Energy Trends of 2019

2019 would be an interesting year for the Energy industry ranging from the Oil and Gas market to Renewable forms of energy production. We have seen some highpoints in 2018; new discoveries; improved and efficient technological advancements but carbon emissions still went up. Funny right?

So I decided to outline three important Energy trends to look out for in 2019:

  • The cost of Renewable electricity will continue to fall:

The falling cost of renewables in developed economies is seen as a welcome development as more investment are being made in renewable power generation to achieve grid parity. Data from IRENA (International Renewable Energy Agency) shows that the global cost of power generation especially from wind turbines reduced gradually from 2014 – 2016 and it is forecasted to keep reducing. There have also been more renewable energy projects in emerging economies (India, Nigeria, Kenya et al) in 2018 and we hope to see more infrastructural growth in these energies and less dependence on the traditional source of energy production wherewith the economic imperatives typically outweigh concern for environmental impacts. I also love this quote from Chris Goodall, who writes the Carbon Commentary blog; “the costs of electricity from PV [photovoltaic solar] have always — without exception — fallen faster than people expected so there is every reason to believe the decline will continue, and probably speed up.” He added that the falling costs of capital and maintenance would continuing to drive costs down.

  • Iran continuous embargo and the rise of US gas market:

The continuous sanctions on Iran by the United States is affecting and has affected Iranian oil production capacity as exports went to as low as 1.1million barrel per day in November 2018 from 2.1million b/d a year ago. These sanctions might cripple exports to as low as zero if Iran does not return to the negotiating table over its nuclear plants or they find a way around the sanctions to maintain exports. A fall in exports can lead to a slight increase in the price of oil, so it is a dicey political situation. We should note that the Iranian oil market is unique because of its potential impact to the overall market and oil price.

The US gas market would see an enormous increase as two new large LNG plants are scheduled to come into service (Cameron LNG in Louisiana and Freeport LNG in Texas). With these new facilities, it is expected that the US LNG export capacity will more than triple placing them as the third-largest exporter of LNG behind Qatar and Australia. Also, according to Wood Mackenzie, there are three US projects awaiting FID (Final Investment Decision) and this may just put the US as the number one exporter in the long run.

  • The rise of the Electric Vehicles:

The sales of EVs (Electric Vehicles) has been on the rise as more countries moves towards inculcating lower carbon emissions policies and incentives for citizens to use more eco-friendly vehicles. Sales are also expected to grow more this year as manufacturers such as Tesla, Mercedes, Hyundai, Porsche et al are introducing new models that are more efficient with longer battery life capacities. Tesla made history, by being the first foreign carmaker to set up a wholly-owned new-energy vehicle (NEV) in Mainland China in other to commence the production of the Tesla Model 3 by the end of 2019. This would not only be beneficial to China (world largest auto and NEV market) in terms of lower carbon footprints, it would also lower the cost of EVs in the long run. The projected sales of electric vehicles globally is expected to reach about 2.1milion up from 64% from 2018 and it will increase subsequently if the right incentives are maintained.

Reference: Financial Times, EV-volumes.com, International Renewable Energy Agency

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