Low oil not a deterrent for renewable energy

Manama: Low oil prices and the cost competitiveness of renewables is encouraging governments to turn to renewable energy as a hedge against fossil fuel price volatility. And, this along with governments’ long-term ambitions for greater energy independence by decarbonising their economies will be the key drivers for the transition to a clean energy world, according to a report by UAE based NBAD.

The report says that even in the current economic climate, global energy demand is outstripping today’s supply. NBAD’s research in 2015 found that closing this gap would require US$48 trillion of investment over the next 20 years, with renewables playing a critical role in the energy mix of the future.

“Today the question on everyone’s mind is: will the low oil price environment stall the growth of renewables? We don’t believe so. The underlying drivers for renewables are long term and strong, particularly across the West-East Corridor. Consumer demand is shifting to a preference for clean energy, governments are pushing hard for policy change to decarbonise their economies, subsidies for fossil fuels are coming off and renewables have become cost competitive against hydrocarbons with new technologies, such as battery storage of clean energy, potentially adding to this advantage” according to Alex Thursby, NBAD CEO.

The report notes that US$640 billion of investment required for renewable energy projects across Asia and Middle East. 2015 was the first year in which developing world attracted greater capital flows into clean energy than the 30 OECD member countries.

The past year has seen a number of factors converging to promote renewable energy and financial institutions have an important role to play in promoting the growth of this sector through engagement with public and private sector stakeholders to create a more energy efficient economy.

The report urges the finance sector to play a more critical role in the development of the sector, and it says ” The involvement of the financial community in the region will act as a catalyst for the growth of renewables .”