New Energy Next Year Will Be Even Bigger

Goldman Sachs: Renewable Power Will Become The Largest Area Of Spending In The Energy Industry In 2021

Ariel Cohen with Talya Yuzucu, November 17, 2020 (Forbes)

“…[Goldman Sachs forecasts that] spending for renewable power projects will become the largest area of energy spending in 2021, surpassing upstream oil and gas for the first time in history…The multinational investment bank and financial services company also expects the clean energy sector to reach a $16 trillion investment volume through 2030, eclipsing fossil fuels…[The main driver] is the diverging costs of capital…[Fossil fuel project hurdle rates, which measure risk, are] around 10-20% whereas renewables are in a much safer 3-5% range, and money likes to go where risk is lowest. These numbers are consistent in the European Union and the United States…

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…[R]enewable power will reach 25% of total energy supply capex in 2021, beating out hydrocarbons for the first time ever…[The cost of capital for oil and gas projects is rising and] only the most cost-conscious investments are being rewarded…In 2020 alone, oil and gas companies reportedly cut more than $37 billion from their annual spending plans…[and] oil and gas majors are shifting towards more climate-friendly business strategies…Big oil will allocate some 14% of their 2021 budgets to renewables vs. 4% in 2019…

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…[G]lobal weighted-average levelized cost of electricity (LCOE) of renewable power projects like utility-scale solar photovoltaics (PV) fell 82%; concentrated solar power (CSP) by 47%; onshore wind by 39%; and offshore wind down more than 29%...[and] many private investment banks, including Deutsche Bank, Morgan Stanley MS +0.1%, Citi Bank, have also announced their strategies to reduce their exposure to the oil and gas sector…The implications for the oil and gas sectors are dire. The unprecedented shift in financing from hydrocarbons to renewable energy projects described by Goldman Sachs is now underway.” click here for more

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