2024 Decoding the energy sector: what to expect

2024 is set to be a change year for the energy sector, marked by critical elections, global wars, polarized views and pressing climate challenges.

Here is a cheat sheet from our detailed research below to shed light on the anticipated trends in the energy sector:

1. Fossil Fuels:

• COP28 set a historic goal of transitioning away from fossil fuels, marking a shift in the global energy system, but no commitments on the timeline for the transition.

• Consumption of oil, gas, and coal has been growing, with all three fuels hitting new record highs in 2023. Fossil fuels are expected to maintain dominance, driving a 1.8% growth in global energy consumption in 2024.

• Non-OPEC oil production growth slows, relieving pressure on OPEC+. The U.S. oil and gas industry emphasizes efficiency gains, aiming to do more with less.

• Post Russia's Ukraine invasion, gas and LNG industries prioritize supply security.

• Investment decisions face a delicate balance between decarbonization and security. 

2. Renewable Energy Trends:

Renewable energy, particularly wind and solar, experienced substantial growth, with a 55% increase in wind and solar production in 2023 with renewable generation capacities expected to reach a record 400 gigawatts in 2024.

2.1  Wind

• Production from wind and solar power worldwide in 2023 was about 55% higher than in 2020 and 2024 has a number of projects in pipeline particularly for gigawatt-scale offshore wind turbines

     2.2 Solar

• Global solar power generation forecasted to surpass a terawatt, contributing significantly to renewable growth lead by Asia Pacific and Europe while Africa offer and untapped pot

• Anticipate a global slowdown in solar growth as the industry matures.

• Efficient Solar Cells: not all the sunlight that hits today’s panels isn’t being converted into electricity. Super-efficient Solar Cells are here to stay by integration of tiny crystals such as perovskites used by companies like Oxford PV to enhance the efficiency and cost of solar panels, contributing to global solar power deployment.

2.3. Hydropower

• Hydropower production remain low as climate continues to lower water level in many rivers across regions.

3.  Nuclear Power Resurgence

• Nuclear power gains momentum as a climate solution and as Wood Mackenzie reflects is “ the only reliable, dispatchable, small physical-and-material footprint, plug-and-play zero-carbon solution for power generation“

• Challenges persist, but it stands out as a reliable, low-carbon energy source.

• New nuclear power plant reactors, particularly in countries where nuclear capacity already exists, France, a 1.6 gigawatt reactor and US and South Korea

4.  Hydrogen Landscape:

• The project pipeline has grown to USD 570 billion, including clean hydrogen production Blue hydrogen projects gain traction for quicker development but challenges persist in maturing green hydrogen projects.

• Green hydrogen of 1 GW electrolysis capacity deployed globally (400 MW added this year) and a total of 12 GW having passed FID. Hydrogen FIDs continue to skew towards blue. Production of hydrogen using electrolysis is mineral and metal intense, sharing some of the main raw materials with manufacturing of other renewable energy technologies.

• 2024 anticipates on major advancements in electrolyzer technology, enhancing efficiency and reducing the cost of green hydrogen production.

• However, hydrogen production will remain low in 2024. Aiming to meet hydrogen production goals, many countries around the world will look to build more capacity. Most hydrogen production currently is grey hydrogen, made through fossil fuel reforming.

5.  Carbon Offsets Revival:

• Voluntary carbon market regains momentum in 2024.

• Buyers prioritize high-quality offsets, signaling a market evolution.

6.  Carbon Capture Technologies:

• Novel carbon capture technologies enter commercial scale.

• Lower energy intensity and cost reductions promise advancements.

7.   Geoengineering Emergence:

• COP28 highlights the urgent need for carbon removal.

• Geoengineering techniques can be used to enhance the carbon absorption capacity of the planet but it’s highly controversial, and it’s a billionaire obsession as per Times Magazine. While some few researchers and companies have begun exploring whether it’s possible by launching a series of new projects.

8.       Breakthroughs in Energy Storage:

• Emergence of innovative storage solutions like solid-state batteries that charge full cycles in minutes, which offer higher energy densities and longer lifespans compared to traditional lithium-ion batteries. Additionally, the development of gravity-based storage systems is expected to gain traction. These systems provide sustainable, long-term storage options, essential for managing the intermittent nature of renewable energy

9.       Sustainable Energy Policy Dynamics:

• Anticipated increase in subsidies, tax incentives, and regulatory frameworks supporting renewable energy projects.

• China leading in renewable energy initiatives, aiming to generate 33% of electricity from renewables by 2025.

• Focus on upgrading grid infrastructure to manage the variability of renewable sources effectively.

• Implementation of advanced technologies like expansion of smart grids and supergrids and distributed energy systems

10.   Investment Trends:

• Significant rise in corporate investment in renewable energy, aligning with sustainability strategies. Key sectors like food, textile, pharma, automotive, and logistics committing to renewable energy targets.

11.   Financial instruments:

• Expansion of Green Bonds and ESG Investments Anticipated growth in the green bonds and Environmental, Social, and Governance (ESG) investments market.

12.   Role of Digital Platforms:

• Integration of smart home technologies and IoT devices empowering consumers to control energy consumption.

• AI-driven recommendations for optimizing energy use, fostering efficiency and sustainability.

13.   Energy pricing and PPAs:

• The elevated prices due to current market dynamics could easily become the new normal. M managing energy price risk is a priority for most companies much in the same way as other business risks, and ensure that they have long term views of their energy market positions.

• As companies move to longer-term energy pricing/procurement plans, the legitimacy of their net zero claims can improve through Power Purchase Agreements (PPAs). Rather than offloading carbon onto third party projects, PPAs mean that an organisation can prove its energy source.  PPAs will consequently provide long-term, financially stable, and best of all solutions to net zero carbon.

14.   Energy efficiency:

• Bullish about the improvements globally as needs more attention from corporate organizations, while most sites have half-hourly metered electricity in UK, there’s still room for incentives to automate and manage the load profiles of the buildings.

• Heat Pumps: are a great alternative to air condition and gas furnaces form a decarbonization point of view.  Sales have increased around the world and in the US, they have surpassed gas furnaces for the first time Electric appliances with cooling and heating capabilities, surpassing gas furnaces in sales.

15.   Transportation and Electric Vehicles (EV);

• Despite slowing demand entering 2024 is expected to be an exciting year for the EV industry according to Euromonitor’s Mobility forecasts, 25% of all new passenger car registrations are forecast to be electric in 2024, exceeding 17 million units in sales globally. 

•  Sustainable Aviation Fuel (SAF): the first flights will be mainstream in 2024 and the way to produce it is also opening more avenues through the use of cooking oil, animal fats, or agricultural waste in an effort to reduce emissions from flying that account to 2% of global CO2 emissions. To reach the 5% reduction on emissions commitment by UN and 100 countries  requires significant production scaling of SAF for meaningful climate impact.

2024 promises transformative advancements in renewable energy, investments and policy support. As companies look to build resilient financial platforms: diversification of energy and internationalism to reduce risk will be the logical strategy particularly in an era of a strong $. As the energy landscape evolves, the ecosystem thinking and collective efforts of governments, industries, and consumers will play a pivotal role in shaping and matching new technologies to existing problems in platforms such as InnovationForce. Keep a close watch on these trends unfolding in the 2024 energy scene! 🌍⚡️ #DecodingEnergy2024