Why Plummeting Oil Prices Help Solar?

As an alternative to oil, the initial development of new energy represented by solar energy was largely due to high oil prices. However, with the continuous advancement of technology and the continuous decline in costs, new energy has achieved leapfrog development. Although solar energy's replacement of oil no longer requires high oil prices, as two competing energy sources, economic efficiency is an important aspect that affects its application. Entersolar.com is a professional manufacturer of solar products, which will give you more information about oil price impact on solar energy economic return, hoping to help someone need it.

Impact on economic returns

The decline in oil prices can impact the economic returns associated with onsite solar photovoltaic (PV) projects in several ways:
Impact on solar equipment costs
Oil prices can influence the cost of manufacturing and transportation, which indirectly affects the cost of solar PV components such as modules, inverters, and mounting systems. Lower oil prices could potentially lead to lower overall costs for solar PV equipment, thereby mitigating some of the impact on project economics.
The reason why the oil price crash is good for solar impact on solar equipment costs
Oil prices affect manufacturing and transportation costs, which indirectly affects the cost of solar PV components (such as modules, solar inverters, and mounting systems). Falling oil prices may lead to a decrease in the overall cost of solar PV equipment, thereby mitigating some of the impact on project economics.
Oil and solar energy

The benefits of lower oil prices for solar

Plummeting oil prices can actually benefit the solar energy sector in several significant ways:
Reduced cost competition
When oil prices are low, the cost of traditional energy sources like natural gas and petroleum-based electricity also tends to decrease. This can make solar energy more competitive by reducing the economic advantage of fossil fuels. As a result, businesses and consumers may find solar energy comparatively more attractive from a cost perspective.
Stable long-term investment
Solar energy offers long-term price stability because sunlight is free and abundant. Unlike fossil fuels, which are subject to price volatility influenced by geopolitical factors and market dynamics, solar energy costs remain predictable over the lifespan of a solar installation. This stability becomes more appealing to investors and businesses looking for reliable long-term energy solutions, especially during periods of oil price volatility.
Policy support and incentives
Governments and policymakers often use periods of low oil prices to reinforce policies supporting renewable energy, including solar. Lower oil prices can highlight the importance of energy security, diversification, and environmental sustainability. Governments may introduce or strengthen incentives such as tax credits, subsidies, and renewable energy targets to encourage investment in solar energy infrastructure.
Technological advancements
The solar industry continues to benefit from technological advancements and economies of scale. Lower oil prices can indirectly influence the cost of manufacturing and transporting solar equipment, potentially reducing overall system costs and improving the economic viability of solar projects.
Environmental considerations
Regardless of oil prices, the environmental advantages of solar energy remain compelling. Solar power contributes to reducing greenhouse gas emissions, improving air quality, and mitigating climate change impacts. As global awareness of environmental issues grows, businesses and consumers increasingly prioritize sustainable energy solutions like solar.
Energy independence
Low oil prices may underscore the importance of reducing dependence on imported fossil fuels. Solar energy offers a decentralized and locally available energy source, promoting energy independence and resilience against global energy market fluctuations.


Low oil prices can actually provide significant benefits to the solar energy sector. By reducing input costs, encouraging company investments, enhancing energy security, driving technological advancements, and garnering public and company support, low oil prices can help accelerate the transition to a more sustainable and resilient energy future.