily about AI or data centers – though these are real contributors. Data centers, despite the headlines they generate, represent a relatively modest share of overall global electricity consumption.

The broader driver is the accelerating electrification of industrial processes across multiple sectors simultaneously: oil and gas facilities converting from combustion-based processes to electric systems; automotive manufacturing reshoring to North America and Europe; semiconductor fabrication expansion; and industrial heat processes being redesigned around electricity.

Add the broad-based digitalization of enterprise operations, rapid EV fleet adoption, and the growth of distributed renewable generation, and the picture is one of sustained, structural power demand growth across every industrial segment.

AI and data centers do, however, illustrate one specific and widely underappreciated challenge: the impulsive characteristics of modern loads. AI workloads cycle from near-zero to full load in milliseconds. Electric arc furnaces draw enormous demand surges. Automated logistics and production systems create sharp, unpredictable peaks. 

The electrical infrastructure inside most industrial facilities – and the grid that feeds them – was designed for constant or slowly varying loads. It was not designed for this pattern. The result is power quality problems, grid instabilities and accelerated degradation of assets operating under stresses they were never specified or designed for.

The business case you cannot ignore

In environments where milliseconds count – a data center hosting AI inference, a pharmaceutical production line, a semiconductor fabrication facility – the cost of even momentary power disruption extends far beyond the immediate financial loss. An unplanned outage can trigger a production restart sequence taking hours, waste an entire batch or breach service level agreements with cascading contractual consequential damages claims. 

ABB’s research shows that waiting for equipment to fail before maintaining it costs up to 10 times more than proactive maintenance – and that a single unplanned outage can run to $125,000 per hour in a data center environment to over $2.3 million per hour in capital-intensive industries like automotive and semiconductors. 

The gap between that figure and the cost of a monitoring system is a business case that writes itself. In my next article, I will take a look at how the energy trilemma plays out in utilities, industry, buildings and data centers.