Covid-19 Executive Briefing

Understanding the economic impact of the Covid-19 pandemic and the implications for the power sector

- ECONOMIC IMPACT -

Latest update: 28 July

Many economists have cut their GDP forecasts. The 2020 consensus forecast for GDP growth is currently negative and many predict a recession.

Concern over the spread of Covid-19 is diminishing, business optimism continues to improve.

Fitch Ratings forecasts Mexico and Brazil's 2020 GDPs to contract by 9.1% and 7% respectively, then grow by 3.4% and 3.5% in 2021.

2024

EY predicts the UK economy to take until 2024 to fully recover.

Impact of Covid-19 on employment

- SECTOR IMPACT: Power -

Latest update: 29 July

GlobalData analyst view:

"There is increasing negative sentiment towards thermal power, specifically coal. Governments are promising to incentivise or extend deadlines for renewable projects, in the absence of large stimulus packages."

During H1 2020, generation in Europe was 6.2% lower than H1 2019. Renewable generation bucked the trend by growing 10.3%.

Between Jan – May 2020, US generation was 4.8% lower than the same period in 2019. Renewable and gas both grew in this period.

Coal-fired generation is expected to suffer the maximum decline, falling 10% in 2020. Gas-fired generation will similarly be hit hard, declining by about 7% for the year.

impact on supply chains and demand

The New York State Government has revealed plans to procure up to 4GW of renewable energy capacity to combat climate change.

The Offshore Wind Growth Partnership is launching a new £2m package of funding and business support activities for the UK offshore wind supply chain.

China produced 59GW worth of solar panels in the first half of the year, up 15.7% from a year ago.

In the UK, the 7GW offshore wind leasing Round 4 has been revised to give the interested parties more time to respond.

The Vietnamese Government has formally approved 7GW of wind capacity to be built, putting it on track for a wind capacity of 12GW by 2025.