by Lamia Al Othman

While renewable energy investment continues, critical mineral shortages, supply chain disruptions, and concentration of AI capabilities present new systemic risks. As we near the end of the year we revisit six of the major trends the IRM Energy and Renewables Group predicted at the start of the year and reflect on these.

Introduction

This year has been marked by geopolitical uncertainty, market volatility, and rapid technological progress, with much hype around the increasing use of AI and the need to provide capacity to power the ongoing technological revolution. As new U.S., EU and U.K. policy directions take shape, global energy markets are undergoing major transition, regulatory reform, and policy realignment.

Recent tariff measures and a renewed emphasis on onshoring, particularly in the U.S. and parts of Europe, are reshaping and rebalancing global supply chains and investment flows. The U.S. in particular has accelerated domestic oil production which has spurred significant growth in shale production, with forecasts suggesting a potential oversupply by 2026 as OPEC+ producers also commit to higher output levels. These developments signal a shifting balance between energy security priorities and market stability, with implications extending far beyond domestic markets.

Despite ongoing tensions in the Middle East, oil prices have remained relatively stable, reflected in recent downward pressure on prices. Further OPEC+ decisions in 2025 may further alter this balance. Meanwhile, the accelerating energy transition continues to present technical, financial, and geopolitical challenges, particularly amid persistent flashpoints such as Ukraine–Russia and China–Taiwan.

As events unfold, risk management has moved beyond its role as an essential management discipline and is cementing itself as a powerful partner —enabling organisations to protect investment, support strategic decision-making, and in creating and preserving long-term value.

At the start of 2025, the IRM Energy and Renewables Special Interest Group published their insights as part of the IRM Risk Trends 2025 annual publication. The report identified the most likely factors which would shape 2025 and beyond:

1. Geopolitical Instability
2. Energy Transition
3. High Performance Computing (HPC) and Energy Grids
4. Economic Instability ‘s Role in the Supply Chain
5. Concentration of AI in Energy Systems
6. Offshore Wind Sector

Monitoring and reviewing the performance of these insights and predictions helps us in understanding the accuracy of our methodology and approach towards developing these perspectives, and provide a reference for recalibration. A summary of the key trends identified at the start of the year are outlined In the table below alongside an update on their current status.

