Ongoing global doubt has thrown much into chaos. Among this, oil prices appear to be crashing. That, of course, is likely to have a knock-on effect for the energy sector and clean tech startup company professionals alike. But how might these dropping rates impact clean energy initiatives for years to come?
Demand for Oil Hits the Slick
Thanks to recent changes in global demand, oil dependence has taken a genuine hit. Goldman Sachs, among others, has reacted relatively dramatically. “Not only is this the largest economic shock of our lifetimes,” analysts state, “But carbon-based industries like oil sit in the cross-hairs as they have historically served as the cornerstone of social interactions and globalization.”
Goldman Sachs’ recent statement also points out that, in the long run, supply will suffer without demand. As a non-renewable and stock energy supply, oil is likely to retain in pipes and facilities, they state, if demand continues to wane. There are few options for the additional capacity.
This is a clear reason why oil prices continue to dip. There is an obvious need for non-renewable energy to retain its initial demand once again. However, this does not mean that renewable energy and innovation need to take a back-seat.
How Might a Tech Startup Company Benefit From This News?
It is tempting to think that a tech startup company specializing in renewable energy or clean tech may suffer due to dropping oil prices. However, the truth actually lies in reverse. We need to consider how oil-based projects are reacting to such news.
For example, those depending on such sources will likely suffer – or even fold altogether. It’s likely, some sources believe, that volatility in oil value may convince investors to jump ship.
Of course, this means that energy-efficient startups are likely to pick up such interest. This isn’t just thanks to the fact that renewable energy is the word on many people’s lips right now.
Supply and Demand Differences
Energy-efficient, clean tech startups don’t have the supply dependency that oil services revolve around. Cleantech and renewable projects are unlikely to feel the adverse effects of a lockdown in the same way that fossil fuel might. That, naturally, is a result of such resources always being available.
For example, startups revolving around hydroelectricity will likely continue to benefit from cheap electricity pricing. The demand for water and wind is never going to deplete. This means that, in time to come, companies striving the energy world for the better are likely to pick up the slack.
Traditional investors in oil and coal, for example, will likely see investing in clean tech as a safer bet. Current changes in global fortunes may encourage traditional investors to think otherwise about the energy resources they are actually placing their trust in.
Does a Reduction Inspire an Increase in Energy Startup Interest?
Mathematically, it makes sense that people will start flocking to energy resources and projects which cost less upfront. However, smart investors are thinking about long-term appeal. Startups based around solar power and photovoltaics, for example, are too seeing significant reductions in running costs.
Recent statistics appear to show that there is around $288 billion invested in clean energy right now. Emerging platforms such as the hugely popular co-investment fund, too, are helping to bring more finance to tech startups based around clean energy and its production.
Startups offering driverless cars and new ways to harness natural energy may also benefit from an ideological shift. Some statisticians believe that demand for oil barrels may drop by up to 10 million per day in 2020. That, for some, is likely to be a wake-up call. Anyone usually dependent on oil is also very unlikely to be as such at this time – due to transport curtailment.
Clean Energy is on the Rise – and Startups will Benefit
Clean tech is very appealing to forward thinkers right now. A plethora of energy startup innovations stand to benefit from investors changing the way they see oil’s true worth.
One great way that such investors can find a relevant tech startup company may be through a directory service such as Fundz. Funded cleantech startup services are out there – it just helps to know where to look for them!