49% of energy companies allocating budgets for AI investments: EY Report

• EY survey reveals 66% of respondents have initiated GenAI Proof of Concepts (POCs),
• AI has been instrumental in reducing costs followed by customer and employee satisfaction

New Delhi, 25 February 2025: Generative AI (GenAI) is set to transform India's energy sector, driving significant improvements in efficiency, sustainability, and cost-effectiveness, according to the EY India report, ‘How much productivity can GenAI unlock in India? The AIdea of India: 2025’. It reveals that 66% of respondents have initiated Proof of Concepts (POCs) for GenAI, with 49% actively exploring AI with allocated budgets. However, only 17% are bullish and investing, while another 17% are in a wait-and-watch mode with small experiments. The survey also highlights that mature enterprises typically allocate 0.4% to 0.7% of their revenues to AI/ML initiatives, achieving an ROI of around 2% of annual revenues

With both ‘Driver’ and ‘Driven’ models of AI adoption emerging, energy companies are leveraging GenAI for predictive maintenance, real-time grid optimization, and personalized customer engagement.

In the metals and mining sector, while AI applications have been widely implemented, GenAI has primarily been applied in non-core manufacturing functions to enhance productivity and speed of execution. According to the EY survey, 50% of respondents believe AI has been instrumental in reducing costs. 33% say AI has improved customer satisfaction, while 17% cite benefits for employee satisfaction.  The real potential of GenAI lies in amplifying AI’s impact on core operations by leveraging extensive structured and unstructured data.

Gaurav Moda, Partner and Leader, Energy Sector, EY-Parthenon India, said, "What's fascinating about GenAI adoption in India's energy sector is how it's reshaping traditional operations. While 66% of companies have initiated POCs, the real value emerges in specific applications – from using GenAI to analyze extensive drilling records for precise exploration decisions to enhancing predictive maintenance through integrated sensor data analysis. However, there's a crucial learning here: companies that prioritize modernizing their data

infrastructure before implementing advanced GenAI applications are seeing significantly better returns. It's not just about adopting the technology – it's about building the right foundation to leverage it effectively.”

In the oil and gas sector, marketing leads GenAI adoption with 50% of implementations, followed by procurement, R&D, finance and operations at 33%. From exploration and production to refining and distribution, the sector is leveraging GenAI to streamline operations, enhance safety, and reduce costs.

Furthermore, the EY report suggests that despite the promising potential of GenAI, the energy sector faces challenges such as poor data quality due to legacy systems, cybersecurity risks, and limited availability of AI talent. Overcoming these hurdles requires a strategic approach, including modernizing infrastructure, implementing robust data strategies, and fostering collaboration with technology providers

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