As Oil Crashes, Renewables Soar

February 17, 2016

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Bloomberg:

The slump in oil prices that’s brought upheaval and cost-cutting to the traditional energy industry spared renewables such as solar and wind, which raked in a record $329.3 billion of investment last year.

The 4 percent increase in clean energy technology spending from 2014 reflected tumbling prices for photovoltaics and wind turbines as well as a few big financings for offshore wind farms on the drawing board for years, according to research from Bloomberg New Energy Finance released on Thursday.

“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,” said Michael Liebreich, founder of the London-based research arm of Bloomberg LP. “They highlight the improving cost-competitiveness of solar and wind power.”

The slump in oil prices that’s brought upheaval and cost-cutting to the traditional energy industry spared renewables such as solar and wind, which raked in a record $329.3 billion of investment last year.

The 4 percent increase in clean energy technology spending from 2014 reflected tumbling prices for photovoltaics and wind turbines as well as a few big financings for offshore wind farms on the drawing board for years, according to research from Bloomberg New Energy Finance released on Thursday.

“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,” said Michael Liebreich, founder of the London-based research arm of Bloomberg LP. “They highlight the improving cost-competitiveness of solar and wind power.”

While oil companies eliminate jobs and curb capital spending to cope with prices that have fallen two-thirds in 18 months, renewables are enjoying a renaissance underpinned by rules designed to curb fossil-fuel emissions damaging the atmosphere.

Fears that low oil prices will continue into 2016 have knocked confidence among oil companies, delaying $380 billion worth of investment in upstream projects, according to analysis by industry consultant Wood Mackenzie Ltd. on Jan. 12. Companies are “going into survival mode” this year with more projects delayed and budgets cut, said Angus Rodger, one of the report’s authors.

Brent crude oil has traded near $30 a barrel this month, down from more than $110 in 2014 as exporters led by Saudi Arabia battled for market share. Coal and natural gas prices have followed, already pushing a handful of producers into bankruptcy. While BNEF has said lower prices may hurt funding for efficiency projects and the spread of electric cars, the main clean energy technologies enjoyed record installations in 2015.

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Bloomberg:

A glut in crude isn’t affecting new demand for wind-energy. Even as falling prices made oil more affordable last year, investors directed a record $329 billion to install new wind- and other clean-energy technologies, said Bloomberg New Energy Finance.

Record installations helped Europe’s three publicly traded wind-turbine makers — Vestas Wind Systems A/S, Gamesa Corp. and Nordex SE– to double their market value in 2015.

Even as oil companies tamp down earnings and investment expectations, wind companies are eyeing records again this year. Vestas, the world’s biggest wind-turbine maker, last week predicted another sales record in 2016. Siemens AG meanwhile is close to a deal with Spain’s Gamesa Corp. Tecnologica SA that would create the world’s largest turbine producer.

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Meanwhile, in Oil ville:

Reuters:

Roughly a third of oil producers are at high risk of slipping into bankruptcy this year as low commodity prices crimp their access to cash and ability to cut debt, according to a study by Deloitte, the auditing and consulting firm.

The report, based on a review of more than 500 publicly traded oil and natural gas exploration and production companies across the globe, highlights the deep unease permeating the energy sector as crude prices sit near their lowest levels in more than a decade, eroding margins, forcing budget cuts and thousands of layoffs.

The roughly 175 companies at risk of bankruptcy have more than $150 billion in debt, with the slipping value of secondary stock offerings and asset sales further hindering their ability to generate cash, Deloitte said in the report, released Tuesday.

Just so this sinks in – as oil, buoyed by fantastically successful shale technology, produces a glut of product on the world market, prices fall, and plans for exploiting more exotic deposits are put on hold.

If the oil industry is successful in cutting surpluses, and prices go up, drillers will go back to work, but price shocks will move even more of their customers into more investment in efficiency and alternative energy.

Meanwhile, as inevitable technological improvement and mass production keep pushing renewable prices down, – further volatility in oil/gas markets just makes guaranteed steady renewable costs more attractive.  Death spiral/life spiral.

 

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10 Responses to “As Oil Crashes, Renewables Soar”

  1. Gingerbaker Says:

    “The 4 percent increase in clean energy technology spending from 2014… ”

    If spending is an indice roughly the same thing as deploying, then 2015 was a very bad year for renewable energy, which needs to increase about 30 – 50% every year to meet our goals for 2050.

    Not sure we should be cheer-leading failure.

  2. safecircle2100 Says:

    Seems like all this excitement could be tempered a bit with news of Nevada and other states (under heavy Utilities lobbying) removing all incentives and tax breaks for renewables… basically shutting down the deployment of renewables in those states. Ouch!


