Renewable Energy Growth Disrupts Global LNG Markets -

Industry

Renewable Energy Growth Disrupts Global LNG Markets

Yes, the expansion of the renewables industry has a marked effect on the business of LNG, where it acts as a competitor in diminishing gas demand, thereby leading to a potential glut in supply as new projects involving the production of LNG come into production, though AI/data center expansion presents a counter scenario in terms of demand.

Key Implications of Renewables on LNG:

Reduced Demand: The growth of solar power, wind, and storage capacities will curtail the use of natural gas in electricity production, which will slow the growth of global LNG demands, especially in European and Asian markets.
Supply Glut Risk: Excessive investment in new LNG export capacity (US, Qatar) could grow faster than demand, arising from a potential supply surplus if renewables make significant progress, leading to a price crash.
Market Competition: LNG faces competition from other technologies that can provide grid stability services. Therefore, it has to demonstrate its relevance as an interim solution rather than a final solution.
Policy & Investments – When countries with policies in favor of renewables suppress investment in gas infrastructure, on the contrary, countries that rely on LNG for energy security, for example post-2022 Europe, experience a sudden increase in demand, according to a report by “Reuters & Institute for Energy Economics & Financial Analysis (IEEFA).
Specific Sector Effects: The competition in the transportation sector comes from EVs and biofuels; in the power sector, renewables are gradually replacing it. However, the massive demand for power stated in theFortune Business Insights and Cipher News estimates creates a contradictory trend.