The energy leadership gap threatening the UK’s path to net zero
John Tilbrook
The scale and speed of the UK’s energy transition to reach the Government’s 2050 net zero targets mean there’s an urgent need to close the gap in energy leadership. The critical nature of this issue is acknowledged but often under-discussed, and the growing skills gap could prove a substantial barrier to sector growth.
It’s fair to say that investment in the sector has skyrocketed and technology has advanced significantly in recent years. However, the development of leadership capabilities within the current workforce, and robust succession planning to provide the leaders of the future, have not kept pace with what’s required. As a result, we’re now at a point where the UK could be at risk of failing on its net zero targets due to lack of leadership.
A growing leadership bottleneck in the UK energy sector
Traditional energy models have been suffering from a decline in senior engineers and plant leaders for some time, driven by an ageing workforce and a lack of attraction for early-career individuals. In renewable energy, the speed and scale of growth is such that there’s a significant shortfall in the number of leaders capable of running the large-scale wind, solar and storage projects that exist. Infrastructure is also experiencing an acute shortage of project managers and programme leaders who can deliver the approved clean energy projects. The impact of Brexit is being felt across the sector, as access to talent from continental Europe has been severely restricted. Leadership roles form a vital part of the expansion of clean energy companies and projects, with estimates of around 400,000 additional jobs required in the sector by 2030.
As well as an insufficient number of leaders, there are gaps in workforce skills and capabilities, with rising demand for leaders with expertise in transition, digital, planning, regulatory and transformation projects.
In short, there’s an increasing imbalance in available talent and future leadership needs.
Why succession planning is failing in energy organisations
There are several reasons behind this shortfall in succession plans. The new net zero landscape requires different pathways to leadership careers. Unfortunately, there’s been historic underinvestment in long term pipelines, with an over-reliance on a small pool of experienced leaders, and many of these individuals are now nearing retirement. While boards focused on short-term operational performance, the capabilities and number of skilled leaders required for building the energy sector of the future have been underestimated.
Replacing leaders approaching retirement age isn’t as simple as swapping old for new. The expertise and experience required to lead new energy projects and plants is vastly different from those in traditional energy models, and the issue is also a structural one in terms of pathways into leadership roles. That means that the leaders of the past, aren’t necessarily the best benchmark for those of the future.
Recognising the need for a new kind of leader is only half the battle. The other half involves creating the space to plan for them amidst numerous everyday priorities. High-pressure environments in energy companies mean that succession planning can be overlooked even when it is recognised as an essential, core requirement. When everything feels urgent and crucial to the delivery of a project or target, longer-term people planning often gets pushed down the list.
Competition is intensifying for transition-ready leaders
As we’ve highlighted in other blogs, while it is widely acknowledged that the current situation in energy leadership is unsustainable for achieving net zero emissions targets, what’s adding to the difficulty is that every part of the energy system is hiring from the same, small talent pools. There’s an overlap in demand between energy, infrastructure, engineering and technology sectors with renewables, battery storage, hydrogen and grid modernisation driving competition.
In addition to competition among energy companies, adjacent sectors are also competing for leadership talent with the skills to deliver complex, large-scale transformation projects, navigate planning and regulatory pressures and deliver digital and cyber-enabled operational programmes.
Sectors, such as defence and aerospace, advanced manufacturing, rail, water, utilities and technology and digital services, can offer more attractive packages and working environments than energy, so the likelihood of escalating remuneration and counter offers increases.
How proactive succession planning closes the leadership gap
The key to delivering the energy leadership of the future, arguably, lies in robust succession planning. It is essential that roles equipped for the future are identified and planned for early on, and that individuals are developed with the necessary skills before the vacancy arises. Importantly, this planning cannot rely on a single pipeline, as even the strongest succession plans can be thrown off course when individuals leave the business or shift their personal or professional priorities. That’s why companies require multi-layered, scenario-based plans that consider various situations and evaluate both internal and external talent readiness.
Widening the definition of leadership is also vital for removing the blockers to accessing potential, not just experience, and supporting mid-career transitions. Companies that succeed in blending internal development with targeted external hiring, are likely to be on the front foot of succession planning and retention. Executive search partners support energy boards in building resilience in a volatile delivery environment, with tools such as market mapping to understand real talent availability and future risks.
Closing the gap in energy leadership
The leadership gap is now a strategic risk to net zero, and energy companies that act early on succession planning and mapping of critical roles will gain a competitive advantage in accessing the required talent. Newman Stewart partners with energy organisations to identify and secure leadership talent critical to the success of the UK’s energy transition.
To discuss your succession planning needs or senior search support, get in touch.
