Solar energy is now the cheapest form of electric generation in history, making solar assets relatively low-risk when compared to capital-intensive fossil fuel discovery and buildout. The largest share of this year's new energy generation in the US will be solar. At the same time, several oil producers expect the COVID-19 pandemic to pull peak oil forward into the 2020s. Some even think we may have already passed the peak, accelerating plans to diversify their energy offerings with renewable capacity. Related ETFs and Stocks: Invesco Solar ETF (TAN), First Trust Global Wind Energy ETF (FAN), Energy Select Sector SPDR Fund (XLE), BP plc (BP), Total SE (TOT)
Renewables Beating Fossil Fuels Across the Board Despite the pandemic, solar energy bounced back late and went on a tear in 2020. Third-quarter installations totaled 3.8 GW, an increase of 46% YoY and accounting for 43% of all new electrical generation installed during Q3, according to a quarterly Solar Market Insight report by Wood Mackenzie and the Solar Energy Industries Association (SEIA). The strong quarter puts 2020 on track to become the third-largest year for solar installations, despite some impacts from COVID-19. A nationwide backlog is expected to spill over into 2021, boosting installations some 26%, according to the Solar Market Insight. According to the U.S. Energy Information Administration’s (EIA) latest inventory of electricity generators, developers and power plant owners plan for 39.7 gigawatts of new electricity generating capacity to start commercial operation in 2021. Solar will account for the largest share of new capacity at 39%, followed by wind at 31%. As MRP noted back in November, the International Energy Agency (IEA) anointed solar power the “new king” of global electricity markets after becoming the cheapest form of electricity in history. For utility-scale solar projects completed this year, the average cost of electricity generation over the lifetime of the plant (called the levelized cost of electricity) was between $35 to $55 per megawatt hour in some of the world’s biggest markets — the US, Europe, China, and India. The cost for coal, in comparison, currently ranges between about $55 and $150 per megawatt hour. Along with an increasing economic edge, money managers and investment banks are beginning to heed the call to scrutinize environmental, social and governance factors. CleanTechnica notes that leading investment firms such as Blackrock have begun to withdraw funds from companies that exacerbate the effects of climate change, too. BlackRock, the world’s largest asset manager, recently told clients that environmental sustainability will be a key factor in investment decisions going forward. Last June, Goldman Sachs shared their expectation that spending for renewable power projects will become the largest area of energy spending in 2021, surpassing upstream oil and gas for the first time in history. The multinational investment bank and financial services company also expects the clean energy sector to reach a $16 trillion investment volume through 2030, eclipsing fossil fuels. Big Oil Buying into the Clean Energy Future As Reuters notes, The COVID-19 pandemic brought forward forecasts by energy majors, producers and analysts for when the world’s demand for oil may peak. Rystad Energy, Norway’s biggest independent energy consultancy, sees global oil demand peaking at 102 bpd in 2028, revised down from a previous prediction of just over 106 million bpd in 2030. Royal Dutch Shell has held off on giving any official prediction for when they expect peak oil, but CEO Ben van Beurden told reporters this year that pandemic may have already brought about a peak in demand. “Demand will take a long time to recover if it recovers at all,” van Beurden said. Shell has warned the value of its oil and gas assets may fall by $22 billion after shaving up to $4.5 billion from its portfolio in the final quarter of the year. In two aggressive projections, Britain’s oil and gas supermajor, BP, forecasts COVID may have pulled peak oil all the way forward to 2019. Though a third, more conservative scenario from the company sees oil demand peaking at around 2030, BP has already ramped up its development of renewable energy assets in an effort to diversify their holdings for the future...
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