Do low gas prices hurt renewable energy adoption? Not really.
Gas prices have fallen dramatically in the US, and many assume this will hurt the renewable energy industry. A new study suggests otherwise.
With the financial advantage of solar or wind energy curtailed by cheap oil, the logic goes, consumers will be less interested in switching from fossil fuels.
That's not necessarily the case in reality, however.
Falling oil prices have a limited impact on renewable energy, and their volatility actually underscores the value of clean power sources, argues a new blog post from the Brookings Institution.
First, the authors claim oil prices and renewable-energy adoption aren't directly related, because each represents a different sector of the energy market.
Oil is primarily used as a transportation fuel, while renewable sources are used to generate electricity.
According to the International Energy Agency, diesel and other petroleum fuels constitute just 5 percent of global power generation today--compared to 25 percent in 1973.
So they aren't necessarily competing for the same market share--unless you include generating electricity used to charge the fairly small number of plug-in cars currently on U.S. roads.
Second, since cost is based on technology rather than the availability of an actual commodity, renewable energy is also considered more stable over the long term.
The cost of electricity generated from renewable sources is tied to the efficiency and availability of technology like solar cells and wind turbines.
That cost has already declined a reported 80 percent for solar, and 60 percent for wind, over the last five years--and further reductions as technology continues to improve.
In contrast, oil is a finite resource, especially from sources that are easily and cheaply available. Even with temporary production spikes, it will only grow more expensive to extract over time.
Few analysts claim any certainty about how long production increases like the U.S. shale boom will last, making oil a more uncertain prospect than renewable energy over the long term.
So while oil is cheap for now, the future still appears to remain bright for renewable energy.
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