Gordon Moran, writing for the European Energy Centre, explores the beneficial effects of falling oil prices on the UK renewable industry
The substantial decline in the price of oil over the past few months has been the largest change in a number of years. However, it is worth noting that such swings are hardly unprecedented and it is possible that the current drop in price may be relatively brief, as similarly large changes in the price of oil were seen seven years ago. There are concerns that the fall in the price of oil could affect the renewables industry.
However, there is cause for optimism! An important factor which is often overlooked is that renewable energy technologies are primarily used to generate electricity, whereas oil is primarily used as a transportation fuel: while fluctuating oil prices may affect commerce and trade, it is largely parallel to investments in renewables.
Governments are still promoting investments in renewables on a large scale and for microgeneration installations in order to reduce carbon emissions and improve energy security. The possibility of cheaper petrol at the pump may negatively affect the development and production of electric cars due to reduced consumer demand, but it is unlikely to affect the renewable sector as a whole.
So it is unlikely that the drop in oil price will substantially affect the renewable energy industry, at least within the UK. Further to this, EU targets for greater energy efficiency will also help to ensure that renewables continue to be invested in. So, in spite of the changing oil price, the future looks bright for the renewable energy industry.