An exercise in energy sector foresight: Those who fail to learn from the past are doomed to repeat it

In the first part of this series, we considered the energy system of 2025 from the vantage point of 2005. Reflecting on blind spots and missed opportunities with the benefit of twenty-twenty hindsight, we teased out the lessons that energy businesses need to learn.

Now, switching from hindsight to foresight, Nous Group’s Energy and Decarbonisation team, together with our Energy Advisory Council, attempt to envision the next twenty years of energy system transition from the vantage point of today.

Change and uncertainty will abound for the next two decades. Yet we chance our arm on five factors we think will play a crucial role in shaping the energy transition of the next two decades. For each we share some key insights and pose the questions that energy businesses should be grappling with should they wish to ensure their long-term success.

Over a twenty-year horizon, decisions will still hinge on navigating costs and price signals. What will also continue is the growing centrality of community engagement and benefit delivery, and the centrality of social license to project economics. A developer’s reputation with community will increasingly become a source of competitive advantage, with the ability to deliver projects faster and at lower cost.

The last decade has underscored the dual imperative: projects must stack up economically and be supported by affected communities. These factors reinforce one another; community support directly enhances economics. Plans ignoring this will remain paper exercises. Recent transmission, wind and solar projects facing setbacks where community trust was absent demonstrate this reality. These dynamics will intensify as competition for land, water, labour, and social legitimacy increases. First Nations communities will play expanded roles through sophisticated co-ownership models and benefit-sharing arrangements.

Technology is likely to bring new energy sources into consideration, such as low-carbon liquid fuels, carbon storage, and grid-edge solutions. Yet for each of these, the lesson of recent years – that both project economics and community support are necessary – will continue to dictate what succeeds. 

• Is our approach to community engagement sufficiently open, honest and collaborative to build trust?
• Have we embedded co-development of projects with affected communities?
• Do we have the right mix of capabilities to do this successfully, with engagement specialists in equal measure to engineers and financiers?

Australia’s transition unfolds within a global context of rapid growth and intense capital demand across the energy sector. As a buyer of electric vehicles, batteries, solar panels, and grid components, Australia operates largely as a price-taker, often queuing behind larger economies. This constraint will remain fundamental through to 2045. 

The late 2010s and early 2020s showed how supply chain disruptions can affect delivery timelines. By 2045, the race to net zero will show no signs of slowing down. Global demand for clean energy technologies will far exceed today's levels, as the transition of developing economies accelerates alongside the continued transition of developed economies. Australia’s challenge is not to control these markets, but to anticipate, hedge, and diversify supply and procurement strategies.

Further, the workforce squeeze is going nowhere. As projects are completed, new priorities will immediately emerge. As we have written before, a mobile, skilled, and adaptive energy workforce will be needed, in far greater numbers than exist today.

Success in this environment also depends on capabilities that go beyond navigating supply chain and workforce constraints: anticipating market shifts, managing financial and operational risks, and rapidly deploying flexible strategies are all of equal importance. Firms must embed volatility and delays into project planning and cost estimation, while maintaining enough agility to pivot across suppliers, technologies, and financing models.

• Do we have the right mix of capabilities to manage a rapidly changing market?
• Does our project planning and delivery pragmatically account for risk and delay?
• How are we preparing for supply chain and labour constraints and growing capital costs?

In recent years, households and industry have begun shifting from being passive energy consumers to active “prosumers.” This trend is set to accelerate. Households will participate through rooftop solar, home and community batteries, electric vehicles and virtual power plants. By 2045, up to four in five households could have rooftop solar.

Industry will follow suit, driven by rising energy demand, particularly from data centres. Large industrials may invest in behind-the-metre or co-located renewable generation, actively procure firmed low-emissions energy and optimise demand using AI-powered technologies and advanced demand management.

For retailers and generators, the transformation will be profound. Energy and money will flow both ways. New products and heightened consumer protection expectations will become standard. Networks will face equally significant changes: grid augmentation for bi-directional flows, support for neighbourhood batteries and EV charging, and pricing models that reflect reduced network reliance. Efficiently channelling surplus household electricity to commercial and industrial users will be critical.

