The Financial Times is pondering what the risk of low oil prices poses to solar investment
The FT is pondering what the risk of low oil prices poses to solar investment, especially in countries which derive a large proportion of their electricity from generators.
Read more on this here.
We find this baffling. Yes, oil prices may be low now but are unlikely to stay there and the key difference between an investment in electricity generation from solar and that from hydrocarbons is that solar has no ongoing cost. Once that investment is made, the electricity keeps on coming and requires no fuel other than daylight which is, last we heard, free. The same cannot be said of hydrocarbons. The cost of a conventional oil, diesel or gas generation plant doesn’t stop with the investment in the generating plant.
Anyone making a decision on electricity generation capability based on the current low oil price and easy availability are ignoring the political and economic risks which could upset things. A rather large proportion of the worlds hydrocarbon reserves are held in countries not exactly known for stable governance and a fondness for liberal democracy. Iran’s imminent re-entry to the global oil markets may depress prices further but the longer term political impact on the Gulf region in particular will be significant. The Saudis will be unlikely to stand by and watch a resurgent Iran drive oil revenues down and impoverish its own restive population. History tells us what happens to the oil price when things gets lairy in the Middle East.
If you’d like to give much less of one about squabbles in far off places then take control of your business’s electricity by owning it. We’re here to tell you how…