What Do Falling Oil Prices Mean for Clean, Renewable Energy?

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What Do Falling Oil Prices Mean for Clean, Renewable Energy?

Most people see the falling oil prices and celebrate the fact that they aren’t breaking the bank just to fill their gas tank. But others see the dropping oil prices as a threat to the entire clean energy economy. What the public believes is that the price of oil represents the price of energy. This is where people are mistaken; the price of oil does not dictate the price of all energy. In reality, they have very little in common.

In the past, these lower oil prices have caused the renewable energy market to panic. Why do the clean energy companies seem to be unbothered by the current drop in oil prices? The number one reason is that energy markets dynamics have altered greatly in the 21st century. When it comes to electricity, renewable energy and oil hardly mix. Diesel and similar fuels account for only 5% of global power, compared to 24% in 1973. In the United States, diesel only makes up 1%!

As you can see, the lower oil prices have almost no impact on solar or wind energy. The price of oil has almost nothing to with the future demand. For example, solar energy can be priced significantly lower than diesel electricity. The price of a barrel of oil would have to drop dramatically to come close to what you can get with solar energy. One excellent way to look at it is this: solar energy is basically free. Solar energy provides a major advantage over diesel, natural gas and coal because fossil fuel prices have proven to fluctuate so greatly over time. The oil market is a constant roller coaster; the price will drop significantly just to go up again. Clean, renewable energy has consistently dropped and is projected to continue this growth, unlike the unpredictable oil industry.

Now for some cold, hard facts. Solar energy costs have fallen 20% in the past year and 80% over the past five years.  Wind energy costs have dropped 15% in the last year and 60% over the past five. The drop in oil costs have people believing that clean, renewable energy must be struggling, but in reality they are proving how they have withstood the test of time and the unstable oil market.

Never fear, clean, renewable energy is here to stay! Are you interested in taking the next step to make your company energy efficient? Give us a call, we look forward to creating a plan designed to reduce energy consumption and save your company money.


Source material: http://www.forbes.com/sites/edfenergyexchange/2015/01/05/why-falling-oil-prices-dont-hurt-demand-for-renewable-energy/