It’s no secret that the energy market has faced turbulence in recent years. The tensions in Russia and outbreak of war meant we witnessed unprecedented disruption and unrest across the global energy market.
2022 saw an exponential increase in energy prices as global supply went into disarray. 2023, however, has seen a stabilisation of gas and electricity prices as markets begin to adjust and governments introduce policy to ease the pressure from energy consumers.
Suffice it to say that energy is big business. The energy market is one of the world’s largest markets, with the latest figures placing an estimated value at around $2.4 trillion (£1.9 trillion). The coming years are only likely to see rises over that already astronomical figures.
In this article, Tariff will provide an comprehensive overview of energy in 2023, including major events, price fluctuations, and policy changes. After a reflective look back over 2023, we will then look at the predictions for 2024, as we gear up to create a greener global future.
Let’s break down a few of the key talking points from another eventful year in energy, and how they’ll undoubtedly factor into the future.
May 2023 saw the publication of the latest World Energy Investment report from the International Energy Agency, which collated data from over 40 member and associate countries. This encompassed key factors such as:
The IEA’s extensive datasets pointed towards multiple key conclusions, but the most pivotal amongst these is the distinct positive trend towards more investment, focus and adoption of renewable energies and technologies.
Globally, investment in clean energy reached a staggering $1.74 trillion (£1.38 trillion), an unprecedented and ultimately promising increase over previous years’ figures.
That’s further reinforced by increased investment in solar tech, which, for the first time on record, exceeded investment in oil production – $382 billion (£302 billion) invested into solar, compared to $371 billion (£294 billion) invested into oil production and infrastructure.
This does come with a sense of trepidation, however. While clean energy investment and support is at its highest levels ever, its often unfairly weighted to more economically developed countries, or those with the infrastructure to support emerging energy technologies.
One of the more positive trends we witnessed over the course of 2023 was a huge uptick in the amount of electric vehicles on our roads. It’s the early signs of the British public and businesses taking steps along that road towards a ban on the sale of petrol and diesel vehicles by 2035.
In the UK alone, charging point mapping company Zap Map estimated there were approximately 1,489,000 electric vehicles on the roads, with more than 920,000 of these being battery-powered vehicles, and a further 560,000 plug-in hybrids.
This comes in the wake of the BBC reporting earlier in the year that more traditional car sales had hit a 30-year low, while electric vehicles looked poised to enjoy one of the most promising years yet, with demand already soaring in January of 2023.
Outside of the UK, electric vehicles have seen similar upward trajectories, with conservative estimates from analysis firm Canalys estimating we’ll see around 14 million new electric vehicles on the road by the start of 2024.
Released in October of 2023, the State of the Energy Union report from the European Commission is designed to better identify the successes and shortcomings of the European Union when it comes to energy production, consumption and wastage.
All in all, the results were extremely positive, especially when compared to previous years. Collectively, the EU saw a reduction in its energy demand by over 18%, which saved 53 billion cubic metres of gas.
The report also mentioned that the EU has built up its energy security over the past year, with 98% of gas storage facilities full ahead of the winter. This is significant in reducing the EU’s reliance on Russian energy exports, particularly following the Russia-Ukraine war, and in ensuring a more self-sufficient future as we look towards cleaner and greener energy.
That’s best exemplified by several key findings in the report, the chief among which is the EU’s gradual shift towards renewables. Of course, certain European countries – such as Iceland and Norway – already generate a substantial proportion of their energy from renewables, but strides need to be made for the rest of the continent to catch up.
That’s already begun, with figures from the report stating that 39% of all electricity generated in the EU for 2022 came from renewable sources. Signs are positive going forward too, with May 2022 seeing wind and solar generation overtake energy from fossil fuels for the first time on record, and further investment only set to boost that further.
It’s no secret that the UK’s energy prices have seen significant changes in recent memory. The latter half of 2021 and into 2022 saw some of the most uncertain times many of us have ever seen, with rapid, drastic fluctuations in domestic and business energy prices often dominating news headlines and social media stories.
That rapid increase saw the implementation of the now-infamous Energy Price Cap. Between July 1st and September 30th, Ofgem set the energy price cap to £1,976. Between October 1st and December 31st, this was lowered to £1,834.
The price cap sets a limit on the maximum amount that suppliers can charge for each unit of gas and electricity. Over 2023, however, we’ve seen much more stability, with an energy price cap now all but defunct as prices have begun to stabilise.
Of course, we are by no means out of the woods yet. Uncertain times till lay ahead for homeowners and businesses alike, and transitioning to cleaner and greener sources of energy generation is the only was to further ensure a more sustainable and, crucially, affordable future.
