How Solar Energy Helps Power the World

For decades, the energy industry has been dominated by big oil companies, which control most of the capital and have a near monopoly on the energy market. While the industry may change, the underlying structure and philosophy remain more or less the same.

In the past few years, however, the energy landscape has changed. The rise of renewable energy sources, such as solar power, has challenged the existing order. Where once large oil fields provided the world with abundant supplies of fuel, the sun now shines down on a global demand for electricity that outstrips supply. At the same time, cheaper, more efficient solar panels have made it possible for ordinary people to generate their own electricity from renewable energy sources.

The implications are profound. With oil companies restricted by government regulation from obtaining new licenses for oil exploration in offshore areas and natural gas suppliers in sharp decline, the stage is set for a revolution in energy.

Why Solar Energy?

Let’s begin at the beginning; why solar energy?

For years, oil companies have invested heavily in research and development to secure oil supplies that will last a century. In the process, they’ve created a strong foundation for the energy industry and an understanding of how oil and gas behave, which has proven invaluable. In addition, oil companies have worked tirelessly to establish a positive public image, investing heavily in advertising campaigns and sponsoring scientific research.

On the other hand, renewable energy sources, such as solar energy, are generally seen as a ‘good’ or ‘clean’ energy source, attracting favoritism and government subsidies. The technology is young and, in many cases, still in its infancy. In addition, generating electricity from renewable energy sources is often cheaper than creating energy from polluting fossil fuels.

The combination of these factors makes solar energy an attractive prospect for ambitious power companies. The fact that much of the technology is still being developed can be both an advantage and a disadvantage. The more you know, the more you can contribute. The advantage of being involved at the outset is that you can shape the direction of the energy revolution and benefit from the resulting growth.

Solar Energy and the Oil Industry

The two are not, in fact, mutually exclusive; solar energy and the oil industry can and do coexist. Indeed, many of the largest oil companies in the world have invested, and are continuing to invest, in solar energy. Solar energy has become a key component of their business models as it provides them with a sustainable, long-term supply of electricity, which is in high demand and does not tarnish their brand as oil does.

The investment is proof of the enduring importance of solar energy. In 2016, global investment in solar energy reached $16.9 billion and is projected to hit $26.3 billion by next year.

The oil industry is not, however, just about making a profit. It’s about power. The oil companies are driven by a desire to dominate the world’s energy supply and dictate the terms of international trade. This inevitably puts them at odds with rival energy producers and the public at large.

If we accept the idea that climate change is the defining issue of our time, then tackling it requires a global effort and the involvement of many industries, not just oil and gas. This is where solar energy comes in. By investing in and promoting alternatives to fossil fuels, the oil industry can still play a crucial role in stemming climate change. For example, solar power is clean energy, freely available and in high demand, which will put downward pressure on electricity prices.

The Growth of Solar Energy

Despite the enormous potential that solar energy holds, it is a relatively young industry. In many cases, the technology to generate power from the sun is still in its infancy. This has presented a challenge for investors, who have had to wait for the technology to catch up before they could reap the rewards of their investment. Still, the industry has managed to overcome these challenges and has continued to grow, attracting huge investments from both the public and private sectors.

The growth of the solar energy industry is almost impossible to quantify, but the numbers are inescapable. Solar power generated a revenue of just $16.98 billion in 2016 and is expected to hit $26.3billion by next year. This represents a CAGR of 11.7%.

The market demand for solar power is set to grow at an incredible pace. By next year, the International Energy Agency has projected that electricity demand will rise by 6% worldwide, with Africa and Asia expected to see the largest increases. This is set to provide a huge boost to the solar energy industry.

The key issues are further downplay and full government support. For instance, Germany has set a target of generating 100% of its electricity from renewable energy sources by next year. The country will achieve this goal, in large part, because of initiatives, such as the Energiewende, which have provided economic incentives for businesses to adopt renewable energy.

The Downside to Being ‘On the Ball’

It’s important to remember that, although renewable energy sources offer numerous advantages, it is still somewhat of a gamble to invest in solar energy. There is always the chance that the technology may not pan out. In the case of Tesla, the automobile company behind the popular Model S and Model X cars, this is exactly what happened. The company began as an electric car manufacturer, creating the technology itself, before shifting its focus to energy storage, such as the home solar battery, not to generating electricity directly from the sun.

The company did eventually manage to release a functioning solar charger, named the Powerwall. However, it was too little, too late. The company had spent most of its capital on research and development and did not have sufficient cash to continue operating. In addition, the shift to energy storage meant that the company had to restructure and reduce costs. It also closed down its car manufacturing division and sold off its energy storage division to pay back investors. In many cases, this is why it’s important to do your homework before committing to an investment. If possible, look for companies, such as Tesla, that have already established a steady track record of successful innovation and product development.

A Global Energy Revolution

The growing demand for electricity that outstrips supply is exactly the problem that renewable energy is trying to solve. Instead of relying on finite fossil fuels, which can be extracted and replaced only when others don’t wish to use the energy, renewable energy sources provide a virtually infinite supply of energy that can be generated at will. As a result, we are now at the cusp of a global energy revolution, where electricity is generated not just by polluting power plants, but also by the sun itself.

Whether you’re an environmentalist, climate change denier or see the benefits of global trade and the free market, the rise of renewable energy is a story that should not be ignored.

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