Cheap oil can't kill solar. So calm down.

germany solar
CC BY 2.0 Tim Fuller

Back in October of last year, I asked whether low oil prices could be good for the environment. It was, I'll admit, a headline crafted more to grab attention than to communicate a reality.

There's very little about oil that can truly be "good" for the environment.

There was, however, an important point I was trying to get at: namely that falling oil prices would hurt investors and producers, and reveal just why reliance on fossil fuels is a long-term liability for our global economy.

Still, the fall in oil prices has some people whispering dark rumors about the trouble ahead for renewables and clean tech. Headlines warn of feeble electric car sales (despite plenty of evidence that they are selling well), and a coming collapse in the viability of solar, wind and other clean technology.

There's good reason, however, to be hopeful. Tom Randall of Bloomberg has posted a great summary of 7 reasons that cheap oil can't kill solar over at Renewable Energy World.

Briefly, here are Randall's main points:

1) The sun doesn't compete directly with oil (at least, not all that much)
2) Electricity prices are still going up
3) Solar prices are still going down (some analysts predict a further 40% fall in solar prices in the next 2 years!)
4) Sales of plug-in vehicles are doing just fine (I told you so!)
5) Pump prices haven't dropped as much as oil prices (partially because other countries are doing what we should be doing—raising gas taxes and cutting fossil fuel subsidies while oil is cheap)
6) Oil prices won't stay this low forever
7) Global investment in clean energy keeps flowing

Randall's piece is well worth reading in full, so I won't flesh out too many of his points in more detail. I would, however, add a few of my own. So here goes:

8) Falling energy demand: Energy demand is falling in many countries, meaning fossil fuel investors are inevitably fighting for a piece of a shrinking pie, while the newcomer, clean energy, has astounding potential to grow.

9) Better products: From Tesla outperforming SUVs in the snow to smarter thermostats and better light bulbs, there is a confluence of technologies that are not just "as good" as their dirty, inefficient predecessors—but better. And they are being marketed for their performance as much as their cost savings.

10) A growing lobby: There was a time when certain vested interests could derail a technology that threatened their hegemony. Now, however, there is a sizable and growing lobby that is ready to fight back. The solar industry is growing jobs at an astounding rate, corporations are abandoning climate denial and entire nations are demanding action to clean their air. We won't be so easily pushed aside this time.

11) Energy storage, energy storage, energy storage: There are many parts of the world where wind and solar are already cost competitive with fossil fuels, without subsidies. But, as about a million internet trolls will remind you every time you mention solar, these technologies are still hampered by intermittency—meaning the sun doesn't always shine and the wind doesn't always blow.

Energy storage, currently a tiny market compared to the size of our energy demands, is about to take off like wildfire. Indeed, Citigroup predicts that energy storage will hasten the demise of fossil fuels, growing to a $400 bn a year market by 2030. Interestingly, the oil industry will be particularly unhappy about this development—the few places where oil is used in electricity generation is either grid-scale peaking plants or backup generators—both of which will have to compete with energy storage. (Of course, cheaper batteries means cheaper EVs too...)

12) Solar benefits directly from cheap oil: The folks I know in the solar industry spend a lot of time driving to installations, not to mention shipping panels and other components from overseas. A drop in oil prices translates to a drop in their overheads—which in turn means either lower costs for the consumer, or a healthier profit margin for the industry. Either way, it means less money flowing from solar to fossil fuels—and that can only be a good thing.

All this is not to say that low oil prices can't impact solar. As with any sector of the energy industry, solar and other clean tech folks will be recomputing their business models, shifting their focus and reconfiguring their message. But the hyperbolic headlines focused on the coming carnage, I suspect, have got it entirely wrong. If anything, cheap solar and other clean technologies will put the squeeze on oil. While oil producers could once drop their prices for a while and watch all the newbies squirm, they are now primarily focused on competition with unconventional forms of oil. Eventually they will be faced with a choice: raise their prices, and add to the impetus to invest in efficiency, renewables and conservation. Or keep them low, and watch their profits dwindle as clean energy marches steadily forward.

This should be interesting.

Cheap oil can't kill solar. So calm down.
The clean energy juggernaut is picking up speed, and low oil prices can't stop it this time. But the negative headlines keep coming.

Related Content on