Will Europe remain a renewable energy powerhouse after the pandemic?
The COVID-19 health crisis has had a negative impact on short-term global renewable energy development, and challenges remain in the medium- to long-term, according to a recent Coface study.
Renewables have strengthened rapidly in the last 20 years, particularly in power generation, increasingly gaining market share from traditional energy sources such as coal, oil, and nuclear. The COVID-19 crisis has had a significant impact on this segment of the energy sector, as the pandemic disrupted supply chains and labour availability. Access to funding was also hit hard. These recent trends have affected projects that had already been approved, as well as other projects in the pipeline.
Low demand and oversupply during lockdowns across the world have pushed electricity prices into negative territory. Consequently, utilities that mainly use traditional energy sources face a “new reality”.
Other sectors are expected to increase their use of renewable energy, particularly those like chemicals or metals, whose activities make them heavier polluters that must comply with stricter regulations. These sectors also need to adapt to stiffening public attitudes to pollution, and the growing likelihood of legal action.
- Renewable energy has gained momentum in recent years, increasing from 21.8% of total global installed electricity capacity in 2000 to 34.7% in 2019.
- A knock-on effect of the COVID-19 pandemic is that global CO2 emissions are expected to decline by roughly 8% year-on-year (YoY) in 2020, to the level they were a decade ago.
- China is a major producer of renewable energy and a global leader in the energy transition.
- In Latin America, integrating renewables into the grid is no longer optional.
- For supply chains, the COVID-19 pandemic has capped the rise of renewable use, and will cause capacity additions to decrease by 13% in 2020, after ten years of steady growth.
- High electricity price volatility is anticipated going ahead
- The chemicals, metals, paper, wood, and ICT sectors are expected to be the largest users of renewable energy.
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