Contrary to what some recent headlines have suggested, cheaper oil has not dampened demand for energy efficiency and renewable energy sources.
The historic correlation between the price of oil and the demand for solar, wind and other clean power sources has been weakened in today’s global markets.
Like apples and oranges, we now use oil and renewables to make completely different types of juice: Oil is used mainly to produce transportation fuels, and renewables to generate electricity.
It means that when the price of one decreases, demand for the other won’t automatically decrease.
But if the falling price of oil doesn’t affect demand for renewables, why does it seem to weaken renewables stocks – even as solar power, for example, is growing faster than ever before? Simply put, it’s a problem of perception.
The notion that the price of oil represents the price of energy in general is engrained in the public consciousness, with widespread financial and political repercussions as a result.
It could create a disincentive for investors, policymakers and customers to support renewables and energy efficiency - when, in reality, investments in fossil fuels represent the riskier strategy of the two.
This blog post from EDF’s Energy Exchange explains in greater detail what’s going on.