In September, however, Prime Minister Rishi Sunak announced multiple changed to the UK’s net zero policies. You can read more in our comprehensive report on Sunak’s addressal, but we’ll also summarise a handful of the crucial points here.
Ban On New Petrol & Diesel Cars Delayed To 2035
By 2030, the production of new cars with internal combustion engines were due to be banned in the UK. This all came as part of the commitment to migrate Britain’s roads over to a much cleaner and forward-thinking approach. Sunak pushed this deadline back to 2035.
Changes To Proposed Legislation Surrounding Boilers
Other changes included boilers, with initial plans to stop new gas boilers being installed by 2035. In this speech, it was revealed that this would now be an 80% phase-out, and that the total ban on off-grid oil boilers by 2026 would be delayed to 2035, with an 80% phase-out target instead of a total ban.
Less Clarity On Energy Efficiency Regulations
The funding that had originally been made available to update outdated and outmoded boilers across the UK has now been reallocated, with new, less clear in guidance in place following the PM’s speech. Rather than having to replace with a degree of urgency, older boilers now only need to be replaced with an electric heat pump “as and when there’s a need to do so”.
In July, the government and the North Sea Transition Authority announced a joint commitment to future licensing. This aimed to secure the UK’s energy domestic energy supply and reduce reliance on countries like Russia, which historically has provided a substantial proportion of the country’s gas supplies, largely down to the Nord Stream pipeline.
Before the Russo-Ukrainian war, Russia provided only 4% of UK gas supplies, but a shut-off sparked fears of blackouts across the UK, particular with the indefinite hiatus placed on both the usage of Nord Stream 1, and the construction of the larger and more robust Nord Stream 2.
These new licenses seek to cut down on the impact that imported liquified natural gas can have, with more locally-sourced gas having an estimated ¼ of the impact of imported resources. They’re also set to bolster employment opportunities, especially across northeastern Scotland and the Humber.
Critics have naturally panned the move, especially given that it’s still a move towards using the already dwindling natural resources we have, when funds and efforts should instead be directed towards renewable or cleaner forms of energy.
It should come as no surprise, but Russia has experienced a 5% month-on-month decrease in fossil fuel exports. Political instability, coupled with ongoing tensions on the Russia-Ukrainian border and into Ukrainian soil, has meant that much of Europe has all but cut off any existing deals with Russia.
China has now replaced the EU as the biggest destination for imports. From late February 2022 to early August 2023, €96.84 billion (€83.43 billion) worth of fossil fuels were shipped from Russia to China. However, in spite of that shift, Russia’s exports have gradually reduced, particularly when compared to the figures we saw prior to Russia’s invasion of Ukraine.
This also represents a more eco-positive future for Europe, insomuch as the continent has moved away from a historically huge supplier of its fossil fuels.
Now that we’ve explored some of the key events in energy over 2023, let’s turn our attention to 2024, and how the landscape is set to change. As one of the UK’s leading suppliers of bespoke business energy deals, we’ve pinpointed 10 predictions for the energy industry in the new year.
Despite price caps for UK energy bills throughout 2023, it’s predicted that the price of power will rise for domestic and business customers across the UK in 2024. According to the latest Ofgem report, the price cap is set to increase by £94, taking the typical yearly household cost from £1,834 to £1,928 per year.
The core reason behind this is a substantial increase in the cost of wholesale power, which has risen from £96.64 to £129 per mWh, a rise of nearly 34%. This, in addition to growing tensions across both the Middle East and Eastern Europe, means we’re set to see a further increase over the unprecedented prices we’ve witnessed over the last few years.
According to a recent report from the International Energy Authority, the global renewable energy capacity is set to see a huge increase of 107 gigawatts, up to 440 gigawatts – the largest singular increase in scope for renewables we’ve ever seen.
To put that into perspective, the IEA found that’s equivalent to the existing energy capacity of two European powerhouses in Spain and Germany. Not only is this a massive step forward towards net-zero by 2050, it’s a huge reminder of what we can do on a global scale.
Typically touted as a more unconventional replacement for the internal combustion engine, and an alternative to electric vehicles, hydrogen is an emerging option for fuelling cars, homes and businesses alike.
It’s one of the cleanest sources of energy, with the only byproduct being water, as opposed to the harmful carbon dioxide produced through burning natural gas. However, the existing infrastructure we have, while it can be used to transport hydrogen fuel en masse, needs to undergo substantial and costly adaptation to ensure it can be more widely used.
