As the new year unfolds, predictions for the future of the energy sector are being rapidly generated, providing a wealth of insights into the trends expected to shape the industry by 2025. The publication Hart Energy highlights several key forecasts that identify both challenges and opportunities in the landscape of energy prices, demand, and technological advancement.
One overarching theme from analysts is the likelihood of falling energy prices in 2025, accompanied by a robust growth trajectory for renewable energy sources. Analysts predict that gasoline consumption may reach its peak, while liquefied natural gas (LNG) and carbon capture technologies are poised for significant advancements. Additionally, the increasing adoption of artificial intelligence (AI) and electric vehicles (EVs) is expected to amplify electricity demand in the coming years.
Supply chain challenges are anticipated in the crude oil sector, particularly amid projections of potential oversupply. Matthew Bernstein, a senior analyst for upstream at Rystad Energy, asserts that market headwinds will complicate the crude oil landscape, citing influences such as heightened stock market performance in the U.S., further cuts by OPEC, and a gradual economic recovery in China. Bloomberg Intelligence’s Mike McGlone echoes this sentiment, predicting that the oversupply of oil, coupled with declining demand across major markets, will place downward pressure on crude prices.
Rystad Energy has forecasted a 2% contraction in global upstream investments for 2025, indicating a plateau in growth following a decade of robust increases. In particular, shale oil investments are expected to decline by approximately 8% due to lower activity levels and reduced pricing, as articulated by Aditya Saraswat, the firm’s research director for the Middle East and North Africa.
The growing momentum for electric vehicle sales is contributing to a notable decrease in the demand for diesel and gasoline, resulting in additional pressure on crude pricing. S&P Global has noted a shifting dynamic in China, where oil demand for passenger vehicles is likely to decline, as the nation pivots towards increasing exports of EVs to assist other countries in their electrification efforts.
In the natural gas sector, Morningstar DBRS has forecast low gas prices that are suppressing new production, while simultaneously driving new demand in 2025. They anticipate that increased LNG exports from the U.S. and Canada could alleviate oversupply in North American gas inventories, projecting an average price of $3.25 per million cubic feet (mcf) for 2025, driven by new liquefaction capacity.
On the demand side, energy consumption is projected to grow as data centres, often reliant on AI technologies, require ever- increasing amounts of power. Analysis from S&P Global suggests that data centres may see energy consumption triple by 2028, potentially representing 12% of national electricity use.
The transition to clean energy remains a priority, with promising growth in energy storage technologies anticipated in both grid-scale and residential sectors. Nina Rangel, a senior research analyst at Wood Mackenzie, predicts substantial increases in grid-scale installations over the next three years, alongside growth in residential storage capabilities.
Carbon capture technologies are also expected to gain traction in 2025, fueled by an influx of projects making final investment decisions. Rystad Energy’s Yvonne Lam emphasises the importance of supportive policies and increased funding in Europe, which could intensify momentum in this sector, notwithstanding potential challenges related to infrastructure readiness.
However, the outlook for hydrogen appears less optimistic. Minh Khoi Le, head of hydrogen research at Rystad, reports that the sector is facing a downturn, with several key projects facing cancellation. Nevertheless, ongoing political developments in major hydrogen markets such as the U.S. and Germany are expected to provide renewed clarity and commitment to hydrogen initiatives.
In summary, while the energy sector is poised for numerous transitions by 2025, it faces a complex array of influences, including shifts in policy, evolving technologies, and changing market demands. Analysts suggest that comprehensive monitoring of these trends will be essential as businesses navigate the unfolding energy landscape.
Source: Noah Wire Services