Applied AI in Energy & Utilities Market

Applied AI in Energy & Utilities Market Overview

Applied AI in Energy & Utilities Market is projected to grow from USD 795.53 Million in 2025 to USD 3959.43 Million by 2034, exhibiting a compound annual growth rate (CAGR) of 19.52% during the forecast period (2025 - 2034). Additionally, the market size for Applied AI in Energy & Utilities Market was valued at USD 665.60 billion in 2024.

Artificial Intelligence (AI) is reshaping the energy and utilities market by enhancing efficiency, sustainability, and reliability. AI applications are wide-ranging, offering transformative benefits. AI optimizes grid operations, improving energy demand forecasting and infrastructure reliability. It also fine-tunes building energy management through sensor data analysis. Additionally, AI aids in energy trading, grid security, and customer service, making the entire energy ecosystem more efficient.

AI's influence extends to smart grids, sector coupling, and electric vehicle integration. It streamlines grid management in the face of decentralized energy sources, supports intelligent power generation and consumption coordination, and enhances grid stability. In the realm of electricity trading, AI-driven forecasts boost grid stability and renewables integration, and recent developments have shown its potential in reducing control reserve demand. Despite the persisting challenges of increasing electricity costs and cybersecurity risks, the combination of AI technology, government backing, and infrastructure investments presents a bright prospect for a future energy landscape that is both efficient and dependable. It is evident that AI is on the brink of taking on an even more crucial role in shaping the evolving energy industry.

FIGURE 1: APPLIED AI IN ENERGY & UTILITIES MARKET SIZE 2025-2034 (USD MILLION)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

Applied AI in Energy & Utilities Market Driver

Smart City Development Create Immense Growth Potential for the Market Players

The rapid expansion and substantial investments in the smart city landscape are significantly influencing the growth of applied AI in the energy and utilities market. This evolution is particularly pronounced in three core sectors: communications, energy, and transportation, which are receiving heightened attention, increased funding, and intensified research and development efforts. These endeavors are aimed at delivering highly efficient solutions and enhancing the overall well-being of urban residents. The global smart cities market is predicted to reach approximately US$ 1.38 trillion by 2030, a substantial rise from its 2019 valuation of US$ 392.9 billion. Furthermore, approximately two-thirds of cities worldwide have already channeled investments into smart city technologies, and this trend is poised to persist, with a projected CAGR of 49.20% between 2022 and 2027.

The movement of people towards urban centers stands as another driving force behind the advancement of smart cities, with the current urban population comprising 55% of the global populace, predicted to ascend to 68% by 2050. This urban migration is propelled by the allure of enhanced digital technologies, which attract both businesses and residents, thereby fostering economic expansion.

The principal objectives of smart cities encompass catalyzing economic growth, refining city operations, and augmenting the residents' quality of life. The smart cities are anticipated to generate US$ 20 trillion in economic benefits by 2026 and can enhance energy efficiency by 30% over a span of two decades. Furthermore, smart traffic signals can curtail travel time by up to 25%, while predictive policing measures can potentially reduce violent crimes by about 5%, and property crimes by approximately 10%. Smarter payment systems in cities in their initial phases can result in savings of US$ 140 per citizen annually. This multifaceted transformation of urban areas through smart city initiatives is poised to revolutionize the energy and utilities market by harnessing the power of applied AI for the benefit of all.

Global Applied AI in Energy & Utilities Market- Segment Insights

Global Applied AI in Energy & Utilities Market- Deployment Type

The global applied AI in energy & utilities market, in this report, has been segmented on the basis of deployment type into on-premises and cloud.

The energy and utilities sector are increasingly supporting cloud deployment for its growing implementation of AI technologies. This shift is due to the expanding industrial use of AI for tasks such as grid optimization and resource management demands significant computational power, which cloud platforms can offer without the need for substantial upfront investments in hardware.

Further, the real-time data processing and analytics requirements of the energy sector align perfectly with the capabilities of cloud infrastructure. Cloud services provide high availability and rapid data processing, which are essential for functions like grid monitoring, predictive maintenance, and demand forecasting.

