Sneak peek of the Energy Market Intelligence Report 2023

Our Energy Market Intelligence (EMI) Network just published the 2023 EMI Report, containing an in-depth analysis of energy market trends and the opportunities and challenges they bring about for us. Read on for the full report, the most important key findings and tune into the EMI webinar series starting on Monday, 19 June.

Global energy markets have been more than eventful lately. Macroeconomic uncertainty, strained financial system and global trade tensions have added multiple layers of complexity to an already challenging environment. Our EMI research team partnered with the Global EMI Network to analyse key developments of the past year to draw insights for our colleagues. As our experts prepare to present their findings in the EMI webinars, here are some of the themes they will discuss in depth:  

Governments' commitment towards renewables is at historic highs  

Disrupted fossil fuel supplies and climate change are among the major drivers for policymakers to accelerate renewable energy growth. The stated policies are expected to drive more than 650GW of solar and onshore wind capacity installations in our core markets between 2023 and 2027, with a substantial upside if policymakers can take corrective measures. 

The global energy markets are far from stable, making regulatory risk stickier 

Europe’s energy crisis is far from over. Possible disruption to LNG (liquefied natural gas) supplies or a lengthy cold spell in 2023-24 may reignite European power market volatility. Such disruptions impact PPA pricing and project valuations. In Europe, for example, power prices fluctuated between €3-700/MWh since June 2022, triggering regulatory interventions and amplifying market uncertainty. 

High-quality projects are in demand, but grid constraints challenge developments  

Since early 2022, interest rates grew from less than 1% to 5% – the highest level since 2010. This has elevated investors’ return expectations from renewables too. However, competition is intensifying for scarce grid capacity as solar and wind capacity waiting for the grid approvals reached 1,100GW in the US and 596GW in the UK, Spain, Italy, and France combined in 2022. 

The localisation drive for RE manufacturing could increase equipment cost  

The EU wants to rebuild and/or secure 36GW and 30GW of wind and PV manufacturing capacity while the US offers abundant subsidies for localisation. These policies can make supply chains more resilient, but they can also raise trade barriers and inflate equipment costs by 10-20%. 

The renewables ecosystem braces itself for "the survival of the fittest" era 

We believe the fundamentals of the simple business equation (profit = revenue – cost) are being challenged across the renewable energy value chain. Revenue streams are more uncertain due to renewables’ growing exposure to market volatility and changing subsidy designs. Capex and opex have risen notably and may climb still. This landscape demands careful planning and execution to deliver renewable energy assets that can successfully compete in the financial marketplace.