Covid-19’s impact on the global rollout of renewables

The global pandemic has caused an unprecedented decline of energy use, global carbon emissions from the fossil fuel industry are predicted to fall by a record 2.5 billion tonnes this year (a reduction of 5%) according to The Guardian, and this has proven beneficial to climate targets which have previously encouraged the growth of renewable technologies.

For example, the goals of the European renewable sector to achieve 20% renewables in final energy consumption by 2020, which was laid out in the 2009 renewable energy directive, has recently seen a boost from the drastic drop of overall power demand.

After the results released in January 2020 showed the EU achieved an 18% renewable share in 2018, ICIS, the independent commodity intelligence service, has predicted that the Covid-19 outbreak might contribute to reaching the 2% increase required to hit the final consumption goal.

In this case, the drop in demand, which will not be normalised for by Eurostat, the EU’s official statistics office, will cause renewables to make up a higher share of consumption in 2020 across the EU. The results would show a renewable share rise within the electricity sector (RES-E) of 2.4%, with the decrease in demand remaining much larger than the fall in renewable output.

This also proves that the significant decline of energy demand currently taking place around the world will most probably continue to change the current rate of emissions. In turn, this raises the question of how the renewable industry and governments will respond to the upcoming challenges and how the pace of increasing sustainability will change in the aftermath of the pandemic.

When it comes to the possibility of a global recession taking place, this might completely alter the plans for sustainability that have already been made, particularly as there might be a significant lack of funding for new projects and research in the area.

The low price of oil and gas in response to decreased demand is likely to pressure the profitability of renewable sources in the near future and, if not sufficiently supported, many ongoing solar and wind projects might face long waiting lists for funding, with some of them likely to be put on standby until markets recover.

In addition, more expensive projects, such as the Hinkley Point C nuclear plant under construction in the UK, might be hit harder, especially when compared to the cheaper alternatives of hydrocarbons and fossil fuel energy.

Andy Bradley, director of research and consulting company Delta-EE, believes that the climate emergency comes as an absolute priority and if governments can find ways to support renewables after the pandemic, and use the situation to place renewable energy at the centre of economies to help boost them, that would be of major benefit in the long-run.

“We are somewhat uncertain about how badly affected renewables will be, for sure, but I would hope that there will be some kind of support for the renewable energy sector,” he says.

In the case of very unfavourable economic circumstances, it seems likely there will be a higher risk of the energy industry being forced to move backwards and sacrifice its current progress in order to save money. This is the reason why timely response and adequate government support will be essential to help rebuild and strengthen the industry after the pandemic is over.

On the other hand, the oil and gas industry already experiences a large amount of criticism over traditional and unsustainable approaches which have threatened the future of oil and gas markets.

In many ways, the liquefied natural gas (LNG) and critical materials supply chains of the energy transition were already undergoing a period of transformation prior to the outbreak of Covid-19. Before the pandemic, natural gas was maturing as a commodity, with LNG bringing in a number of new suppliers, causing a decline of prices and a rapid loss of value for long-term contracts.

These circumstances make it unlikely that countries will turn their backs on their renewable efforts and go back to fossil fuels. Quite the opposite, there is a real chance that the ongoing crisis will provoke more investment in wind and solar energy sources so as to help reboot economies.

Compared to oil and gas, clean energy technologies were becoming even more affordable and wide-spread, especially after the Paris Agreement, aiming to keep the global temperature rise this century below 2°C, received support from 197 countries.

Nicolas Befort, professor of economic sciences at NEOMA Business School in France, shares his view that the post-Covid-19 impact on renewables will mainly depend on whether governments will prioritise rapid economic growth or strategic rollout of renewables.

“The position of renewables will really depend on how the current crisis is conceptualised. If the narrative is conveyed in a way that there’s an ecological crisis, which has strong economic consequences, including for the renewable industry, this will open a window of opportunity for renewables to gain traction, and occupy a central stage.

“It's also up to producers, public authorities, and global climate movements [to decide] how they’ll carry these arguments,” he says.

Exactly how the pandemic will influence the rollout of renewables will remain unclear until at least the end of the lockdown, imposed in over 100 countries at present, but one thing is for sure – the renewable energy industry better be prepared for a rapid reaction and possible change of plans once normal energy demand is restored.