{"id":253330,"date":"2025-12-27T02:25:14","date_gmt":"2025-12-27T02:25:14","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/253330\/"},"modified":"2025-12-27T02:25:14","modified_gmt":"2025-12-27T02:25:14","slug":"renewables-turn-lng-glut-into-a-sinkhole","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/253330\/","title":{"rendered":"Renewables turn LNG glut into a sinkhole"},"content":{"rendered":"

MELBOURNE, Dec 26 (Reuters Breakingviews) – Solar, wind power and batteries are set to make life a misery for the liquefied natural gas market. Some fossil fuel executives already think the push by incumbents like Exxon Mobil (XOM.N), opens new tab<\/a>, Shell (SHEL.L), opens new tab<\/a> and Woodside Energy (WDS.AX), opens new tab<\/a> to hike global production by some 50% by 2030, per the International Energy Agency, is creating a bubble. But renewable energy\u2019s advantages will make the pop even worse.<\/p>\n

On the surface, the LNG expansion might look rational. Europe\u2019s share of imports of liquid methane has doubled to 30% since Russia\u2019s 2022 invasion of Ukraine, per Capital Economics, and the rise of artificial intelligence has created a boom in power-hungry data centres. Meanwhile, President Donald Trump is trying to force purchases of more U.S. fossil gas into trade agreements with the EU, Vietnam and others. And the industry argues LNG is the transition fuel to wean the world off coal power \u2013 especially Asia, which already accounts for 65% of global LNG imports.<\/p>\n

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TotalEnergies (TTEF.PA), opens new tab<\/a> CEO Patrick Pouyann\u00e9, though, told the audience at the Gastech conference in Milan in September that the sector is \u201cbuilding too much\u201d. Vivek Chandra, boss of Gulfstream LNG in Louisiana, summed up the otherwise upbeat mood at the confab as \u201cirrational exuberance\u201d.That\u2019s likely to be an understatement. Gas turbines have roughly tripled, opens new tab<\/a> in price since 2021 to $2,400 per megawatt-hour, per U.S. utility NextEra Energy. With battery costs falling \u2013 by 40% in 2024 alone \u2013 all-in renewable generation and storage in 2030 could be up to 56% cheaper than gas, estimates Wood Mackenzie.<\/p>\n

It\u2019s already having an impact on the world\u2019s biggest LNG importer, China, which is rapidly expanding its wind, solar and hydroelectric generation. By October, Beijing\u2019s LNG imports had fallen 11 months in a row year-on-year, per data provider Kpler. The People\u2019s Republic is also likely to increase purchases from Russia rather than from the U.S. and Qatar, which are responsible for most of the planned expansion of global supply.<\/p>\n

Renewables have another factor in their favour: they\u2019re quicker to install, with major projects taking around a year on average, compared to five years for a gas-fired power plant. And that\u2019s assuming the equipment is readily available. But turbine makers GE Vernova (GEV.N), opens new tab<\/a>, Siemens Energy (ENR1n.DE), opens new tab<\/a> and Mitsubishi Heavy Industries (7011.T), opens new tab<\/a>, which account for 90% of the market, have warned customers they face having to wait as long as eight years for delivery, according, opens new tab<\/a> to the Institute for Energy Economics and Financial Analysis. That effectively nixes any chance of new gas plants replacing coal-fired power stations in Asian countries from Vietnam to the Philippines.<\/p>\n

Excess fuel supplies, a hardware backlog and a more competitive alternative bode ill for LNG market incumbents. A crash is looming.<\/p>\n

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This is a Reuters Breakingviews prediction for 2026.<\/p>\n

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Editing by George Hay; Production by Oliver Taslic<\/p>\n

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Antony Currie joined Breakingviews when it opened its New York bureau in 2005, working there until moving to Melbourne, Australia in late 2020. He has covered everything from the car industry to investment banking, more recently adding sustainable finance and water security to his beats.
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\nHe holds a bachelor’s degree in German language and literature and a master’s degree in international relations, both from the University of Bristol.<\/p>\n