In this two-part report our Global Energy Perspectives team summarise developments in the energy transition over the past couple of years and look forward to the implications for investors.
In part two of this report we focus on the reasons to be cautious:
Longer-term economics risk
The uncertain trajectory of future commodity prices creates downside risk for power generators if commodity markets move from famine to feast. Equally, a cost of living crisis is incentivising political action to cap the upside of energy profits or attempt to decouple renewable prices from commodities.
Rising cost of capital
Rising inflation is causing interest rates to rise, ending a period of unprecedented low interest rates since 2008. This will increase the cost of raising finance for developers.
Permitting and grid constraints
There will be persistent challenges in converting accelerated renewable demands into greater supply owing to planning, permitting and grid capacity issues.
Supply chain and production costs
Increasing demand, coupled with rising material costs, is creating price pressure on the renewable supply chain. The rise of local sourcing requirements risk compounding these price pressures further.
Economic pressures and politicisation of the decarbonisation agenda risk reductions in fiscal support for green technologies.
Read our full report below for a more detailed analysis.
The future of European CfDs
Contracts for Difference have been successful at increasing competition, accelerating capability buildout and stabilising prices in many European states.Read more
Asian LNG markets: evolution and growth in response to the war in Ukraine
The rapid reduction in Russian gas exports to Europe has resulted in an unprecedented reshuffling of LNG trade dynamics.Read more
Commercial fleet electrification – adoption is accelerating, but barriers remain
With 50% of new car registrations in the UK being registered by businesses, it’s vital for companies to start electrifying their fleets.Read more
2040 Global Gas Market Outlook
Opportunities for investors to contribute to the energy transition.Read more