Houston expert: Where is tech going? And can the energy industry keep up?

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Scott Nyquist on the future of technology and how they affect the energy industry. Photo via Getty Images

When smart people come together to consider the future, it’s worth listening to them.

Not long ago, McKinsey brought together more than 60 experts, and asked them to name the most important technology trends for business. They started from the premise that the next 10 years will see more technological progress than in the previous 100 years—and that this will up-end companies and industries everywhere.

“We believe the technology disruption over the next few years will be equal to the industrial revolution,” says Nicolaus Henke, a McKinsey alum who participated in this Tech Trends Index, which will be updated annually.

Here are some of the specific predictions. More than three-quarters of enterprise-generated data will be processed by edge or cloud computing by 2025. Ten percent of global GDP could be associated with blockchain by 2027. Renewables will produce 75 percent of global energy by 2050. 5G could reach 80 percent of the world’s population by 2030.

Time will tell if any or all of these are right; personally, I think renewables will have to wait a little longer for that kind of dominance. But by and large, I found the list, and the underlying thinking, compelling. And given my background in oil-and-gas, I thought it was striking that parts of the energy industry are working on just about every single one of them. Here is the list:

Next-level process automation and visualization.
Future of connectivity.
Distributed infrastructure.
Next-generation computing.
Applied artificial intelligence (AI).
Future of programming.
Trust architecture.
Bio revolution.
Next-generation materials.
Future of clean technologies.

Specifically, the first half-dozen items are all connected to digitization, and while the energy industry may not be at the cutting edge of development, it has a long track record of integrating these technologies and safely deploying them in order to deliver low-cost and reliable supply.

For example, the oil and gas industry has used AI for years to evaluate reservoirs and to plan drilling—one of many improvements over the traditional “one rock, two geologists, three opinions" way of doing things. And advanced materials, such as composites, engineered polymers, and low-density/high-strength metals and alloys are commonly used to lower costs and improve performance, for example in deep water oil and gas production and rotating equipment. As for connectivity, there is no shortage of commitment, but I think it is fair to say that the full potential has not been tapped.

McKinsey has estimated that making use of advanced connectivity alone—to optimize drilling and production, as well as to improve maintenance and field operations—could translate into $250 billion in value by 2030. That is something that the industry could really use, given recent price fluctuations. Taken as a whole, while the industry is nowhere near completing a full digital transformation, it is certainly well on its way.

As for the item most clearly connected to the industry — No. 10, clean technologies — at first glance, this might seem like bad news for traditional energy players. Not so fast. There are clear opportunities in areas such as clean coal, carbon capture, and energy storage. Moreover, other kinds of clean technologies can help the industry decarbonize its operations—something that will become more important as carbon regulation gets more stringent.

As I see it, then, while parts of the industry may seem old-school, it is actually heavily engaged in almost everything on the list. That should come as no surprise. From the first time oil was pumped in Pennsylvania in 1859, it has innovated and adapted to integrate technologies that improved productivity, safety, and environmental performance. In fact, it could it could even be said that the sector is part of what is often known as the Fourth Industrial Revolution—the convergence and interaction of physical, digital, and biological technologies.

I, and many others in the industry, believe that the ongoing energy transition will likely suppress demand for fossil fuels in the long term. But while the items on the Tech Trends Index, together and separately, will be disruptive, requiring big changes in business models and day-to-day operations, they could also help the industry to adapt.

———

Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally ran on LinkedIn on October 4, 2021.

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EPA scraps $7B solar program, stripping Texas of hundreds of millions in clean energy funds

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The U.S. Environmental Protection Agency is ending a $7 billion Biden-era program that was supposed to enable low-income Americans to access affordable solar power. The program, which EPA Administrator Lee Zeldin called a “boondoggle,” would have benefited more than 900,000 U.S. households.

In line with the EPA’s action, the Lone Star State is losing a $249.7 million grant awarded last year to the Harris County-led Texas Solar for All Coalition. The grant money would have equipped more than 46,000 low-income and disadvantaged communities and households in Texas with residential solar power. The nonprofit Solar United Neighbors organization said Texas had already begun to roll out this initiative.

Also slipping out of Texas’ hands are:

A more than $156 million 19-state grant awarded to the Clean Energy Fund of Texas in partnership with the Bullard Center for Environmental and Climate Justice at Houston’s Texas Southern University. The Clean Energy Fund is a Houston-based “green bank” that backs investments in solar and wind power.
Part of a $249.3 million multistate grant awarded to the Community Power Coalition’s Powering America Together Program. The nonprofit Inclusive Prosperity Capital organization leads the coalition.
Part of a $249.8 million multistate grant awarded to the Solar Access for Nationwide Affordable Housing Program, led by the nonprofit GRID Alternatives organization.