Moreover, cloud-based AI solutions enable seamless collaboration and remote access, allowing experts to analyze data and make informed decisions from anywhere. This feature is especially beneficial for an industry with dispersed assets and remote monitoring needs.

FIGURE 2: GLOBAL APPLIED AI IN ENERGY & UTILITIES MARKET, BY DEPLOYMENT TYPE, 2022 VS 2032 (USD MILLION)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

Global Applied AI in Energy & Utilities Market- Application

The global applied AI in energy & utilities market, in this report, has been segmented on the basis of application into robotics, renewables management, demand forecasting, AI-based inventory management, energy production and scheduling, asset tracking and maintenance, digital twins, AI-based cybersecurity, emission tracking, logistics network optimizations, and others. Renewables management is application seeking attention in the given market.

The global energy landscape is undergoing a remarkable transformation, guided by a collective commitment to sustainable practices and climate change mitigation. This transformation is most evident in the rapid growth of offshore wind energy across the world's regions, with Europe leading the charge, targeting a substantial expansion in offshore wind capacity. Meanwhile, the U.S. Department of Energy is resolutely pursuing its goal of deploying 30 gigawatts of offshore wind energy by 2030.

This shift towards renewable energy aligns with the prevailing trend of escalating investments in clean energy technologies, as opposed to traditional fossil fuels. According to the International Energy Agency (IEA), global energy investments in 2023 are expected to reach approximately US$ 2.8 trillion, with a significant portion devoted to clean technologies such as renewables, electric vehicles, and energy storage systems. This growing emphasis on clean energy sources is fueled by concerns surrounding cost-effectiveness, energy security, and environmental sustainability.

In this transformative energy landscape, applied artificial intelligence (AI) emerges as a pivotal force. AI technologies have the capacity to optimize various facets of the energy and utilities market. They can enhance the efficiency of renewable energy sources, like wind and solar, by predicting energy generation patterns, optimizing grid operations, and enabling effective energy storage solutions. Furthermore, AI-driven predictive maintenance in utilities can significantly reduce downtime, improving the overall reliability of energy infrastructure.

Hence, the global transition towards clean energy, exemplified by the surge in offshore wind and clean technology investments, presents a fertile ground for the application of AI in the energy and utilities market. The integration of AI into energy systems holds the promise of enhancing sustainability, driving economic growth, and fostering global cooperation to combat climate change.

Global Applied AI in Energy & Utilities Market- End User

The global applied AI in energy & utilities market, in this report, has been segmented based on end user into energy transmission, energy generation, energy distribution, utilities, wind farms, and others.

Wind farm is gaining traction. AI enables more accurate and predictive maintenance of wind turbines, reducing downtime and maintenance costs. It also analyzes vast amounts of sensor data to detect early signs of equipment failures, optimizing turbine performance and prolonging their lifespan.

Further, AI enhances the integration of renewable energy sources like wind into the grid by forecasting power generation more accurately. This allows for better grid management and minimizes energy wastage, contributing to a more efficient and sustainable energy ecosystem.

Moreover, AI-driven solutions enable wind farm operators to respond to real-time changes in weather conditions, optimizing energy production and grid stability. Additionally, AI facilitates the development of smart grids, which can dynamically balance supply and demand, reducing energy costs and emissions.

Global Applied AI in Energy & Utilities Market- Regional Insights

Based on Region, the global applied AI in energy & utilities is segmented into North America, Europe, Asia-Pacific, Middle East & Africa, and South America. Further, the major countries studied in the market report are the U.S., Canada, Germany, UK, Italy, Spain, China, Japan, India, Australia, UAE, and Brazil. North America holds a prominent share in the market and Asia-Pacific is likely to account for a massive growth during the forecast period in the market.

