A post-novel coronavirus (Covid-19) world is going to be very different by any yardstick. As the focus has shifted from rescue to recovery, governments have considered options for “building back better,” outlines The Renewables 2020 Global Status Report (GSR) released last week. A comprehensive study of fiscal recovery packages concluded that “green” recovery measures, such as investment in renewables and building efficiency, are more cost effective than traditional stimulus measures, creating more jobs and delivering higher returns.
Renewable energy also offers a range of other proven benefits, including increasing energy security, reducing emissions and improving human health. Calls for a “green recovery” have gained momentum, with a broad coalition of actors from all corners of society advocating an ambitious stimulus package that: prioritises renewable energy, energy efficiency, grid modernisation and resource-efficient transport; makes bailouts for emissions-intensive industries conditional on emissions reductions; promotes “green finance”; and puts a price on carbon.
It should be recalled that as governments worldwide instituted lockdowns in 2020 to slow the spread of Covid-19 and to respond to the resulting global health crisis, economies ground to a halt and energy demand plummeted. Amid the pandemic, oil prices also tumbled due to recent dynamics in the global oil market. Data for countries representing more than one-third of global electricity demand showed that every month of full lockdown reduced electricity demand 20% on average. Global electricity demand decreased 2.5% in the first quarter of 2020, and demand for coal and oil fell nearly 8% and 5% respectively. Renewables were the only source of electricity to record demand growth over this period, due to low operating costs and preferential access to electricity networks.
The carbon intensity of electricity systems also dropped, and cities across the globe benefited from unusually high air quality, as pointed out by the GSR. Nonetheless, the concentration of CO2 in the atmosphere continued to rise to record levels even as emissions decreased, highlighting that a structural shift would still be necessary to reach long-term climate and development targets.
The crisis has had immediate implications for the entire renewable energy sector, from network operators facing unprecedented shares of renewable energy generation, to project developers hit by labour and supply chain disruptions. The long-term impacts of the crisis will depend on a multitude of complex and interlinked factors, including the response of governments, markets and societies.
Electricity networks in major markets were able to accommodate huge changes in the energy mix as of mid-2020, despite the challenges of maintaining operations amid social distancing rules. The share of supply met by renewables reached historic highs in China, Europe, India and the US. In China, thermal power generation dropped 9% in January and February, whereas wind and solar power generation increased 1% and 12% respectively. In the EU and the UK, coal-based power generation fell 29% between March 10 and April 10, while renewables delivered 46% of all power generation, up 8% compared to 2019.
Operators in a few regions curtailed renewable power generation in the face of structural challenges: limited options for storing or exporting excess generation; reduced demand-side flexibility as industrial plants went offline; and inaccurate load forecasts owing to a lack of historical data on electricity demand during a pandemic. Project developers have faced significant labour shortages and supply chain disruptions, although the impacts vary by technology and region. Solar PV projects stalled amid factory closures in China, which accounted for 70% of global module supply as of early 2020, and large job losses were reported by companies reliant on residential installations. Given the ground reality, “green” recovery measures are the need of the hour. It will be a slow journey, one step at a time.
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