This has already entered its embryonic state. Car manufacturer Toyota estimate there’s at least 100 hydrogen fuelling stations across Europe, with 2024 set to bring about more. The National Grid, too, posits that hydrogen can be used with minimal disruption to homes and businesses, as hydrogen transportation will utilise the existing network of gas pipelines.
Now a mainstay in UK households, smart meters are set to become even more present across the UK. Offering a myriad of benefits, ranging from more transparency on what you pay, to more accurate and automated reporting, smart metering is an irrefutable step forward.
Plus, as the technology becomes more robust and adaptable for a variety of different settings, it’s likely to feature more in businesses, too. That’s something we’ve already gotten ahead of the curve on here at Tariff, offering bespoke solutions on smart meters for businesses in all sectors and industries.
While it’s consistently been the most prevalent form of renewable energy generation across the UK for some time now, wind power actually saw a dip in Q2 (April to June). According to the latest governmental publication on energy trends, the total amount of power generated by both off- and -on-shore wind fell by 16% to 13.7 TWh, from 15.8 TWh.
However, there’s substantial reasoning behind that drop, with unusually low average wind speeds meaning less power was generated. We’re predicting that to change, especially as we enter another winter period, and winds start to pick up again.
2023 saw the advent of the UK’s Solar Taskforce, spearheaded by the Minister of State for Energy Security and Net Zero, which was designed to ensure that the projects surrounding PV (photovoltaic) panels and solar energy generation were robust enough to see us through to the UK’s 2035 net zero goal, and the global 2050 deadline.
Following multiple meetings and plans of action, the taskforce is set to come to an end in February of 2024, culminating in the publication of a comprehensive roadmap for the UK’s solar provisions. One of the key figures already being forecasted is a huge 70 GW of solar generation by 2035, a massive increase over the numbers we’ve seen in previous years.
In a new drive set to launch in 2024, the UK government has sought to impose a limit to the amount of carbon allowances (a governmental permit that allows companies to emit a predetermined amount of carbon dioxide into the atmosphere).
This “carbon allowance” scheme often flies under the radar for the general public, but it’s an initiative that’s set to have some substantial impact going forward, especially with the net zero deadline looming.
The proposed new limitations will see the amount of carbon allowances fall from the approximately 79 million issued in 2023, to 69 million in 2024. That will see further reductions by 2027 (down to 44 million), and decreasing to 24 million by 2030.
A major player in the world’s economy, and home to more than 26 million people, Australia has the unique position of being able to set the precedent for the next moves in greener energy, particularly across Oceania.
Their proposed federal budget, as reported by The Guardian, seeks to prioritise those businesses that are looking to take Australia and its energy industry to the levels it needs to sustain going forward. This includes:
This is all in aid of pursuing the lofty goal of reducing Australia’s total emissions by 43% by 2030, with 82% of all energy sourced from renewable or clean sources. It’s got the financial backing, too – the Australian government has pledged a hefty $40 billion AUD (£20.9 billion) to support the shift.
The EIU’s 2024 Energy Outlook offered confirmation of what we’ve continually seen in recent years – energy demands are set to see a further rise of 1.8%, with the burgeoning population of Asia being a huge driver behind that.
Of course, this is no surprise. It’s a trend we’ve continually seen, especially as the world’s population continues its relentless growth. What is surprising, however, is that the demand for fossil fuel has persisted in spite of spiralling prices and disruptions to supply chains, reaching record levels.
There’s a silver lining, though. The EIU predicts that the demand for renewable energy will see a much more substantial growth of around 11%, offering a promising outlook for the future.
A hugely positive prediction, and one that’s set to revolutionise how we approach energy, comes from the World Economic Forum’s analysis of the IEA’s latest report – there’s a substantial enough supply of renewable energy to meet the additional demands of an ever-expanding planet.
This is big news, not only because it represents a shift of focus on a global scale, but because it ensures that further investment, focus and adoption is likely to come in time. There’s no word yet on whether that will be in 2024 or whether we’ll have to wait until closer to that looming 2050 deadline, but it does paint a positive picture.
With 2024 just around the corner, time is scarce to ensure you stay ahead of the curve, and we’re in the ideal position to help. At Tariff, our mission is simple – we provide businesses with everything they need to make the leap from more conventional forms of fuelling their endeavours, to cleaner, greener and future-focused forms of energy.
We offer one of the industry’s most bespoke services, taking every aspect of your business into consideration in our undertakings. We’ll scour the market, using our network of connected companies and packages, to ensure we source a deal that’s built with you in mind.
Get in touch with our in-house experts today to discuss your options, and how Tariff can facilitate a brighter, cleaner future in energy.
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