  3. OK… so you go to Bloomberg’s site you enter your email to get access the to “client” data aka “fact sheet” and they send you a 42 page pdf file…

    $329 B of investment in 2015… of which $199 B is ” Renewable Energy/Asset Finance”, $20 B is in Digital Energy and Storage Asset Finance, $67 B is in Small Distributive Capacity.

    It is not possible to review the data that went into the generation of the above numbers… in the footnotes “Total values include estimates for undisclosed deals.”

    No detailed break downs or references in this report, that I could find regarding sources that went into “creating” these numbers and claims… (yes there are some break downs but they are incomplete and don’t add up… )

    The 2014 report produced by Bloomberg and the Frankfort School has some sources cited, which I found informative…

    http://fs-unep-centre.org/sites/default/files/attachments/key_findings.pdf

    In the process of digging for more detail.. in the cites I came across this.

    A report by the United Nations Environment Programme

    GREEN ENERGY CHOICES: The Benefits, Risks and Trade-Offs of Low-Carbon Technologies for Electricity Production

    http://apps.unep.org/publications/index.php?option=com_pub&task=download&file=011913_en

    This was a good read.. worth the time.

    And this one I am in the process of reading… Global Statue of Renewable 2015, REN 21. (I am still unclear on who is funding the group and the lead authors…)

    http://www.ren21.net/wp-content/uploads/2015/07/REN12-GSR2015_Onlinebook_low1.pdf

    But these numbers are for 2014….

    In order for claims to be viewed as creditable, the data and methodology used to generated those claims needs to be available to be reviewed…. and without that, the claims should be viewed (by any reasonable person) has questionable at best.

    Would this “fact sheet” produced by Bloomberg survive a “peer review” process???

    This is a great site, a wealth of information, I am sadden to see the creditably tarnished by these kinds of posts.

    Are there other current “sources” on this issue that cite transparent and “reviewable” data?

  4. Tom Bates Says:

    The oil prices are low as the Saudi decided to crash all the frackters in the world by driving down the price of oil with the added benefit of weakening the Syrian and Iranian governments which the Sunni clerics in Saudi Arabia hate. The actual price of oil is about $1 a barrel as that is what it costs the Saudi to produce a barrel of oil. all the rest is a monopoly known as OPEC. Renewables are not soaring, they still cost more than fossil fuels, a lot more. You notice the money in solar per the graft is about the same as in 2011, four years ago. The politicians to make solar and wind go steal money from one set of taxpayers and give it to another. Solar city is an example. Hundreds of millions stolen from the taxpayers and given to Solar city,a wonderful business plan if you are dishonest.

    • Gingerbaker Says:

      Tom, you – of all people – should not go around accusing people of being dishonest.

    • andrewfez Says:

      There are a few large fields in SA that produce $10/barrel oil. I’ve never heard of $1 oil other than that produced 100 years ago. Certainly it’s not the OPEC aggregate by any means. CAPEX/production has been soaring for a decade or more for all the big public companies.

      FSLR has kept up its price during the crash, which I wasn’t expecting; I was hoping for more shares in the $20 range, but here we are in the $60’s, and talk of undervaluation is happening. SPWR still has moments where it correlates with oil prices but I have no interest in overweighting my position there, especially if we’re nearing a bear market.

  5. indy222 Says:

    Solar PV stocks are moribund. Even these last few days of big stock market rallying and big rallying in oil prices, after putting in a double bottom in the $20’s…. even after the rah-rah (but ultimately toothless) Paris “accord”. Nowhere. Big investors are happy to bet money on ANYthing which will give them a fast return. They check their (disgraceful) ideology at the trading room door. So, I take it as a serious sign of something wrong in the solar sector that the re-rise in oil is doing nothing for the value of solar stocks. Today was a great example; All market sectors rallied 1-2% yet again, and oil was up yet again, with oil-price friendly news from Iran adding to oil’s rally…. yet solar stocks went nowhere, or down. SunPower announced their earnings in after hours….. and proceeded to go….. nowhere.

    Something’s wrong in this story.

  6. petersjazz Says:

    And thats about halve ot the money spent on seeking for oil.

  7. pendantry Says:

    “These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,”

    Not so long ago I was convinced that fuel prices could only go up (because we passed peak crude in 2006). I was forgetting that the ‘free market’ is a fiction, and now suspect that the price is being manipulated downwards by those who control its extraction purely so that those who oppose the concept of free energy can continue to argue that it’s ‘too expensive’.

    I’ve been looking at the moon a lot lately. It shines very brightly, reminding me of all that free energy passing us by (anathema to those who would enslave us all in their corporate wet dreams).


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