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ELI5: Why does renewables go down with oil? How are they linked economically?
by vyle_and_vyrtue 6y ago
ELI5: Why does renewables go down with oil? How are they linked economically?
- Danieru 6y agoNot the OP, but I can say in Japan the spot electric market price is set by the marginal generator: LNG peaker plants. Thus if renewables were selling into the open market the price for their electricity would indeed be determined by the fossil fuel plants. Yet the vast majority of renewables being installed world wide are doing so under more favorable deals.
- jbay808 6y agoBecause oil is the competition. If I can burn oil to generate electricity very cheaply, then I'll do that. I might be willing to pay a little more for renewables, but not a lot more. If oil prices drop, renewables will have to cut their prices too or else lose their customers. The cost of making solar panels probably don't fall that much, so renewable energy companies will lose money. Only very strict regulations could decouple the prices of oil and renewables.
- chasd00 6y agoit could be demand for energy as a whole (both fossil and renewable) is going down.