In a post on the X social media platform, Zeldin said the recently passed “One Big Beautiful Bill” killed the Greenhouse Gas Reduction Fund, which would have financed the $7 billion Solar for All program.

“The bottom line is this: EPA no longer has the statutory authority to administer the program or the appropriated funds to keep this boondoggle alive,” Zeldin said.

Anya Schoolman, executive director of Washington, D.C.-based Solar United Neighbors, accused the EPA of illegally terminating the Solar for All program. She said ending the program “harms families struggling with rising energy costs and will cost us good local jobs.”

U.S. Sen. Bernie Sanders, a Vermont independent, joined Schoolman in alleging the EPA’s “outrageous” action is illegal. Sanders introduced the legislation that established the Solar for All program.

The senator lashed out at President Trump for axing the program in order “to protect the obscene profits of his friends in the oil and gas industry.”

New UH white paper details Texas grid's shortfalls

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Two University of Houston researchers are issuing a warning about the Texas power grid: Its current infrastructure falls short of what’s needed to keep pace with rising demand for electricity.

The warning comes in a new whitepaper authored by Ramanan Krishnamoorti, vice president of energy and innovation at UH, and researcher Aparajita Datta, a Ph.D candidate at UH.

“As data centers pop up around the Lone Star State, electric vehicles become more commonplace, industries adopt decarbonization technologies, demographics change, and temperatures rise statewide, electricity needs in Texas could double by 2035,” a UH news release says. “If electrification continues to grow unconstrained, demand could even quadruple over the next decade.”

Without significant upgrades to power plants and supporting infrastructure, Texas could see electricity shortages, rising power costs and more stress on the state’s grid in coming years, the researchers say. The Electric Reliability Council of Texas (ERCOT) grid serves 90 percent of the state.

“Texas, like much of the nation, has fallen behind on infrastructure updates, and the state’s growing population, diversified economy and frequent severe weather events are increasing the strain on the grid,” Datta says. “Texas must improve its grid to ensure people in the state have access to reliable, affordable, and resilient energy systems so we can preserve and grow the quality of life in the state.”

The whitepaper’s authors caution that Texas faces a potential electricity shortfall of up to 40 gigawatts annually by 2035 if the grid doesn’t expand, with a more probable shortfall of about 27 gigawatts. And they allude to a repeat of the massive power outages in Texas during Winter Storm Uri in February 2021.

One gigawatt of electricity can power an estimated 750,000 homes in Texas, according to the Texas Solar + Storage Association.

The state’s current energy mix includes 40 percent natural gas, 29 percent wind, 12 percent coal, 10 percent nuclear and eight percent solar, the authors say.

Despite surging demand, 360 gigawatts of solar and battery storage projects are stuck in ERCOT’s queue, according to the researchers, and new natural gas plants have been delayed or withdrawn due to supply chain challenges, bureaucratic delays, policy uncertainties and shifting financial incentives.

Senate Bill 6, recently signed by Gov. Greg Abbott, calls for demand-response mandates, clearer rate structures and new load management requirements for big users of power like data centers and AI hubs.

“While these provisions are a step in the right direction,” says Datta, “Texas needs more responsive and prompt policy action to secure grid reliability, address the geographic mismatch between electricity demand and supply centers, and maintain the state’s global leadership in energy.”

Houston-area logistics co. breaks ground on recycling center tied to circularity hub

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TALKE USA Inc., a Houston-area arm of German logistics company TALKE, broke ground on its new Recycling Support Center in Mont Belvieu Aug. 1.

The facility will process post-consumer plastic materials, which will then be further processed at Cyclyx's new Houston-based Circularity Center, a first-of-its-kind plastic waste sorting and processing facility that was developed through a joint venture between Cyclix, ExxonMobil and LyondellBasell.

The materials will ultimately be converted into recycling feedstock.

“We’re proud to break ground on a facility that reflects our long-term vision for sustainable growth,” Richard Heath, CEO and president of TALKE USA Inc., said in a news release. “This groundbreaking marks an important milestone for our team, our customers, and the Mont Belvieu community.”

The new facility was partially funded by Chambers County, according to the release. The Baytown Sun reports that the county put $1 million towards the construction of the project, which brings advanced recycling and mechanical recycling to the area.

TALKE USA said it plans to share more about the new facility and its impact in the future.

Meanwhile, the Houston-based Cyclyx Circularity Center (CCC1) is slated to open this year and is expected to produce 300 million pounds of custom-formulated feedstock annually. A second circularity center, CCC2, is expected to start up in the Dallas-Fort Worth area in the second half of 2026. Read more here.

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