Key Risk Trends and Current Status

Risk Trend	Highlights	Current Status (October 2025)
1. Geopolitical Instability	Conflicts in key oil regions disrupt supply chains; concentrated supply chains and dependencies on critical minerals pose risks (China controls over 70% of global rare earth processing); energy transition projects may face delays and cost increases.	Ongoing tensions in the Middle East and Eastern Europe continue to disrupt oil and gas supply routes, though oil prices have not reacted as sharply as in previous years mainly due to strategic stocks (e.g., OPEC+ policy, incremental supplies from US, Brazil) absorbing the shocks. At the same time, China’s October 2025 export controls on rare earths and battery inputs have injected friction and cost in EV and renewables driving price volatility and exposing the vulnerabilities of concentrated supply chains. China’s dominance in minerals has seen policy shifts globally. The global shift toward onshoring and protectionist policies (e.g., DRC cobalt, Indonesia nickel, Chile lithium),including new tariffs, is further reshaping energy markets and investment flows. Energy projects in sensitive or high-risk regions are increasingly reporting delays due to security challenges, logistical disruptions, and investor caution amid prolonged geopolitical uncertainty. If these conditions persist, the sector may face higher project costs, slower progress on energy-transition goals, and growing pressure on long-term energy security.
2. Energy Transition	The Trump Presidency likely to lead to changes in energy and related policies both at home and abroad. Slowdown due to uneven tech readiness, regulatory divergence, geopolitical resistance (e.g., Russia), investor pressure, and supply chain issues; challenges with hydrogen adoption and development, PV technology, and nuclear innovations.	Renewable energy development continues, although unevenly; China remains dominant in PV manufacturing whilst also continuing to rely heavily on Coal. Hydrogen adaptation is progressing slower than expected, whilst our prediction that SMR and thorium reactors could be a transformative opportunity has also shown to be slower with several SMR and thorium reactor projects still in pilot stages.   There is still a major demand for fossil fuels, which means any decarbonization will be difficult for major fossil fuel–dependent economies, although countries such as Saudi Arabia are investing heavily in the Energy Transition. With a target of 50% renewables by 2030, there is a strong focus on renewable energy projects and investment. Whilst we predicted that grid failures could disrupt economies, the scale of the major outage that occurred in Portugal and Spain was nonetheless surprising. During April, the Iberian grid lost around 15 GW of generation (roughly 60% of demand) in a matter of seconds, triggering a blackout that affected nearly the entire mainland of both Portugal and Spain.
3. High Performance Computing (HPC) & Energy Grids	AI data centres and Bitcoin mining strain grids; vertical integration of Bitcoin mining and data centres; cybersecurity, centralisation, increased investment in High Performance Computing (HPC); and algorithmic errors pose systemic risks; grid failures could disrupt economies.	HPC demand is accelerating as predicted as AI continues to grow in usage . data centres and Bitcoin-mining facilities expand, increasing grid pressure and energy intensity. In response, cybersecurity and redundancy investments are rising, as governments and grid operators seek to bolster resilience, strengthen interconnections, and ensure that future large-scale grid events do not cascade into economy-wide disruption.
4. Economic Instability’s Role in the Supply Chain	Inflation, sovereign debt, and trade wars threaten supply chains; critical component shortages (PV, wind turbines) could slow the energy transition; climate goals are at risk. Enhanced technologies could be adopted such as AI driven supply chain optimization and blockchain-based tracking for ESG compliance.	If current trends persist, global supply chains will face escalating risks from rising trade barriers and U.S. tariffs introduced in 2025, which have already disrupted key import routes and increased costs for manufacturing and renewable-energy sectors. These pressures, combined with persistent inflation, elevated debt burdens, and uneven economic recovery, will likely weaken global demand and erode investment confidence. Companies may be forced into costly adjustments such as nearshoring and multi-region sourcing, increasing operational complexity and financial strain. Simultaneously, diverging climate-policy trajectories will amplify strategic uncertainty. Delays and policy reversals in the U.S. and India contrast sharply with the EU, UK, and China’s continued commitment to energy transition, creating fragmented regulatory and cost environments. If this divergence continues, businesses in energy and industrial sectors will face heightened risks of project delays, compliance challenges, and uneven competitiveness across markets. These combined factors could reshape global production networks, making resilience and sustainability planning critical for long-term success. An area that is gathering speed is the adoption of AI driven supply chain solutions. Adoption by Amazon, Walmart and Zara are some examples where demand forecasting and optimizing of inventory management are being implemented. This move by market leaders will certainly lead to AI supply chain solutions being rolled out across organisations globally during 2026. There is still a challenge however with poor data quality, talent shortage and integration with legacy systems which need to be overcome.
5. Concentration & Monopolisation of AI in Energy Systems	Few tech companies dominate AI in energy, creating monopolistic risks, cyber threats, and stifled innovation; regulatory gaps persist.	During 2025, tech giants have continued to dominate in AI-driven energy systems which could create serious risks for security, innovation, and market fairness. Companies like Oracle, OpenAI, Microsoft, and AWS are rapidly expanding their control over AI-powered data centers and grid optimization tools. For example, Oracle and OpenAI’s “Stargate” hyperscale data center, expected to generate around $30 billion annually by 2028, shows how these firms can build facilities in 12–18 months, far faster than the 5+ years it takes to develop a traditional power plant. This speed advantage may lock utilities into proprietary ecosystems, limiting competition and innovation. The AWS outage on October 20, 2025, illustrates a key risk of monopolisation: as a few hyperscale providers dominate AI-driven energy systems, a single failure can cascade across utilities and critical infrastructure, showing how concentrated control magnifies systemic vulnerabilities. At the same time, cybersecurity threats are increasing as AI becomes integrated into critical infrastructure. Utilities such as E.ON, Enel, and National Grid are using AI for predictive maintenance and smart grid management, which expands the potential attack surface for cybercriminals. Smaller innovators like Kraken Technologies struggle to scale due to the market dominance and influence of hyperscale providers. Current regulations remain behind the curve, leaving oversight gaps in AI-driven energy systems. If these patterns persist, the sector could face monopolistic control, greater cyber risks, slower innovation, and broader systemic vulnerabilities that threaten energy security and resilience.
6. Offshore Wind Sector	Major providers face operational challenges; technological, financial, and logistical hurdles threaten sector growth; physical asset security and maliciious actors	The offshore wind industry is at risk of a significant slowdown driven by rising costs, logistics bottlenecks and regulatory uncertainty. Capital expenditures have surged by 30 – 40% since 2021 due to inflation, supply-chain constraints, and high interest rates, forcing major developers to cancel or delay projects. For example, Ørsted suspended its Hornsea 4 project with an estimated €470 – €603  million write-down, while Shell and Equinor exited U.S. offshore wind leases. These financial pressures are reducing investor confidence and increasing the likelihood of auction failures. A shift in U.S. policy has resulted in cessation of wind projects, including some which were nearing completion. Logistical challenges, such as shortages of specialised installation vessels and port infrastructure, are compounding delays. Technological risks in scaling floating wind and advanced monitoring systems add further uncertainty, while fragmented regulatory frameworks and subsidy dependence leave projects vulnerable to policy shifts. If these dynamics continue, the sector faces heightened risks of cost overruns, investment pullback, and missed climate targets, undermining global energy transition goals and long-term resilience. Malicious actors continue to be a concern with events over the last year indicating a continuing heightened risk environment for submarine cables and off-shore infrastructure, and threats posed by state-sponsored malicious activities are likely to increase in this time of elevated geopolitical tensions.

