Over the past decade, there has been a significant increase in investment in renewable energy, particularly in solar power. Solar power has become more cost-competitive compared to conventional sources of energy like oil. In contrast, the oil industry has faced challenges such as fluctuating oil prices, geopolitical tensions, and the need to transition to cleaner and more sustainable energy sources. Let’s analyse the main reasons explaining this trend:
Renewable Energy Transition
The transition to renewable energy sources is a crucial global initiative aimed at reducing greenhouse gas emissions, combating climate change, and promoting sustainable development. It involves shifting away from fossil fuels such as coal, oil, and natural gas, and instead choosing energy from renewable sources like solar, wind, hydro, geothermal, and biomass.
Falling Solar Costs
The International Energy Agency (IEA) says that this year, a record amount of more than $1.7 trillion will be spent on clean energy technologies. In comparison, only about $1 trillion will be spent on fossil fuels. They also say that spending on solar power will reach more than $1 billion daily, or $382 billion annually while spending on oil production will be $371 billion. This is a significant change in the energy business. However, the IEA warns that spending on fossil fuels is much more than it should be to reach the goal of net zero by the middle of the century.
Many governments around the world are actively supporting renewable energy initiatives through various mechanisms, including subsidies, tax incentives, and renewable energy targets. These policies can stimulate investment in solar power and accelerate its growth.
One of the main incentives is that governments are looking for more energy independence due to the recent geopolitical context.
Solar power plant in Atacama desert, Chile
Other advantages of investing in solar energy
Despite the growth in clean energy investment, the oil and gas industry is still building new projects. But the IEA report shows that the switch to renewable energy is gaining speed, with solar power becoming the best way to get the whole economy off carbon quickly. Below are a few additional good reasons to invest in solar power:
As more countries and businesses invest into renewable energy, we can hope for a cleaner and more stable future. If you want to explore deeper this topic, please find here the link from the IAE report.