Renewable Energy Soars As Exxon, Shell Falter

As many know, Big Oil companies have suffered major losses as a result of the pandemic, as oil demand plummeted. Now, however, the prospects for the industry are looking more dismal than ever. As oil supermajors have faced increasing pressure to shift toward more sustainable business strategies, such pressure will certainly result in companies looking to renewables as the solution to this shift.

Recently, both Exxon Mobil and Royal Dutch Shell were hit with critical climate-related decisions. A Netherlands court ruled that Shell must drastically reduce its emissions this decade in what was “the first time a court ordered a private company to, in effect, change its business practice on climate grounds.” This was a seminal moment that will greatly benefit the clean technology space, leading it to become the norm, and no longer the alternative source for power in society.

Engine No.1, an activist hedge fund, nominated a slate of four candidates for the Exxon board, three of which were ultimately elected. What’s significant about that? The Exxon proxy vote was that Engine No.1’s candidates were backed by major institutional investors including the United States’ largest pension funds and BlackRock, the world’s largest investment management company.

Institutional investors pushing a shift in Exxon’s climate strategy sends a strong signal to the fossil fuel industry that they can no longer abdicate their responsibility to sustainable investment. So, what happens when Big Oil fails? Clean technology and renewable energy rise up to replace it. The demand for renewable energy solutions is continuing to increase and will ultimately be more heavily relied on.

So, What Does This Mean?

Ultimately, decisions such as these will vastly improve the transparency and accountability of corporations that have a major impact on climate change. There will be a crucial shift in the philosophies of corporations as they transition to more clean technology investments. As oil companies are better held to account for their ESG commitments, more companies will turn to clean technology as the answer for their energy needs.

As a result, clean technologies are poised for tremendous growth in the energy sector. More specifically, as a key area for reducing emissions, the power sector will become increasingly run by renewable energy. These solutions, such as solar and wind power, will see a substantial boost in investment, leading them to become the norm in society. I fully expect to see more solar and wind farms as capital flows into fossil fuel alternatives and clean-tech.

Cleantech that is Affordable and Reliable

Let’s face reality for a second – there has been a misguided perception surrounding renewable technologies that renewable energy is too unreliable and too costly to be able to effectively support society’s power needs. This perception has prevented these technologies from becoming a mainstream product in the power market. Frankly, too many people share the Donald Trump conception of solar and wind power: what happens if the wind doesn’t blow or the sun is blocked by clouds?

However, this misconception is becoming increasingly irrelevant. In fact, solar power costs have decreased by roughly 80% over the last ten years. More importantly, solar systems with smart monitoring and management capabilities are the affordable solution. When sites can be remotely controlled from the cloud, the need for costly site visits is eliminated. As more companies begin to leverage the power of the cloud, smart system monitoring will ensure the reliability of off-grid renewables while reducing costs, and these concerns will fade away.

The advancement of energy storage technologies and smart battery management will help make renewable power affordable and reliable, even on cloudy days.  The automotive industry is a key driver as can be seen by General Motor’s recent announcements. With their announced $35 billion investment, the cost of electric vehicle car batteries will be reduced by 60%. This is a clear example of how these investments are accelerating the adoption of renewable energies and the movement away from traditional oil and gas energy sources. By using smart off-grid technology to efficiently harness and store renewable energy, users can be far more confident in the reliability of their critical systems. Smart battery management and optimized charging methods will also help extend the life of renewable energy systems, thereby increasing their cost-efficiency. Ultimately, with smart technologies on the rise, cost and reliability concerns are becoming increasingly insignificant.

Most importantly, as companies are pushed toward sustainable investing and held accountable for their ESG goals, the development of these critical smart technologies will be greatly accelerated. As they become increasingly cost-effective and reliable while oil is in decline, renewable technologies will see a major boom.

This past year has been a pivotal year for Big Oil. Although demand will likely rebound in 2021, investors are making it clear that they are no longer satisfied with the increasingly outdated business models of oil companies.  The movement away from Big Oil is accelerating at an unprecedented pace. This presents a huge growth opportunity for clean technologies to become the new norm in the power sector.