Power consumption growth to boost renewables and LNG sectors in 2025

THE increasing draw on power grids, from car usage to data centre operations, will spotlight the renewable energy and liquified natural gas (LNG) sectors this year.

Globally, power consumption growth will hit a peak of 3.1 per cent on average in 2025 – the highest since 2021, according to research consultancy BMI.

Emerging markets in South-east Asia such as Indonesia will experience a growth rate of 4.8 per cent in 2024. Meanwhile, major developed markets such as France and Germany posted a negative consumption rate in 2024 due to slowing gross domestic product growth. As a result, developed markets are expected to prioritise decarbonising power sectors, via integrating renewable energy into the power mix.

Distributed solar installations, where solar panels are installed across rooftops, will help to offset the slowing expansion of utility-scale solar projects, said BMI.

Emerging markets, however, are likely to continue pursuing energy security and rely on fossil fuels for stable baseload power.

Growing economies need reliable and affordable power sources. This makes the move away from fossil fuels challenging, due to established infrastructure and lower costs with coal and oil. Fossil fuels also provide a stable and dependable source for baseload power, unlike renewable energy sources, which are intermittent and dependent on weather conditions.

Meanwhile, in the LNG sector, the delays in upcoming projects across the Americas means Europe and Asia will have less access to the energy source next year, noted Samantha Dart, head of natural gas research at Goldman Sachs.

The Ukraine transit deal for Russian gas to flow to Europe also expired at the end of 2024, which means Europe would have to use more gas in storage for this winter.

Tighter LNG supply in Europe could drive prices up, as would demand from Asia, which consumes over 60 per cent of the global resource while producing just over 30 per cent.

“The reason why we see so much upside risk is because differently from oil, in LNG there is no spare capacity, what you see is what you get,” said Dart.

Energy research and intelligence firm Rystad Energy noted that Donald Trump’s victory at the polls could prime LNG for growth, as the incoming US president’s campaign pledge will likely accelerate the country’s infrastructure expansion in the sector. This could mean a doubling of US LNG export capacity from 11.3 billion cubic feet per day (bcfd) in 2023, to 22.4 bcfd in 2030.

Emily McClain, head of North America gas and LNG research at Rystad Energy, noted: “This rapid expansion risks oversaturating the market, potentially driving down prices and profitability for producers.”

Singapore’s focus on renewables

Closer to home, renewables was a big theme that emerged in 2024, said Tan Wooi Leong, senior executive director of global energy infrastructure and energy at Surbana Jurong.

Recent developments underscore this. This includes the conditional approval for Australia-based solar energy provider Sun Cable to import 1.75 gigawatts, as well as signals from the Energy Market Authority indicating willingness to give long import licences to support renewable energy projects.

On the LNG front, the Singapore government has indicated a centralisation of its procurement to mitigate wild swings in energy prices given the Republic’s small demand and global development. For instance, LNG supply was tough to come by even on the spot market when the Russia-Ukraine conflict happened, noted Tan. “Everyone started to look at how we can secure our energy supply, hence diversifying energy sources is crucial for Singapore,” he pointed out.

In 2025, small modular reactors are likely to be a hot topic of discussion in Singapore. The city-state has inked a 30-year nuclear deal with the US to tap their expertise in studying reactors for clean and reliable energy.

Renewable energy import will also move into a delivery phase, where new challenges will emerge, Tan noted. These challenges could spawn new opportunities as well as new energy ecosystems form.

While Singapore will still be reliant on LNG in the near future, green energy sources are on the horizon. But there will be a premium to pay for more sustainable energy, not just in cost of materials but in infrastructure changes in dealing with the intermittent nature of renewables, with storage systems needed to prevent brownouts or power cuts.

“We are still dependent on LNG because that is the best for base, because if you want to ensure a reliable power supply, you need to have a very stable base load,” added Tan.