Table of content
Energy Compliance
18 Feb 2026

Why energy digitalisation projects fail even with the right technology

Why energy digitalisation projects fail even with the right technology

Quick summary
Energy companies across Europe invest heavily in digital platforms, IoT, AI, and automation, yet many initiatives fail to deliver expected value. The problem is rarely the technology itself. Governance gaps, regulatory complexity, integration challenges, and cultural misalignment typically undermine outcomes.

Introduction

Across Europe and the Nordics, utilities, grid operators, and energy-intensive industries are accelerating digital investment. Smart grids, advanced metering infrastructure, predictive maintenance, AI-driven forecasting, and energy management platforms are now mainstream ambitions. According to the International Energy Agency, digital technologies could reduce global energy system costs by up to 5 percent through improved efficiency and flexibility (IEA, 2023).

Yet many energy digitalisation programmes struggle to move beyond pilot phases or fail to scale across organisations. Budgets are spent. Platforms are deployed. Sensors are installed. But measurable impact on reliability, efficiency, emissions, or revenue remains limited.

This paradox highlights a critical insight: success in energy digitalisation depends less on selecting the right tools and more on aligning governance, data, compliance, and organisational capability.

Misaligned business cases and unclear value ownership

Many energy digitalisation projects begin with a strong technical vision but a weak economic narrative. Advanced analytics, digital twins, or IoT networks are deployed without clear alignment to regulatory incentives, tariff models, or asset management strategies.

In regulated European markets, grid operators must justify investments to national regulators. If digital initiatives are not directly linked to measurable reliability improvements or cost reductions, they risk delayed approval or limited cost recovery. The EU Energy Efficiency Directive requires measurable performance improvements, not simply digital deployment (European Commission, 2023).

Common pitfalls include:

  • Focusing on technology features instead of operational KPIs
  • Treating pilots as innovation showcases rather than scalable business cases
  • Lack of defined value ownership between IT, OT, and operations
  • No clear link between digital metrics and regulatory reporting

Without a financially accountable owner, digital platforms become cost centres rather than strategic enablers.

Takeaway: Digital success requires a measurable, regulator-aligned business case owned by operational leadership, not just IT.

Legacy infrastructure and integration complexity

Energy systems are among the most complex infrastructures in Europe. Many utilities still operate SCADA systems, field devices, and control architectures designed decades ago. Integrating modern cloud platforms with legacy OT environments is rarely straightforward.

According to Deloitte, integration complexity is one of the top three barriers to digital transformation in industrial sectors (Deloitte, 2024). In energy, the challenge is amplified by:

  • Heterogeneous protocols across substations and assets
  • Proprietary vendor systems
  • Long asset lifecycles, often 20 to 40 years
  • Limited documentation of legacy configurations

Digital projects often underestimate the effort required to harmonise data models and ensure interoperability. Nordic grid operators, for example, must align cross-border balancing markets while maintaining national operational standards. This adds layers of data synchronisation and cybersecurity requirements.

A 30 to 50-word clarification:
Operational technology refers to hardware and software that directly monitors and controls physical devices such as turbines, transformers, and substations. Unlike IT systems, OT environments prioritise availability and safety, which complicates frequent updates or rapid digital experimentation.

When integration planning is insufficient, projects stall at the interface between old and new systems.

Takeaway: Technology succeeds only when integration architecture is planned with full visibility of legacy constraints.

Cybersecurity and compliance friction

Energy infrastructure is classified as critical infrastructure across the EU and US. Regulatory frameworks such as the NIS2 Directive and ISO 27001 impose strict cybersecurity and risk management requirements.

According to the European Union Agency for Cybersecurity, the energy sector remains one of the most targeted critical sectors in Europe (ENISA, 2024). This reality creates tension between innovation speed and compliance assurance.

Digital projects often fail because:

  • Security requirements are introduced late in the lifecycle
  • Cloud deployments conflict with national data sovereignty rules
  • Risk assessments delay operational rollout
  • Responsibility between CISO, CIO, and operational leadership is unclear

In Denmark and Germany, regulatory scrutiny on grid reliability and cyber resilience is particularly strong. Any digital system affecting grid stability must pass rigorous validation and testing.

When cybersecurity is treated as an afterthought, projects face redesign costs or deployment freezes.

You might be interested in: How NIS2 impacts energy and utilities

Takeaway: Compliance and cybersecurity must be embedded from the design phase, not added after development.

Data quality and governance gaps

Energy digitalisation is fundamentally data-driven. Forecasting, load optimisation, asset health monitoring, and emissions reporting all depend on reliable, structured data.

However, many organisations underestimate the scale of data governance required. McKinsey reports that poor data quality can reduce the expected value of AI initiatives by up to 30 percent (McKinsey, 2023).

Typical data-related obstacles include:

  • Inconsistent naming conventions across assets
  • Missing historical data for predictive models
  • Siloed data ownership between departments
  • No unified data architecture

In EU energy markets, additional complexity arises from reporting requirements linked to emissions trading systems and sustainability disclosures. Data must be auditable, traceable, and regulator-ready.

