Modules for Traders
Translate the power of knowledge into action. Open Free* Demat Account
The future of oil and an introduction to renewable and solar stocks
Now, we saw how crude oil came into the picture and how it quickly rose to become the primary energy source of the entire world. In addition to that, we also briefly went over the market structure and the key players involved in the production and process of the commodity. And finally, we topped it all off by taking a look at the commodity contract specifications.
In this chapter, we’re going to dedicate a bit of space towards trying to assess the future of crude oil. And, we will also be briefly going over the renewable energy sector and the stocks that you need to watch out for.
Crude oil: What does the future hold for this commodity?
As you already know, crude oil is a fossil fuel; which means that it is non-renewable. Once we’ve used up all of the crude oil reserves on earth, which we will at some point in the near future, we’re not going to get anymore for millions of years.
While this is one factor that’s constantly hanging over the head of crude oil, there’s also another one - the ever increasing demand for this fossil fuel. The limited supply of the black gold, combined with the massive and consistent increase in demand for it, has led to experts questioning the future of crude oil.
And to make matters worse, the use of fossil fuels like crude oil is an enormous contributing factor towards increased air pollution and climate change. This has led to many governments pushing heavily towards using renewable energy instead. That’s not all. The production and adoption of electric vehicles have also seen a tremendous increase in recent years.
However, considering the fact that electric vehicles currently suffer from limited driving range, lack of charging infrastructure, and high initial cost of purchase, it would take another decade or so for them to permeate the vehicular market. But looking at Tesla, the EV manufacturer, and other similar EV startups, things are likely to quickly change in the next decade or so. Despite the challenges before electric vehicles, global society may be fast moving towards the elimination of the use of crude oil.
If this keeps up for the next, say 30 years, we might just be able to see a massive transition from fossil fuel powered vehicles to fully electric vehicles. As a matter of fact, by 2050, we may even be able to see a scenario where the demand for crude oil is so little that the supply far exceeds it. With so many factors in play, we can to a certain extent, be sure that the golden days for crude oil are slowly waning. If this were to happen, the prices of crude oil may just plummet down to their lowest, much like how we saw during the COVID-19 pandemic in 2020.
Renewable energy sector: An introduction
Of late, the renewable energy sector has been gaining a lot of traction in India. As a matter of fact, we’re currently the fourth most attractive renewable energy market in the entire world. The installed renewable energy production capacity in the entire country currently stands at 92.55 GW.
Out of this total capacity, solar energy accounts for 38.79 GW and wind energy accounts for 38.68 GW. More new renewable power projects are being commissioned and being brought to the fore as well. By 2040, the Indian government expects that around 49% of the total generated electricity would come from renewable sources. And there’s also been a considerable amount of FDI inflow of around $42 billion in the renewable energy sector.
Companies operating in the renewable energy space
Now that you’ve gotten a good idea of the renewable energy sector in India, let’s take a look at a few of the major entities operating in this space.
1. Tata Power
With more than 100 years in the field of electricity generation, Tata Power is the largest integrated power company in India. Although the company’s primary focus is in thermal power generation, it recently ventured into the renewables space as well. Tata Power currently has four hydro-electric power projects, a wind energy generation plant, and as many as 10 different solar power projects of varying scales.
2. Suzlon Energy
Established in the year 1995, Suzlon Energy has consistently been one of India’s largest companies in the wind energy sector. The company is engaged in the manufacture of wind turbines of varying sizes and specifications. Currently, the company is listed as the world’s fifth largest wind turbine supplier. It has installed over 11,000 MW of wind power capacity in the country and accounts for almost one-third of India’s total wind installations.
3. Indosolar Limited
Indosolar Limited was established in 2005 as a garment manufacturing company. However, it later forayed into the solar cell manufacturing space in 2008. Indosolar Limited is involved in the business of producing photovoltaic cells and solar panels. Currently, the company is listed as the largest photovoltaic cell manufacturer in the entire country in terms of production capacity.
4. Ujaas Energy Limited
Incorporated in 1979, Ujaas Energy Limited is India’s first ever company to generate and sell electricity generated from solar energy. The company earned this distinction through its 2MW solar power plant at Rajgarh, Madhya Pradesh. The power plant has since been upgraded to produce 16.5MW. In addition to the plant at Rajgarh, the company also has four other solar power plants in various districts of Madhya Pradesh.
Though these four are some of the biggest and the most popular companies operating in the solar energy space, they’re far from the only ones. Here’s a quick glimpse of some of the other companies operating in this space as well.
- Adani Green Energy Limited
- Waa Solar Limited
- Websol Energy System Limited
- Synergy Green Industries Limited
- Surana Solar Limited
- Gita Renewable Energy Limited
- Urja Global Limited
- XL Energy Limited
- Inox Wind Limited
- Orient Green Power Company Limited
- Indowind Energy Limited
- National Hydroelectric Power Corporation Limited
With this, we’ve come to the end of this chapter. In the forthcoming chapters of this module, we’re going to be focusing on the other most popular and commonly traded commodities in the Indian commodity market. So, stay tuned!
A quick recap
- Crude oil is a fossil fuel; which means that it is non-renewable. Once we’ve used up all of the crude oil reserves on earth, which we will at some point in the near future, we’re not going to get anymore for millions of years.
- The ever increasing demand for this fossil fuel. The limited supply of the black gold, combined with the massive and consistent increase in demand for it, has led to experts questioning the future of crude oil.
- To make matters worse, the use of fossil fuels like crude oil is an enormous contributing factor towards increased air pollution and climate change.
- So, the world may be making the shift to more renewable and clean energy sources.