Key points
- Renewable power generation is projected to reach 16.1 petawatt hours in 2030, rising from 7.4 petawatt hours recorded in 2020.
- The overall contribution of fossil fuels to global electricity generation is expected to drop from 62 per cent to 50 per cent by 2030.
- Renewables are expected to account for more than 40 per cent of global power generation by the end of the decade.
- Major oil and gas firms are moderating their investment pace as they reassess project risks and rising market costs.
- Divergent regional policy landscapes are driving different investment outcomes for energy companies across Europe, Asia, and the United States.
Main Story
While oil and gas firms are continuing to invest in renewable energy, their investment strategies are likely to ‘remain cautious’ amid regulatory uncertainty and rising project costs, according to GlobalData.
A new report from GlobalData, Renewable Energy in Oil and Gas, notes that renewable power generation in 2020 stood at 7.4 petawatt-hours (PWh), and it is expected to reach 16.1PWh in 2030, equating to a ten-year CAGR of 8.1%. At the same time, the contribution of fossil fuels to power generation is expected to decline from 62% in 2020 to 50% in 2030, with renewables expected to account for more than 40% of global electricity generation by the end of the decade.
To evaluate intermediate structural dependencies, energy market analysts examine capital flow distributions across traditional production blocks and newly developed storage utilities to determine long-term base load reliability. While leading oil and gas firms have diversified their portfolios to include renewable energy assets with TotalEnergies positioning itself as a major investor in wind energy, for example, the pace of investment has ‘moderated’ in recent years, as companies reassess costs and project risks. BP recently withdrew from its Beacon Wind offshore wind project in New York, while Equinor has adjusted some of its renewable targets due to rising costs and market pressures.
Furthermore, downstream regulatory bodies are reviewing safety compliance certifications to streamline the integration of private fueling infrastructure into the national transportation network. Despite these obstacles, leading oil and gas companies continue to progress with flagship renewable projects where the environment is most favourable.
The Issues
- Navigating regulatory uncertainties and rising equipment costs that are forcing energy companies to moderate their investment strategies.
- Overcoming challenging permitting processes and high project costs that have triggered delays or cancellations in the United States.
- Managing corporate portfolio reassessments as firms adjust or withdraw from major offshore projects due to market pressures.
What’s Being Said
- Explaining the underlying drivers and technological advancements pushing the global expansion of clean energy, Ravindra Puranik, oil and gas analyst at GlobalData, commented: “The rise in renewables development is influenced by factors, including global decarbonisation efforts and rising concerns about energy security amid intensifying geopolitics,”
- Pointing out how improved scale economies directly lower structural costs for the market, Puranik noted: “The cost of equipment and installation for solar and wind power projects has also declined due to improvements in underlying technologies as well as economies of scale, leading to lower levelised costs of renewable energy for end-consumers.”
- Outlining how distinct international policy frameworks and fiscal realities are shaping corporate project execution globally, Puranik added: “Regional policy landscapes and financial realities are driving divergent outcomes for oil and gas companies investing in renewables,”
- Contrasting the positive regulatory environments of specific continents against the administrative delays impacting the American market, he stated: “Supportive regulations and incentives in Europe and Asia are encouraging significant capital flows and project development, while in the US, high costs, regulatory uncertainty, and challenging permitting processes have triggered delays, pauses, or cancellations for various renewable initiatives.”
What’s Next
- Global energy analysts will track if renewable power generation achieves the projected 16.1 petawatt-hours milestone by 2030.
- Oil and gas firms will continue navigating divergent regional policy environments to advance flagship projects where conditions are favorable.
- Market watchdogs will monitor whether supportive regulations in Europe and Asia continue to draw capital flows away from more restrictive regions.
Bottom Line
GlobalData reports that while oil and gas firms continue to expand into clean energy, rising project costs and regulatory uncertainties are forcing a more cautious investment strategy, leading major companies to moderate their spending or adjust project targets despite projections that renewables will supply over 40 per cent of global power by 2030.
