Will rising fuel prices accelerate the switch to renewables?

With fuel prices at a record high, consumers and businesses worldwide are feeling the impact. The rising cost of diesel is already creating a domino effect throughout the economy and the latest agreement from OPEC+ to cut output has sparked fears of further price hikes.

As the latest OPEC+ cuts spark fears of fuel price hikes and businesses look to counter the unpredictable costs of fossil fuels, a commercial energy storage provider considers the impact of the volatile market on the uptake of renewable energy solutions.

As businesses and international leaders look to counter the unpredictable costs associated with fossil fuels, Vienna Zhou, CEO of TROES Corp., a commercial energy storage provider who is already playing a role in decarbonisation, considers the impact of the volatile oil market on the uptake of renewable energy solutions.

Why are fuel prices so high?

During the peak of the pandemic, the demand for fuel dropped so suddenly that production was cut significantly. As economies reopened and manufacturing continued, the demand for energy also returned.

The latest surge in fuel prices is largely due to the jump in oil prices that followed Russia’s invasion of Ukraine and the resultant international sanctions creating supply issues, coupled with that demand recovery as the peak of the covid pandemic passed.

With recent weather events such as Hurricane Fiona and Hurricane Ian wreaking havoc in Puerto Rico, Nova Scotia and Florida and causing more than tens of billions dollars of damage and a death toll of over 100, production has been further impacted.

All of these factors are pushing fuel prices higher which is expediting the search for renewable alternatives.

In its Renewables 2021 report, the International Energy Agency (IEA) states that: “By 2026, global renewable electricity capacity is forecast to rise more than 60% from 2020 levels to over 4,800 GW – equivalent to the current total global power capacity of fossil fuels and nuclear combined.”

Conflicts and inflation influencing supply chains

Russia is the world’s second largest producer of oil and natural gas. Without oil and gas supplies from Russia, global supply chains are finding fuel to be no longer as easily accessible, or no longer financially viable.

Increased diesel prices are causing a global ripple effect with some areas returning to coal as an alternative energy source. Islands that rely on diesel to generate electricity are seeing massively increased costs that are being passed down the chain to consumers. Inflation is surging with the price of food and other necessities climbing to historic highs. The ongoing chip shortage is also causing technology and auto manufacturers (including EVs) to rethink production strategies.

Renewable energy as a fuel alternative

Commercial and industrial power consumers, that rely on fuel to operate, are already working towards minimising, or completely removing, their dependency on fossil fuel driven by the ‘stick’ of a commitment to net zero. Advances in renewable technology and energy storage solutions have added a ‘carrot’ to this process, as renewable energy generation begins to compete with fossil fuels on cost.

With consumers eyeing a shift towards sustainable energy to combat unstable global oil and gas prices, energy storage can play a key part in decarbonisation and the transition to net zero in the coming decades.

The image shows a farm utilising an off-grid battery storage system designed by TROES to optimise a farm’s diesel generator by providing immediate support when needed, decreasing maintenance and reducing both carbon emissions and cost.

“Our storage solutions are able to store electricity from renewables, conventional generators, or the grid, making energy storage a versatile option to maximise bill savings and offer safety and resilience,” Vienna Zhou says.

“During the summer, an integrated solar PV combined with an energy storage system will completely reduce our client’s fuel consumption.”

Have rising fuel costs accelerated your own transition to renewable alternatives? Contact: margaret@fueloilnews.co.uk