The recovery of the global economy boosted global energy prices significantly in the second half of 2021 and early 2022. The Russian invasion of Ukraine triggered yet another sharp price hike, though prices have now fallen back to pre-invasion levels as key OPEC suppliers signaled that they would expand global supply.
You can check out the energy economics during the current course of the war-hit crisis on the utility bidder. But, in the medium to long term, what could Russia’s invasion of Ukraine entail for global energy markets? What are the potential growth prospects for enterprises that serve the industry?
Alternative Energy Utilities for Europe
The Russian incursion represents a dramatic shift in European politics, which has remained unchanged for three decades. European countries have come together to lessen their reliance on Russian oil and gas. That will imply new pipelines from North Africa, particularly Algeria, but maybe Egypt, and a significant investment in LNG regasification facilities.
Since the invasion, Germany has already signed a deal for one terminal, with more to follow in Germany and other countries. As a precaution against future supply disruptions, oil and gas storage capacity will be increased, and this will not be confined to Europe.
Increase In Global LNG Investment
Lower oil and gas prices harmed overall LNG investment from 2014 to 2018. Higher prices will encourage more investment. The utilization of US LNG capacity has risen above 95%, and new gasification projects are once again being considered.
Across America, Europe, and Asia, both exporting and importing countries are rethinking their LNG policies. Energy experts predicted $70 billion in annual LNG investment in 2025, up from $50 billion in 2020 before the crisis, and these projections will be revised higher when our new research is released.
Enhancement Of Renewable Energy
With nearly $300 billion invested globally in 2022, renewable energy leads to new power generation investments. Significant further growth was previously expected, but as governments prioritize energy security, investment levels in Europe will rise. Several EU countries have set new targets and programs to boost solar and wind energy, particularly offshore wind.
Equipment manufacturers, project developers, and after-market service providers will benefit from this. It will also boost the global energy storage business, with more short-duration projects (0-3 hours) to assure grid resilience and longer-duration storage (4–24 hours) to reduce renewable curtailment.
Growth In Industrial Decentralized Energy
Reducing their susceptibility to rising grid electricity rates will become increasingly crucial as businesses electrify. That will spur investment in commercial and industrial power generation and storage and clever software-driven solutions like Virtual Power Plants.
That will allow businesses to maximize the value of the energy they provide by trading it indirectly in the market. This tendency was already well established, but the volatility of 2022 will have elevated the profile of energy-related issues at the C-level, implying that action will be taken more quickly.
The increased revenues flowing to fossil fuel firms have received much attention, yet this could benefit the energy transition in the long run. It allows oil and gas businesses to invest in non-oil and gas initiatives that are tougher to explain when profit margins are thin.
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