The State of Oil Is Falling in Love With Solar Energy

"Everything's bigger in Texas," as the saying goes. Texas generates most electricity in the U.S., and accounts for approximately 25% of the U.S. oil refining and natural gas industry.

Texas is also on the verge of a renewables boom since it creates the most wind power in the United States. Developers plan to quadruple solar capacities, adding enough panels to light up Dallas in 2020. Solar is already popular when it comes to households, however it is becoming more and more appealing for oil and gas drillers. In a way, Texas is combining something which at first sight seems incompatible. How is this possible?

Solar – Support for Oil And Gas Producers

The renewables boom is taking place mostly in the heart of the U.S. shale oil industry – the Permian Basin. Solar and wind farms have shown it is a reliable energy source for the production facilities. Occidental Petroleum OXY, a major player in the shale oil industry in the Permian Basin, announced that it will launch a solar-powered facility to power oilfields. Another oil giant ExxonMobil XOM is planning to reach 1 million oil-equivalent barrels per day by 2024 as it signed a multi-year contract with Orsted DNNGY, the Danish renewable company. Orsted should provide around 500 megawatts (MW) of energy, split between wind and solar in order to distribute electricity to Exxon's facilities in the Permian Basin. Apache Corporation APA and Royal Dutch Shell (NYSE: RDS-B) also power part of their oil fields in the Permian with solar. Oil producers saw advantages in using solar and other renewables for powering their remote oilfields, because they provide a quick, clean, cheap and flexible source of energy, unlike coal and natural gas plants.

Coronavirus Impact – Cloudy Skies For The Solar Segment

Although projections for 2020 were bright, the coronavirus pandemic struck has heavily struck the solar industry. The effects of the pandemic influenced a sharp drop in installation demand. Furthermore, disrupted supply chains in China, the main supplier of solar components, and delivery problems have also affected the solar industry. The U.S. solar market is down almost 20% in 2020, and the projected growth for this year will surely not be hit. Zacks Consensus Estimate for Solaredge Technology SEDG 2020 earnings has declined 6.91%, whereas estimates for SunPower SPWR, First Solar FSLR and Vivint Solar VSLR have declined by $0.07 per share, $2.78 per share, and $0.01 respectively. The question is whether this is only short-term distress, or a long-term crisis is upon the industry.

Even though these are hard times for renewables globally, and consequently in the U.S., we can still expect further expansion of the solar segment. The appealing cost of solar, which has plummeted from $3.53/W in 2010 to $0.80/W in 2019, points to the long-term future of the alternative energy source. It is still more attractive than coal or gas when it comes to electricity production, and current low prices of natural gas and oil can only postpone the inevitable supremacy of renewables.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be sent to ivana@iamnewswire.com

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