Cheap Oil Unlikely to Slow Growth of Renewables, Citigroup Says

(Bloomberg) — Cheap oil will do “little to derail” the
long-term growth of renewable power, according to Citigroup Inc.

Oil generates about 5 percent of global electricity and
doesn’t generally compete directly with wind and solar power,
Citigroup researchers wrote in a report Monday. Only 11
countries get more than 20 percent of their electricity from
oil, mainly in the Middle East and the Caribbean.

Large-scale solar farms in the Middle East are competitive
with oil at $30 a barrel, and on-shore wind can hold its own
against oil at $23 a barrel. Oil would have to drop into the $20
to $30 range before mature renewable energy sources like wind
and solar could be “seriously threatened,” according to the
report.

“Citi expects the long-term outlook for renewables will
only get brighter, despite the price fall” for oil, according
to the report.

Citi sees the price of Brent crude, the global benchmark,
averaging $54 a barrel this year. West Texas Intermediate, the
benchmark in the U.S., will average $46 in 2015, down from a
high of more than $107 in June.

Researchers at Goldman Sachs Group Inc. and Deutsche Bank
AG also expect renewable energy to shrug off crude’s decline,
and expect significant investment in wind and solar projects
this year.

Slumping oil prices may even increase demand for clean
power, especially if fossil fuel companies curtail production.
That could lead to a shortage of natural gas, driving up prices
and making wind and solar more competitive.

“The underlying drivers of renewable energy adoption –
policy, increasing competitiveness, and energy security – point
to continued long term growth” of renewables, the report said.

To contact the reporter on this story:
Ehren Goossens in New York at
egoossens1@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Will Wade, Carlos Caminada

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