Informa invited Frost & Sullivan to MENA Energy Forum 2022 to chair a series of panels focused on the current challenges in the global energy markets and the European Union’s response. This was part of a two-day online event Informa organised for energy industry professionals in the Middle East and North African region. Below are five key takeaways from the panels:

  • The ambition is there: The general view was that Europe has stepped up to the plate in terms of its renewable energy ambitions, and member states that were previously cautious on renewable energy are now more committed.
  • Not enough thought has been given to the infrastructure challenge: Targets are one thing, realisation is another. There are currently major delays for permitting and securing grid connections in many member states (5+ years is not unheard of). Also, not enough consideration has been given to the associated T&D infrastructure needs, and the level of intelligence within the grid is still not at the level where we can effectively integrate all the disparate electricity loads without issues.
  • Hydrogen will play a big role in Europe’s energy future: Given the need to reduce reliance on Russian gas and decarbonise the energy system, low-carbon hydrogen has a pivotal role to play. The EU has recognised this with the recent announcement that $5.2 billion of public funding has been made available for projects. However, developing this infrastructure still poses many challenges, as electrolyser manufacturers struggle to reach the volume and scale of production required to meet demand.
  • Europe’s gas supply situation remains precarious: Europe has been sucking up all the available LNG on the spot market to try and fill the supply hole left by Russia and maximise the stored gas for winter. However, it has been helped in the short term by lower demand from China. If Chinese demand significantly recovers, Europe will face increased price and supply pressures in 2023. Investment is being made to increase natural gas production, but it will be 2026-27 before significant capacity comes online.
  • Bad for decarbonisation in the short term, better in the long term: In the short term, global decarbonisation has been negatively impacted. Coal utilisation rates are edging higher, and gas is being flared into the atmosphere in Russia. In the long term, it could bring a dividend for decarbonisation as commercial and industrial enterprises focus more on energy efficiency and higher renewable capacity comes online.

In summary, the European energy landscape is highly volatile at the moment. The war in Ukraine has caused a paradigm shift in supply, and the region is scrambling to adapt. The result is significant investment opportunities as Europe invests in the energy infrastructure to help it secure its energy independence.

Jonathan Robinson,

Jonathan Robinson, Global Energy Program Lead, Frost & Sullivan’s Industrial Practice