![Green gold: The oil crisis and the Corona epidemic have made renewable energy
a hot investment opportunity](https://www.newtimes.co.rw/sites/default/files/styles/mystyle/public/main/articles/2020/04/27/x106504717-1587735962038gettyimages-1210853062_1.jpg.pagespeed.ic.qfQfd7gfKv.webp)
Try to remember when was the last time you read a newspaper or watched the news and the headlines were not COVID-19 related. Since the virus burst into our lives, media outlets all over the world are
![Yariv Cohen Yariv Cohen](https://www.newtimes.co.rw/sites/default/files/styles/article-author/public/profiles/photos/xyariv_cohen.jpg.pagespeed.ic.FW7dN_YOXr.webp)
constantly updating devoted viewers about the rising numbers of fatalities, the World Health
Organization estimates, the economical implications of the quarantine policy, and so on.
Unlike past global economic crises, the current collapse is drastic, immediate, and not limited in time. By comparison, even after the 9/11 attacks, the flight market was hit, and so was the demand for oil. Back then, the effect was short-term. The current crisis, as mentioned, presents a completely different picture.
In stark contrast to the cut in demand, world oil supply has not dropped at all. The main reason is that many oil producers consider not only the price they will receive for producing a barrel of oil, but also the cost of halting operations. In many outdated oil fields which are operated by water pressure, stopping the oil pump means permanently closing the field and stopping oil production. Therefore, many oil producers prefer to continue to flood the market, no matter the cost.
The last factor that must be added to the equation is oil storage capacity. In a reality where oil is outstripping demand, someone needs to store the oil for the day demand rises. Because the storage capacity is limited, the price of oil is pushed further down, even into the negative realm. This is an almost imaginary situation, which is expected to change, yet may affect the entire field for a long time. And while no one can know where the market is headed, many experts estimate that the low price level ($ 10-40 a barrel) might be here to stay.
A dramatic change
While a low price level is very bad news for oil producers, it is great news for the planet and for the renewable energy sector.
Traditionally, renewable energy was considered a secondary investment option relative to its older brother, the oil and gas sector, since traditional areas of energy were considered a much more lucrative investment. While there is an element of risk (as only a small percentage of search licenses lead to finding oil deposits and a successful project), in any case of success, the return on investment (ROI) is tremendous, much higher than for investments in (almost) any other sector, including renewable energy.
That is no longer the case. At a low oil price (even if not as extreme as it is today), the ROI in oil will be much lower than before, and will no longer justify the high risk in the dynamic and ever-changing market. With high-risk levels and limited return on investment, the oil sector is no longer as magical as before, and more particularly, it is no longer better than investing in renewable energy projects. Clean energy companies present much lower risk investment opportunities with a stable and solid ROI.
These have led to a dramatic change in the energy market: the renewable energy sector is not only offering a greener, more sustainable, and responsible investment option, but also a more economically viable one.
A new, green reality
Global crises do not create reality, but accelerate social and economic processes that have already begun. This is also the case in the energy market. The “exchange of power” between the traditional oil and gas to renewable energy has been on the table for a long time, yet nobody could tell when and where this change will happen.
Now, the global crisis and oil prices crush are accelerating the trend and moving it a few steps forward. The post-crisis economic reality will not be the same as we knew; in the energy field, we are expecting a revolution and a new world order. The green energy sector will not only be able to survive the crisis but emerge from it as a winner, and present investors with a more sustainable, responsible, ethical, and profitable investment opportunity.
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