With clean energy adoptions accelerating rapidly, oil companies are trying to shift and adapt to the new trends in the energy market.
FREMONT, CA: The demand for clean energy is shooting up, leaving oil companies with limited opportunities in the market. The fall in prices of clean energy has fuelled the decline of fossil fuels. Previously, it was believed that the depletion of fossil deposits would lead to the decline of the oil industry. Now, experts are predicting the decline to happen anytime by the next decade. To prevent market fluctuations or eventual decline, oil companies need to start taking measures immediately. With the right step, companies in the oil industry can easily adapt to the changes in the energy sector and stay profitable. Some ways in which oil companies can secure themselves are enlisted here.
• Expansion of Portfolio to Include Clean Energy
Oil companies should not stick to conventional offerings. Rather, strategic diversification should become a priority. By gauging market trends, oil companies should consider new investments. Investments in clean energy are critical for the sustainability of oil companies in the long run. Major producers of oil acknowledge the changing currents in the energy sector and are opening their portfolios to include non-conventional sources of power that can be used to harness clean energy. Apart from providing an alternative during the decline of oil, the investments will future-proof the companies.
• Diversification of Roles
Oil companies mostly essay the role of energy producers. However, in the changing circumstances, oil companies should not stick to energy production only. Instead, the companies should look to develop innovative capabilities and evolve into brokers and distributors in the energy sector. For instance, an oil company in decline can invest in building electric charging infrastructure and not just solar or wind energy production.
With the right degree of flexibility, oil companies can easily withstand the decline in the popularity of the resource and create a diversified business model to remain relevant in the modern energy sector, which favors renewables over fossil fuels.