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From Stantec ERA: 5 reasons why oil companies are investing in solar energy

June 25, 2019

By Jose Walsh Duarte

Find out why solar energy—which has emerged as a cheap and limitless source of renewable energy—is now used by oil and gas companies to run refineries

There’s no better example of the green-power revolution than solar energy. We use it to power our cars, our buildings, and to charge our phones. It’s the primary source of electricity used to power space missions. It also has the potential to help oil and gas companies process their resources. 

Oil refining involves gas and water separation and oil distillation at massive volumes. It’s an expensive and energy-intensive process. Companies are looking for ways to make it cheaper and cleaner. Solar is proving to be an answer to the industry’s needs.

Here are five reasons that solar energy is good for oil and gas.

Solar farms can be equipped with high-efficiency solar modules on single axis trackers, which follow the sun all day and increases energy production by 15–30%.

1. Solar power is inexpensive

The cost of solar energy has plummeted to the point where electricity from solar photovoltaic (PV) is being produced for 2 to 5 cents per kilowatt hour, compared to 15 cents per kilowatt hour for fossil fuel power generation. That is a very long way from solar’s infancy in the 1950s, when the cost of a solar cell was nearly $1,800 (US) a watt, which would have been equivalent to producing electricity for $661 per kilowatt hour today.

That’s because the technology has improved and become much more affordable to produce on a commercial scale. Some contributing factors consist of creating higher-efficiency solar cells through research and development, market-stimulating policies, and building larger solar plants. Many governments are working to meet their greenhouse-gas emissions targets and as a result they are also pushing the industry to reduce costs.

Today, a utility-scale solar plant will pay for itself within 5 years and have an operating lifetime of more than 30 years. Operation and maintenance costs are low as well. Operating costs amount to just 2–3% of the plant’s annual revenue.

Today, a utility-scale solar plant will pay for itself within 5 years and have an operating lifetime of more than 30 years.

2. Solar power is easy to install

In addition to the cost savings, solar plants are a fast solution for oil and gas producers. Building a solar plant only takes 5 to 12 months—compared to 2 to 3 years to build a plant that uses fossil fuels to generate electricity. Solar plants are scalable and have a quicker permitting process.

Solar farms can be equipped with high-efficiency solar modules on single axis trackers, which follow the sun all day and increases energy production by 15–30%.

3. Solar energy is resilient

Installing a solar plant provides oil and gas producers an alternative source of electricity generation onsite. Distribution lines in remote locations sometimes breakdown due to equipment capacity limitations, storms, and fires. Similarly, fuel delivery for generators in remote locations can be delayed. Solar PV can be paired with energy storage, allowing the solar plant to generate electricity 24/7 like a traditional power station.

We have another 5 billion years until the solar fuel runs out. The earth receives more energy from the sun in 22 days than we have coal, petroleum, and natural gas reserves on earth combined.

Read and download Stantec era: The Energy Remix

4. Solar power is portable

Oil and gas producers are also attracted to the portability of solar power.

Many pumping stations are in remote locations and it is too expensive to build transmission and distribution lines. The nice thing about solar is how elegant it is—it’s the only electricity source that doesn’t require any moving parts. The solar modules are placed outside, sunlight gets absorbed by the solar cell material, and electricity is generated.

5. Solar energy is clean

And of course, solar power is a boon for a company’s green footprint as well as its bottom line. A solar plant’s energy payback time is less than two years. Unlike traditional energy sources, solar has no negative effects on air quality—it doesn’t generate carbon monoxide or sulphur dioxide—and using it can earn carbon offset credits for oil and gas producers. Many big companies—including Shell, Total, and BP—have already jumped on the bandwagon, installing solar arrays at their oil fields and diversifying their investments by installing renewable energy sources.

The future is complementary

Just this year, California Resources Corporation (CRC) hired us to conduct a feasibility study and preliminary design of a 20-megawatt AC solar farm for their Kern Front Oil Field in the foothills of the Sierra Nevada Mountains. CRC believes that renewable energy and oil and gas complement each other; nearly 30 percent of CRC’s electricity comes from renewable sources.

A few months later, we held a lunch-and-learn for clients in Bakersfield, California—one of the most oil-productive counties in the United States—which spurred even more interest. Major oil and gas companies are diversifying their energy assets and embracing these new technologies, and analysts in the sector are trumpeting this trend. One thing is certain—oil, gas, and solar energy have a promising future together.

  • Jose Walsh Duarte

    Having worked in the solar photovoltaic field for more than 14 years, Jose has contributed to everything from research to practical implementation. He’s experienced in residential, commercial, and utility-scale solar projects.

    Contact Jose
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