A 30 to 50-word clarification:
Data governance is the framework of policies, processes, and standards that ensures data accuracy, consistency, security, and accountability across an organisation. In regulated industries, governance also supports auditability and compliance with reporting obligations.

Without robust governance, advanced analytics produce unreliable outputs, eroding trust among engineers and executives.

Takeaway: Digital value depends on disciplined data governance before advanced analytics deployment.

Cultural resistance between IT and OT

Energy digitalisation often exposes structural divides between IT departments and operational engineering teams. IT prioritises agility, scalability, and cybersecurity. OT prioritises uptime, safety, and risk minimisation.

According to the World Economic Forum, organisational resistance is one of the primary barriers to scaling digital transformation in industrial sectors (World Economic Forum, 2024).

Common friction points include:

  • Engineers distrust cloud-based systems controlling physical assets
  • IT teams underestimate operational safety constraints
  • Project ownership conflicts across departments
  • Change fatigue after repeated transformation attempts

In Nordic utilities with flat hierarchies, collaboration is often stronger. However, even there, governance boundaries between grid operations and digital teams can slow adoption.

You might be interested in: Bridging IT and OT in industrial environments

Takeaway: Digital programmes must actively align IT and OT cultures, incentives, and governance models.

Scaling failure after successful pilots

Energy companies frequently demonstrate promising pilot projects. Smart meters improve visibility. Predictive maintenance reduces downtime in one facility. AI forecasts improve short-term accuracy.

Yet scaling remains elusive.

According to BCG, more than 70 percent of digital transformations fail to achieve their stated objectives, often due to scaling challenges rather than technical shortcomings (BCG, 2023).

Barriers to scaling include:

  • Inconsistent infrastructure across regions
  • Lack of enterprise-wide architecture standards
  • Budget fragmentation
  • Insufficient change management

In the EU context, cross-border operations add complexity. Grid codes, regulatory regimes, and market mechanisms vary between countries, making standardisation harder.

A pilot proves feasibility. Scaling proves governance maturity.

Takeaway: Plan for enterprise-wide scale from day one, including architecture, budget, and regulatory alignment.

Unrealistic timelines and transformation fatigue

Energy infrastructure operates on multi-decade investment cycles. Expecting rapid transformation comparable to digital-native sectors creates unrealistic expectations.

Digital projects often fail because:

  • ROI expectations are set within 12 to 18 months
  • Regulatory approval cycles are underestimated
  • Workforce upskilling needs are ignored
  • Vendor dependencies create delays

The International Energy Agency notes that grid digitalisation is essential to integrate renewables at scale, particularly in Europe’s energy transition (IEA, 2023). However, infrastructure transformation is inherently gradual.

When leadership expects rapid disruption instead of phased modernisation, projects are labelled failures prematurely.

Takeaway: Energy digitalisation requires phased transformation aligned with infrastructure and regulatory realities.

Conclusion

Energy digitalisation projects rarely fail because of poor technology choices. They fail because governance, compliance, integration, data quality, and organisational alignment are treated as secondary concerns.

Across the EU and Nordic energy landscape, regulatory scrutiny, cybersecurity risk, and legacy infrastructure amplify these challenges. Success depends on:

  • A regulator-aligned, measurable business case
  • Integration-first architecture planning
  • Built-in cybersecurity and compliance
  • Strong data governance foundations
  • Cultural alignment between IT and OT
  • Enterprise-scale design from the outset

Technology enables transformation. Organisational maturity determines whether that transformation delivers measurable value.

FAQ

Why do energy digitalisation projects often stop at the pilot stage?

Many pilots are designed to demonstrate technical feasibility rather than scalable business value. Without enterprise architecture standards, regulatory alignment, and clear ownership, expansion becomes complex and costly.

Is legacy infrastructure the main barrier to digital transformation in energy?

Legacy systems are a major constraint, but integration planning and governance gaps are often more decisive factors. Modern platforms can coexist with older systems if architecture is carefully designed.

How does EU regulation affect digital energy projects?

Frameworks such as the Energy Efficiency Directive and NIS2 require measurable performance improvements and strong cybersecurity controls. Projects that fail to align with these requirements risk delays or non-approval.

Can AI solve digitalisation challenges in energy?

AI can improve forecasting, asset optimisation, and efficiency. However, without high-quality data and governance frameworks, AI outputs remain unreliable and may reduce stakeholder trust.

Sources
About Author Wirtek is a Danish tech company with 25 years of experience, specialising in three core domains: energy, connectivity & automation and digital engineering. We build, connect and operate digital solutions through software development, Internet of Things (IoT), quality assurance and ready-made products. Founded as a Nokia spin-off, we combine deep know-how with EU compliance to partner with companies on their journey to modernise systems and extend capabilities while reducing risk. Since 2022, we have focused strongly on shaping solutions that power the sustainability transition.

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