Why Industries Like Oil and Gas Are Turning to Solar Energy

You might think that the solar and oil and gas industries are in a heated war over the future of energy. In some ways, that's correct, but it doesn't begin to tell the complex relationship between the two industries. In fact, solar energy is starting to become a critical component to oil and gas and other industries that need off-grid power.

As technologies like portable solar and energy storage improve, solar will provide energy to places that may seem unlikely for renewable energy.

Image source: SunPower.

Why off-grid solar is a big opportunity One of the problems with conducting operations like drilling for oil and gas or providing cell phone reception in remote locations in North Dakota, Texas, or even Canada is that energy isn't abundantly available to businesses. Electricity and natural gas don't necessarily make their way to your job site, meaning you have to bring in the energy you consume. This can be costly, not only to transport and store energy, but also just to run generators and set up your own energy infrastructure.

Solar energy can provide a way to create energy onsite and energy storage allows you to use that energy all day long.SunPower has made a couple deals in the off-grid business recently, one with Digicel Haiti and one with Verizon in the U.S. The Digicel project was for 14.4 kW worth of solar at 90 base stations around Haiti. SunPower is also building 10.2 megawatts of solar power at eight Verizon sites as part of a $100 million investment that will include fuel cells as well.

But the solar energy is just scratching the surface of its potential in off-grid developments.

Telecom is turning to solar energy on a large scale. Image source: SunPower.

What could cause off-grid solar to explode What hasn't grown rapidly yet, but will play a big role in the future, is energy storage. SunPower is launching energy storage in residential applications and has its eyes on commercial energy storage as well. SolarCity is a step ahead in that market with a product called DemandLogic that can provide backup power, lower demand charges (charged based on peak usage at a location), and even makes off-site solar feasible for round the clock usage.

2015 will likely be a transformative year for solar and energy storage. Dozens of companies are launching new storage products, including Tesla Motors which is partnering with SolarCity. Tesla's Gigafactory is geared not only toward car batteries, but also units for energy storage. According to early plans, around 30% of capacity is planned for Tesla's energy storage product.

This could be big business The sheer size of the potential off-grid market for solar is tremendous. There are as many as 1,900 drilling rigs active in the oil and gas market at any time and over 1.1 million active oil and gas wells. There are also around 190,000 cell phone towers in the country.

It's difficult to say how far solar could reach into these markets, but if the solar industry can get to the point where they install just 2,000 off-site systems sized at 20 kW with energy storage the cost could be about $6 per watt. That's $240 million in potential revenue. Those are back of the napkin calculations but given the number of cell sites and oil wells it's probably a low estimate of the industry's potential.

Keep an eye on off-grid solar solutions as a growth driver for SunPower, SolarCity, and even Tesla Motors. It's a market that has a lot of potential and it could become a standard in both industries.

The article Why Industries Like Oil and Gas Are Turning to Solar Energy originally appeared on Fool.com.

Travis Hoium owns shares of SunPower and Verizon Communications. The Motley Fool recommends SolarCity, Tesla Motors, and Verizon Communications. The Motley Fool owns shares of SolarCity and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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