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One of the biggest concerns many people have at the moment is how energy consumption and prices will change in 2022 as more and more businesses return to work. That’s why we’ve put together this handy guide with some of the key energy consumption predictions from leading economy experts.
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As we enter the new year, there is a lot of uncertainty about what the next twelve months have to offer, especially as we slowly start to return to a new ‘normal’ following the coronavirus pandemic. One of the biggest concerns many people have at the moment is how energy consumption and prices will change in 2022 as more and more businesses return to work. That’s why we’ve put together this handy guide with some of the key energy consumption predictions from leading economy experts.
Economist Intelligence recently published a report detailing their predictions for 2022. In the report, they claim the overall picture for the energy sector will be one of growth. According to the EIU, global energy consumption will rise by 2.2% as economies continue to recover from the significant impact of the pandemic and return to normal levels of working. EIU also claims that energy prices will stay firmer than in previous years, as the demand recovers and supply bottlenecks continue to disrupt the power generations.
This means many energy companies will need to undertake an urgent review of their strategies for the year ahead, especially as the government and investors are currently ramping up the pressure to cut emissions in order to meet the net zero by 2050 target.
Let's look at these key points in a bit more detail…
In 2022, it is estimated that global energy consumption will increase by 2.2%, reaching 13,410m tonnes of oil equivalent (mtoe) as economies all over the world recover from the impact from the COVID-19 pandemic. This is higher than in 2019, compensating for the decline in consumption seen as a result of the pandemic and its multiple lockdowns, though it is a slowdown from the rapid rebound in 2021 as the energy consumption gradually returns to normal.
A significant amount of the demand growth will come from the power sector as the electrification of the global economy continues e.g. businesses going digital and the transition to electric vehicles (EVs). Nearly all of the energy sector, including coal, will see consumption rising in 2022. Coal consumption is estimated to rise by 1.5% year on year, which is almost as fast as natural gas consumption as this will be restricted due to supply issues in the first half of the year.
Oil consumption was the worst hit area of the economy in 2020, however, in 2022 it is expected to rise by 2.7%, whilst solar and wind power is set to skyrocket by 10.5%.
Due to the higher demand for energy in 2022, networks will be able to raise their prices above those from the last three years. These higher prices are expected to last until the second quarter of 2022 as stocks are rebuilt. Price forecasts for natural gas and liquified natural gas (LNG) have also gone up, particularly in Europe. Should production remain subdued, the prices could increase even further, or they may suddenly drop if investors take advantage of the higher prices.
For more of the latest energy advice and updates, check out our handy gas, electricity and water guides.
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