Cross-Cutting Insights

Across all six risk areas, three broad themes emerge:

1. Persistent geopolitical factors continue to shape energy trade and investment. The need to enhance risk management capabilities around geopolitical and supply chains are a priority for the sector.
2. Uneven transition progress reflects disparities in policy readiness, financing, and supply chain resilience. A move towards greater resilience and future readiness is becoming the new norm.
3. Digital dependency through AI and high-performance computing introduces both efficiency and new systemic risks which will in turn require investment in risk management skills and technologies.

These interlinked forces suggest that energy resilience in 2025 will depend on global policy coordination, technological adaptability, and strategic diversification across supply chains and partnerships.

Risk Management’s Role

Risk management is a critical enabler for the energy sector, ensuring resilience by helping organisations and stakeholders navigate a rapidly evolving landscape.

It should, when well implemented and continually improved:

• Enable companies to anticipate and prepare for geopolitical disruptions and supply chain shocks.
• Make use of scenario planning and stress testing as a means of developing contingency plans for events like regional conflicts or critical mineral shortages.
• Enable better informed decisions to be made such as diversifying suppliers and logistics routes to further reduce vulnerability to shocks.
• Support assessment of the actions needed to meet shifting regulations and policy divergence, ensuring compliance and strategic alignment.
• Provide decision support in a wide range of situations for organisations of all types.
• Assist with the evaluation of the readiness and risks of emerging technologies – such as hydrogen, small modular reactors, and advanced photovoltaics – helping prioritise investments and avoid costly missteps.

Organisations which have an effective and forward thinking Risk Management approach which focuses on resilience, are able to assess and adapt to shifting regulations and policy divergence, ensuring compliance and strategic alignment whilst supporting decision-making for organisations, investors and governments alike.

Economic instability and supply chain disruptions are also addressed through effective financial risk modeling and supply chain mapping, allowing organisations to hedge against inflation, interest rate shifts, and trade wars, while identifying and mitigating bottlenecks in critical components like PV panels and wind turbines.

Conclusion

The energy sector is increasingly interconnected and complex. The convergence of transition goals and geopolitical fragmentation is making the balancing of sustainability goals far more challenging to achieve and coordinated global action is needed to redress imbalances. Key priorities include strengthening regional energy alliances, diversifying supply chains, and advancing next-generation technologies..

While investor pressures and policy uncertainty remain, advances in high-performance computing and grid technologies are unlocking new opportunities for emerging markets, renewables expansion, and sustainable growth. For both governments and corporations, 2025 stands as a decisive year to transform energy transition ambitions into a resilient future.

The experience of 2022-2025 has delivered a clear lesson: energy security and geopolitics are closely linked. Going forward, the stakeholders in the energy sector must plan for a future where resilience to events such as military escalations, trade ruptures and political instability is just as important as cost and efficiency.