Energy Firms Have Linked Tech Risks to Cost Hikes
Uncertainty surrounding new power infrastructure performance is driving up construction, insurance, and operating costs.
Updated on Oct. 5, 2026 in Energy
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Should energy companies prioritize long-term infrastructure resilience over rapid project completion?
A new industry report from FM indicates that energy sector companies are facing rising financial pressures linked to the adoption of new technologies. The findings highlight significant uncertainty regarding how these assets perform under stress during rapid infrastructure expansion.
Why it matters
The rapid acceleration of power infrastructure due to artificial intelligence and widespread electrification has introduced complex asset risks. Industry stakeholders now report that these variables are directly undermining investment returns and inflating project budgets.
Surveys of 750 risk decision-makers, 150 insurance brokers, and 150 financiers revealed that 59% of energy firms view technology adoption as a primary cost driver. While 85% of respondents support early engineering intervention to stabilize projects, 46% remain uncertain about the performance of new technology under stress.
The players
FM
A commercial property insurer that provides engineering-led risk management services to the global energy sector.
The details
Engineering teams mitigate these risks by analyzing site selection, technology, and equipment during the initial design phase. Insurers are increasingly integrating this engineering expertise to identify potential exposures before construction begins. Despite this, 78% of energy companies report that site-selection decisions often create unanticipated downstream risks that complicate long-term stability.
Timeline
Over the next three years, 39% of energy companies plan to increase small modular nuclear reactor capacity.
The Tech Race
The report highlights the systemic friction inherent in the global race to scale power infrastructure for AI and electrification. It serves as a benchmark for how capital intensive, high-tech energy deployments like small modular reactors are struggling to reconcile operational performance with traditional risk metrics.
Energy providers are now forced to navigate tighter project budgets and higher insurance premiums as they integrate advanced generation technologies. These costs often translate to the planning and deployment timelines for new infrastructure that the public relies on for consistent power availability.
The takeaway
Energy sector decision-makers must weigh the benefits of rapid modernization against documented increases in insurance and construction overheads. Investors should monitor the 39% of companies targeting small modular nuclear reactor expansions as a leading indicator for whether early engineering can curb these rising costs.
Further reading
For more on how infrastructure shifts are shaping the utility landscape, explore our Energy section.
Source note: This article includes information reported by POWER Magazine.
Live Poll
Should energy companies prioritize long-term infrastructure resilience over rapid project completion?
