According to an analysis conducted by GlobalData, oil & gas corporations are likely to take a wait-and-see approach towards investing in renewable energy, in spite of the continued expansion of this clean energy source.

The report entitled: Renewable Energy In Oil & Gas predicts that global renewable electricity production will rise from 7.4 PWh (Petawatt Hours) in 2020 to 16.1 PWh (Petawatt Hours) by 2030, a compound growth rate of 8.1%. By 2030, renewables are expected to make up more than 40% of total electrical supplies globally, with fossil fuels declining from 62% to 50 %.

According to GlobalData, the growth of renewable energy continues to be driven by favourable government decarbonisation initiatives, supply concerns and reduced technology pricing.

The research noted that in the last decade, many of the largest energy producers have developed new branches dedicated to renewable energies and invested in producing solar & wind power. Recently, however, momentum has slowed down as many companies are evaluating whether to continue investing due to recent escalations in prices and the uncertain nature of markets.

Several recent occurrences exemplify this trend. For example, BP recently pulled out of its Beacon Wind offshore wind farm project, as Equinor has made adjustments to its renewable energy plans due to rise in the cost of developing these projects and developing, and complicated, market conditions. 

The report noted that the policy framework is one of the major influencing factors in investment decision-making. Renewable energy has been largely attracted to Europe and Asia in part through supportive regulations and incentives; whereas there has been an increase in project delay and cancellation in the United States because of the increased cost of doing business, permit issues and the uncertainty of regulation. 

According to GlobalData’s opinion, the majority of oil and gas companies will continue to make selective investments in the renewable energy market where market conditions, regulatory support and investment expectations are positive.