Renewables Could Prove Cheaper Than LNG in Overseas Power Markets, Report Finds

By Jeremiah Shelor, NGI's Daily Gas Price Index.

The slew of North American liquefied natural gas (LNG) export projects currently in the works could face stiff competition from renewables in Asian and European power generation markets, according to a new report from economists with The Brattle Group.

The report, “LNG and Renewable Power: Risk and Opportunity in a Changing World,” notes, as other analysts have, the recent softening of LNG demand in key markets like Asia (see Daily GPIJan. 13). While many forecasters see demand growing beyond 2020, this isn’t a safe bet, according to Brattle.

“The analysis in our paper suggests that market participants should be very cautious in thinking that the LNG supply glut is necessarily a temporary problem, because another important dynamic in world energy markets is the declining cost of renewable power and the prospect of increased penetration of renewables in the global power generation mix and thus competing with LNG as a ‘fuel source’ for power generation.”