Energy price volatility is the ‘new normal’

Energy leaders see energy price volatility and the future of a climate framework as their top critical uncertainties, according to the latest research by the World Energy Council, published 20 January.

The 7th annual edition of the World Energy Issues Monitor, entitled Energy price volatility: the new normal, has gathered the views of more than 1,000 energy leaders, including ministers and chief executives from nearly 80 countries.

Energy leaders are worried about the recent sharp plunge in the oil price to its six-year low. They are kept busy by the continual reduction in the cost of renewable energy technologies, which have increased their share in the energy mix, but have also put strains on the energy system. In some parts of the world that do not have viable energy storage solutions, the grid is not yet able to cope with large shares of intermittent forms of energy and lacks effective market signals to deliver back-up capacity or storage. 

Establishing a coherent climate framework is perceived as the next most critical uncertainty ahead of a global climate agreement being reached at the Conference of the Parties meeting (COP-21) in Paris at the end of this year. This issue could spell the presence or absence of a meaningful carbon price.

Energy leaders believe that the emissions agreement between China and the US, announced in November 2014, has increased the pressure on other large emitters whose stance and approach to cutting emissions still pose a large questionmark for investors.

The report also finds that developing electric storage and the quest for energy finance continue to keep energy leaders busy. These issues will be influenced by the future of energy subsidies, a key ‘need for action’ area in the 2015 survey, with the design of market mechanisms playing an important role.

Download the 2015 World Energy Issues Monitor at http://www.worldenergy.org/publications/2015/world-energy-issues-monitor-2015/