The North American energy and utilities market is undergoing a significant transformation due to a surge in investments in renewable energy technologies, particularly in the United States. In 2022, these investments reached a staggering US$ 32.3 billion, showcasing a remarkable increase from US$ 29.1 billion in 2013. This growth is driven by green stimulus programs and tax credits that promote renewable energy projects, making it a hotspot for innovation and technological advancements. Notably, the Inflation Reduction Act has allocated US$ 160 billion in tax credits for renewable energy companies, further incentivizing the adoption of clean energy solutions. Consequently, the demand for applied AI in the energy and utilities sector is poised for substantial growth. AI's potential lies in optimizing energy production and grid management, enhancing the efficiency and reliability of renewable energy sources, and addressing the intermittency challenges associated with solar and wind power.

FIGURE 3: APPLIED AI IN ENERGY & UTILITIES MARKET SIZE BY REGION 2022 VS 2032, (USD MILLION)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

Furthermore, the launch of a US$ 500 million fund by Itochu and Sumitomo Mitsui Trust Bank for renewable energy projects in North America underscores the commitment to expanding the renewable energy sector. This fund will invest in various renewable energy projects, including solar, wind, hydrogen, and ammonia-based solutions.

Canada is also actively advancing its renewable energy initiatives, with plans to reduce greenhouse gas emissions and achieve a net-zero grid by 2035. Federal funding programs like the Smart Renewables and Electrification Pathways program are providing substantial support for renewable energy and electrical grid modernization projects. This support not only reduces greenhouse gas emissions but also strengthens Canada's transition to a net-zero economy by 2050. Investments from various sources, including the government and industry players, are contributing to the growth of renewable energy in Canada.

In conclusion, the synergy of increasing investments and government incentives positions North America as a thriving hub for AI-driven innovations in the energy and utilities sector, ultimately driving the market growth.

Applied AI in Energy & Utilities Market- Key Market Players and Competitive Insights

Prominent market players in the applied AI in energy and utilities sector employ a range of growth strategies to remain competitive. They are heavily investing in research and development to continuously enhance their AI solutions, focusing on predictive maintenance, smart grid management, and energy-efficient technologies. Additionally, strategic partnerships are a key component of their growth strategy, allowing them to expand their market reach, access new segments, and foster data sharing collaborations.

The market players are also prioritizing customization and scalability of their offerings, ensuring that their AI solutions can adapt to diverse infrastructures and customer needs. By maintaining a strong focus on data security, compliance, customer-centricity, and global expansion, these companies effectively navigate the evolving landscape of the energy and utilities industry while staying ahead of the competition.

Applied AI in Energy & Utilities Market- Key Companies Include

• AAIC

• AltaML Inc.

• ATOS SE

• CEZ Group

• Google

• IBM

• Microsoft Corporation

• MindTitan

• Nvidia

• SmatCloud Inc.

• Utility Dive

Applied AI in Energy & Utilities Market- Market Segmentation

Applied AI in Energy & Utilities Market- Deployment Type Outlook

• On Premises

• Cloud

Applied AI in Energy & Utilities Market- Application Outlook

• Robotics

• Renewables Management

• Demand Forecasting

• Ai-Based Inventory Management

• Energy Production and Scheduling

• Asset Tracking and Maintenance

• Digital Twins

• AI-Based Cybersecurity

• Emission Tracking

• Logistics Network Optimizations

• Others

Applied AI in Energy & Utilities Market- End User Outlook

• Energy Transmission

• Energy Generation

• Energy Distribution

• Utilities

• Wind Farms

• Others

Applied AI in Energy & Utilities Market- Regional Outlook

• North America

  • US

  • Canada

  • Mexico

• Europe

  • Germany

  • France

  • UK

  • Italy

  • Spain

  • Rest of Europe

• Asia-Pacific

  • China

  • Japan

  • India

  • South Korea

  • Australia

  • Rest of Asia-Pacific

• Middle East & Africa

  • Saudi Arabia

  • UAE

  • South Africa

  • Rest of the Middle East & Africa

• South America

  • Brazil

  • Argentina

  • Chile

  • Rest of South America