Energy market trends: the outlook for 2024

This year promises to be a pivotal point for the European energy sector, and rest assured that Montel News will closely follow all key developments, both global and local. The energy crisis of 2022 appears to be behind us, but many headwinds remain. Currently, the situation in the Middle East has not escalated into a full regional war, yet it remains tense. Could Iran really close the strait of Hormuz and send us back into a full-scale energy crisis? And there are other concerns; Russia’s attacks on Ukraine’s energy infrastructure and not least the potential return of Donald Trump to the White House.

AI and the energy sector

Amongst all the geopolitical fears, there are also some bright spots. Artificial Intelligence (AI) is already helping to forecast power prices, wind output and hydro generation, and should it continue its meteoric rise, the data centres and servers driving the technology will massively increase electricity demand, possibly matching the power demand of Sweden or the Netherlands by 2027.

Renewable energy's renaissance

Growth in renewable capacity is continuing at a rapid pace across Europe. Perhaps the increase in solar and wind output is too good a success story, as during windy periods and midday peaks, the units generate so much electricity that they drive prices down – often below zero - when there is a supply glut.  The increased prevalence of negative prices across Europe should also provide financial incentives for smart people filling energy storage and batteries. And perhaps also reassure industry that Europe can be a region of low energy prices.

The post-crisis economic recovery and energy demand

Energy demand has dropped by as much as 20% in some countries as businesses struggled to cope with rising costs during the crisis period. Currently, benchmark figures across Europe are around 85 EUR/MWh for Germany Cal-25 (base) and 33 EUR/MWh for Cal-25 gas (Dutch TTF). These represent price decreases of around 71% and 73% respectively from their peaks during the energy crisis. Thankfully, this represents excellent news for energy intensive industries and other large power consumers who find their energy costs more manageable once again.

With so many interlinked factors influencing Europe's energy landscape in 2024, the underlying theme is clear. The journey towards an energy-secure and sustainable Europe is fraught with challenges but also ripe with opportunities.

Look out for the first of a series of Montel blogs from me in the near future. I'll be going more in depth on each of the topics covered in this post, focusing on: AI and its use in the energy sector, as well as the ways in which it impacts Montel’s coverage of the most important issues; next on the list will be on the impact of geopolitics on global as well as local markets; before we then dive into demand dynamics, including a look at green hydrogen. Will batteries be the game changer for the energy transition, or are we locked into a future of extreme volatility?