Last week I discussed an article that appeared in the UK’s Telegraph with the sensational title “Oil industry [is] on borrowed time as switch to gas and solar accelerates”.

This week, I will discuss the other part of the article related to solar power where it asserted that the “breathtaking advances in solar power as scientists crack the secrets” is a threat to the oil industry and oil demand.

There is definitely plenty of evidence to show the inroads made by solar energy on global energy supplies. And especially since the beginning of this century, advances in solar technology and the development of its engineering systems have gone a long way to make the increased use of solar energy desirable and more practical.

But this is driven more by government policies as a way to reduce their carbon dioxide emissions and improve energy security by reducing their reliance on imported oil and gas. To encourage investors in this direction, governments almost always have to subsidise solar energy projects and undertake to connect the electricity produced that way to the grid.

The trend is supported by the relatively high prices of oil in the last 10 years, and the subsidies from governments on behalf of tax payers, especially in Germany, Italy, China, US, Japan and India.

But the subsidies are becoming contentious, especially as they rise with more plants coming on stream or planned. For this reason, the UK government, with 5,000MW of installed solar capacity, plans to remove subsidies in April 2015, two years earlier than previously promised. This is despite the objection of investing companies who stand to lose a lot if subsidies are removed, even with the guaranteed purchase of their production and the certainty of a minimum electricity tariff over 15 years, as reported in the Guardian.

But solar power, as good as it is, suffers from certain flows such as its intermittency and unreliability as it depends on daylight hours, which in Europe is not more than 25 per cent of the day. Therefore it has to be backed up by installing conventional power stations or large and very expensive sets of batteries to provide power round-the-clock.

Solar power requires large areas of land, which is not a problem in the desert but could well be in Europe. The area required for solar panels, batteries and roads and access for cleaning and maintenance could run into thousands of square kilometres.

Because of the low efficiency of solar power installation of not more 15 per cent, large-scale plants may create environmental damage over large areas of land as they reflect or turn into heat the rest of the sun’s energy. We really do not understand a lot about these issues yet due to the relative newness of such systems.

India’s plans for a large solar station costing $4 billion are now stalled by environmental objectors who are afraid that it may affect the local climate and prevent migratory birds from visiting the region. Given all the pros and cons of solar power, is it really eroding or becoming a threat to oil demand?

BP’s Statistical Review of World Energy tells us that global solar energy production and consumption in 2000 was 0.2 million tonnes of oil equivalent (mtoe) and in 2012 jumped to 21 mtoe after growth picked up since 2008. Therefore, according to the same source, solar energy consumption in 2012 is only 0.17 per cent of the total energy consumption of 12,476.6 mtoe, while oil’s share is 33 per cent and its consumption is 4,170.5 mtoe in 2012.

The International Energy Agency forecasts solar electricity generation in 2035 to be between 680 terawatt hours (TWh) and 1,389 TWh depending on the policies that may or may not evolve. This is to be compared with a total electricity generation of between 39,853 and 32,295 TWh respectively giving a share for solar electricity of not more than 4 per cent at best.

The evolution of solar energy is welcome to compliment other energy sources including oil, and solve a number of logistical problems in some areas as well. Especially so in our region, as in a barren desert space, many of its environmental risks can be avoided.

But the progress of solar energy should not be used to mislead the public into thinking that the oil era is about to be over. I conclude that the oil industry is not on borrowed time despite the growth of other energy sources including solar.