The US central bank has lowered interest rates for the first time in more than four years. (Photo: Fed)
The Federal Reserve slashed interest rates by 50 basis points and suggested further reductions to come. The news immediately reverberated in the U.S. stock market, significantly boosting solar energy stocks and highlighting market expectations for the renewable energy sector. However, some analysts believe that the current rate cut is not enough to reverse the situation.
Lower interest rates to reduce costs of renewable energy
Compared to fossil fuels, renewable energy projects are more sensitive to interest rates. A report from global energy consultancy Wood Mackenzie in April indicated that in the U.S., a two-percentage-point increase in interest rates would raise the cost of renewable energy generation by 20%, while traditional natural gas plants would see an 11% increase.
