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Advances in drilling technology have turned America into a big oil producer
which has undermined the power of the OPEC to influence price. The increase in
supply and falling demand of oil has led to a fall in oil prices.
Nevertheless, the main focus is on how low oil prices affect the shift towards lowcarbon energy since renewable energy has recently benefitted from
unprecedented investments and showed its potential in areas such as Hawaii.
But their relationship is not always straightforward since renewable electricity
does not directly competes with oil. Additionally, support for renewables has
been for political and environmental reasons rather than price.
Nonetheless, in light of the low oil price, some renewables such as biofuels and
electric cars are losing their appeal.
Future prospect
In the long run however, there is a bright future for renewable energy. In
particular solar electricity where storage are becoming more affordable and
better, which would put off fossil fuel investors.
Old energy industries are changing as well. Gas will be more abundant and
easier to trade while improvement in processing technologies are making energy
cleaner, albeit the high cost. But nuclear energy is losing its appeal as it is
viewed as dangerous.
Despite various challenges, the technology for a clean and green future is
already available. Due to solid-state technology, transmission costs for electricity
are falling. Power grids can also be connected, such as the one between Britain
and Iceland. Granted, these projects are costly upfront, but they offer long term
savings from cheaper power and storage. Sensors and computer are also able to
collect information and offer incentives to consumers to limit their consumption
at peak times.
Business models which can turn a profit from energy-savings are also developing,
with capital markets rising in response to their potential.
Renewables
Looking back, investing in renewable energy seems wasteful due to its mediocre
results. Recent statistics however, have shown otherwise. In 2013, global
renewable capacity in the power industry has increased by 8% from 2012 even
though subsidies and investments fell. Renewable energy now plays a significant
role as part of the energy mix. As shown in Denmark where wind turbines
provided a third of the countrys energy supply.
Solar Energy
The reason for the growth in solar energy is due to its innovation and most
importantly, decreasing costs. IEA expects the cost of solar panels to halve
within 20 years. Moreover, in the right conditions, solar is already cheaper than
oil and Asian LNG, despite the decreasing oil price.
New technology
Energy Efficiency
With the current usage of energy, it is impossible to keep the rise in global
temperatures below 2C by 2100. The best hope is to increase energy efficiency
and certainly, the cheapest and cleanest energy choice is simply not to waste it.
Improvements in energy efficiency since the 1970s in 11 IEA member countries
saved an equivalent 1.4 billion tonnes of oil in 2011, which was worth $743
billion.
However, much of the energy consumption in buildings are wasted because
design of pipework was of least priority to past architects. There is also a dearth
of such skilled workers in countries with no tradition for energy conservation.
Moreover, adapting existing buildings is difficult. Retrofitting an existing house to
be energy efficient is costly which tenants and owners would rather not spend.
Additionally, there are cheaper ways such to combat insulation such as wearing
lighter clothes.
Nevertheless, one solution is to impose mandatory standards for landlords and
properties sellers. Another way involves energy-service-companies whom will
develop economies of scale and tap financial markets for the upfront costs. The
savings are shared with owners and tenants.
For new buildings though, energy efficiency is an important factor. For example,
the Pertamina Energy Tower in Jakarta will be so thrifty that, wind, solar and
geothermal energy can meet all its energy needs.
The growth of a bond market is an encouraging sign about the future of energy.
An example is solar energy, which is now a predictable source of income drawing
huge money.
Conclusion
All in all, the existence of abundant energy in particular solar, better and cheaper
storage for intermittent power, extensive distribution which provides resilience in
the network, smarter ways of managing energy used and a thriving renewable
business model have led to energy become cheaper, cleaner and more plentiful.