Top 3 predictions for the energy transition

Robert Buckley, our Head of Relationship Development, gave his top 3 predictions for the energy transition in 2023.

1) Decarbonisation destabilisation

Europe’s energy market is going through a war-driven restructuring away from Russian gas which will take years. Wholesale gas, coal and carbon prices will remain very high much longer than everyone expects, and consumer distress will be acute. The political pressure to allow extra carbon emissions, bale out consumers and tax producer windfalls will continue to intensify.

2) Investment strike

Despite very high energy prices, the power decarbonisation investment outlook will be tougher than for some years. The era of cheap money is over, and projects will require much more certainty and scrutiny before they are taken forward. Political risk will be amplified as we move towards a general election, with perceived producer windfalls squarely in the politicians’ sights.

3) Business leads the way on decarbonisation

Carbon disclosure rules and the dislocation of very high energy prices will drive businesses to decarbonise faster. Substantial improvements in efficiency, shifts into onsite energy production and power Purchase Price Allocation will start to erode the national markets for energy supply and distribution, with the regulatory and policy framework struggling to keep up.

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