Renewables MMI® Holds Steady, Low Oil Prices Won’t Hurt Demand

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The monthly Renewables MMI® registered a value of 62 in January, on par with December’s value.

Compare With Previous Months’ Renewables MMIs

While many are predicting that a decline in oil prices will mean lower demand for renewable energy and a lower MMI, others are saying that thanks to continuing US tax breaks and incentives, that even cheap oil won’t dent renewables’ inevitable expansion, particularly in the case of solar.

Renewables_Chart_January-2015_FNL

Forbes notes that while it’s true that stocks for some of the more trusted clean energy investments are being dragged down by dipping oil prices, it doesn’t mean demand for clean energy is also suffering. In fact, as oil prices have tumbled, demand for energy efficiency and renewable energy only keeps growing.

For solar, that demand is coming from state mandates and individual home owners in warmer climates simply looking to save money on their energy bills. California Gov. Jerry Brown recently proposed nearly doubling his state’s renewable energy mandate to make utilities there derive 50% of their power from renewable sources by 2030.

Utilities in western states so lavish the opportunity to turn consumers into clean energy-generators, and therefore lower their own percentage of non-renewable energy sources, via solar panels on homes that many are now trying to tell homeowners how to orient their roof-mounted silicon photovoltaic panels to increase capacity.

But Jeff, you say, if the mandates and low power bills are working, why hasn’t it already been reflected in the renewables MMI chart? Good question! 2014 was honestly a year of experimentation and stagnation in renewable energy markets. Look back at previous months’ renewables MMIs to see just how much. The needle stayed flat for most of the year not because of a lack of interest in renewable energy but because of a lack of development capital on a large scale.

Individuals reaped savings from proven technologies such as silicon solar PVs but big projects requiring large materials capital investments did not get approved or started. Neither governments nor private developers had the cash-on-hand to spend on costly new solar or wind farms and the normal regulatory hurdles kept nuclear development and electrical grid upgrades from happening on a mass scale everywhere but the developing world.

This is where low gas prices actually HELP renewables by increasing available investment dollars from our favorite side, the supply side. There will be more cash on hand for new solar and wind installations, hydro power development and even upgrades to aging electrical grids. The costs, in oil, of transportation, construction and materials creation have all gone down with oil prices.

India has already committed to building a 750-megawatt power plant in the central province of Madhya Pradesh. The world’s largest democracy aims to invest $1 billion into renewable energy in the coming years, and it has raised its 2022 solar power capacity target from 22 gigawatts to 100 GWs.

2015 could be the year that much-needed investment finally flows into the renewable energy sector and this MMI finally breaks out of its flat range.

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Chinese steel plate reached $514.14 per metric ton after a 5.3% increase for the month. The price of neodymium rose 2.0% to $56,733 per metric ton after falling the previous month. US grain-oriented electrical steel (GOES) grew 0.3% to finish at $2,739 per metric ton.

US steel plate fell a slight 0.6% over the past month to $811.00 per short ton.

Last month was consistent for Chinese cobalt cathodes, which did not move from $35,458 per metric ton. The price of silicon held steady around $2,418 per metric ton last month. Korean steel plate experienced a flat month, staying around $814.81 per metric ton. Hovering around $664.22 per metric ton for the month, Japanese steel plate remained unchanged.

The Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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