Retailers and networks must also address equity. Many households will be unable to invest in their own energy resources. Sharing network costs among fewer, lower-income customers is unsustainable. Avoiding this will require fundamental changes in cost recovery and retail offerings tailored to consumers who cannot participate in consumer energy resources (CER).

• How prepared are we for a fundamental change in our business model when energy flows both ways, across consumer engagement, product design and pricing?
• Are we prepared to invest in and manage the infrastructure required for bi-directional grids and distributed energy resources?
• What is our strategy to protect all consumers and ensure equity and affordability for customers who cannot participate in consumer energy resources?

Government intervention has underpinned Australia's energy history and will remain prevalent through to 2045. The Nelson Review highlighted how infrastructure development has been government-led and assumes ongoing government activity will drive much of the energy sector’s transformation. The form of intervention might evolve – from direct subsidies to market-shaping regulation, from state-based planning approvals to national infrastructure coordination – but the centrality of government is a given.

Federalism will continue to complicate matters. States will likely still want to lead on planning and delivery, while the Commonwealth will attempt to set overarching frameworks and funding arrangements. Better coordination is possible, but divergences between state and federal governments is more likely the rule than the exception.

For businesses, this means policy risk is not going away. Energy investment will continue to be exposed to shifts in political ideology, regulatory priorities, and government willingness to intervene in markets. This includes possible divergences between states and federal governments.

• How can our business model remain agile in the face of shifting policy directions and regulatory priorities?
• What is our appetite for proactive engagement in strategic advocacy beyond formal submissions?
• Where should we prioritise advocacy to influence policy settings that materially impact our operations and investments?

The past decade has seen profound technological change in the energy sector, and the pace is only accelerating. Each new technology tends to spark further innovation. Household solar is a clear example: its uptake has driven the development of web applications to monitor and trade energy, battery storage solutions, and grid-level coordination tools. Similarly, the growth of renewables in the grid has created demand for technologies like synchronous condensers and grid-forming inverters to maintain system stability. These shifts are spawning new value chains and attracting an expanding array of players, but the winners – the technologies that will ultimately underpin the future grid – will only reveal themselves over time. For instance, whether there is an ongoing role for both synchronous condensers and grid-forming inverters is a technical debate without a clear answer. 

Energy businesses are now grappling with how many parts of this evolving value chain to participate in. Some, like Origin, and more recently Essential Energy, have invested in platforms such as Kraken to strengthen digital capabilities and customer engagement. Others are exploring partnerships or acquisitions to secure positions in emerging technologies. Some network businesses have taken steps to support the adoption of new technologies such as synchronous condensers, but they may not be their owners and operators forever.

As disaggregation continues and the number of market participants grows, sustaining innovation across multiple fronts will become harder. At the same time, the need to adopt and integrate new technologies quickly will only increase, creating both opportunity and pressure for energy businesses.

Technological change, both known and unknown, will also continue to drive fundamental system-level challenges. The right mix of technologies to deliver a stable, cost-effective energy system will require constant monitoring and evidence-based policy and investment decisions. 

• Are we clear on where we want to lead innovation, where we are content to follow, and how we manage the risk of backing the wrong technologies?
• Do we have the right partnerships and capabilities across the energy ecosystem to adopt and integrate innovation quickly?
• How well do we understand the evolving needs and expectations of our customers, and how does this shape our technology choices?

The next twenty years will not see us take a straight path to net zero. Ours will be a dynamic, high-stakes transition shaped by rapid technological change, evolving policy, and shifting consumer expectations and needs. Energy businesses will need to balance innovation with system integrity, while ensuring security and affordability in an increasingly complex market.

Rather than simply react to change, those who succeed will anticipate it, invest boldly, and build the agility to adapt at speed. The question is not whether transformation will happen, but how prepared each business is to lead rather than follow. In this environment, clarity of strategy and willingness to act decisively will separate tomorrow’s winners from those left behind.

Get in touch to discuss the future of the energy transition.

Connect with Simon Guttmann and Daniel Blakeley on LinkedIn.

This is the second part of a two-part series. You can read the first part here.