Clean Energy Investment – 7/13/16

As the renewable energy industry gains momentum, big oil taking a hard look at clean energy investment.

With crude prices still at an extremely unprofitable level and unlikely to recover so long as shale-oil exerts its downward pressure, oil companies are beginning to look elsewhere for future growth. And funnily enough, they are looking at renewables. As the chart from Bloomberg New Energy Finance (BNEF) below shows, wind and solar growth projections have started looking mighty attractive to thanks to falling costs. Renewables outpaced even gas-fired plants as sources of new power added to U.S. electrical grids last year.

Screenshot 2016-07-27 at 10.04.28 AM

According to the recently released seventh annual U.S. Clean Tech Leadership Index, which tracks and ranks the clean-energy and clean-tech activities of all 50 states and the 50 largest metro areas in the U.S, renewables have made tremendous gains in just the last few years.

Since 2010, the number of states with 10% in-state generation from non-hydro renewables rose from 1 to 14. The top three states Iowa (31%), South Dakota (25%), and Kansas (24%) derived most of that energy from wind power, but California has became the first state to generate 10% of its in-state electricity from solar power reflecting the significant decreases in costs the solar industry has seen and is expected to see in the future.

solar power

Tax-equity investment in U.S. clean-energy projects is projected to exceed last year’s record $13.1 billion reaching as much as $14.8 billion in investment in 2016. After two key federal tax incentives for solar and wind projects, the ITC and the PTC, were granted an unexpected extension for an additional five years at the end of 2015, interest in clean energy investment increased dramatically.

Still, a few billion dollars in clean energy investment isn’t much compared to the the hundreds of billions the U.S. oil industry is worth and recent capital flows look like a way for oil companies to test the water for now.

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