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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Tackling the shift to renewable energy trading
13/9/2023
6 min read
Increasing adoption of intermittent renewable energy sources like wind and solar is causing a shift in the electricity supply market. Franziska Danz, Vice President Product Management, ION Commodities, examines the implications for energy traders.
The energy trading picture is changing significantly as adoption of intermittent renewable energy sources increases. According to the International Energy Agency (IEA), global renewable energy capacity additions will see the largest recorded increase in 2023, soaring by 107 GW to 440 GW.
This shift is driven by numerous factors, including global policy support and political incentives, energy security concerns and the increasing economic attractiveness of renewable energy production. Overall, cumulative world renewable capacity is forecast to reach over 4,500 GW at the end of 2024, equal to the combined power capacity of China and the US.
This growth of renewable power is leading to a decline in energy prices in the long term, largely driven by pricing dynamics in wholesale power markets. Firms with long positions in regions that are becoming more reliant on renewable energy face double risks – decline in the value of their portfolio and rising volatility, compelling them to adapt both their asset strategies and trading operations.