Cost of capital for renewables 5x lower than off-shore oil

From Bloomberg – Clear signs capital is moving to renewables from off-shore oil and LNG.

Ten years ago, the “cost of capital” for developing oil and gas as compared to renewable projects was pretty much the same, falling consistently between 8% and 10%. But not anymore.

The threshold of projected return that can financially justify a new oil project is now at 20% for long-cycle developments, while for renewables it’s dropped to somewhere between 3% and 5%, according to Michele Vigna, a London-based analyst at Goldman Sachs Group Inc. “That’s an extraordinary divergence, which is leading to an unprecedented shift in capital allocation,” Della Vigna said.

“This year will mark the first time in history that renewable power will be the largest area of energy investment.”