A top global energy expert has warned that COVID-19 threatens to ‘derail’ the progress of the global renewables industry.
More than ever, governments will be central in tackling these challenges and determining the pace of deployment of renewables, said Heymi Bahar, senior analyst for renewable energy markets and policy at the International Energy Association (IEA).
Renewable technologies such as wind and solar PV have experienced spectacular growth over the past two decades, creating whole new global industries and helping avoid significant amounts of greenhouse gas emissions, he said.
But even faster deployment of renewables will be vital if the world is to meet its climate goals and other long-term sustainable energy objectives, said Bahar.
Without government action, the crisis caused by COVID-19 could considerably disrupt their momentum, the expert wrote in a blog published on the IEA website.
“How the situation affects renewables will depend on two key areas: the duration of confinement and social-distancing measures in different countries, and the scope and timing of economic stimulus packages in response to the economic downturn,” said Bahar.
The expert said falling costs and strong policy support have made renewables increasingly attractive and competitive in many economies, but they now face three main challenges from the coronavirus crisis.
“Supply chain disruptions that can lead to delays in completing projects; the risk of being unable to benefit from government incentives that end this year; the likely decrease in investment because of pressure on public and private budgets combined with uncertainty over future electricity demand.
“Economic stimulus packages aimed at getting the global economy back on track will be particularly important,” Bahar said.
In October 2019, several months before the scale of the coronavirus pandemic emerged, the IEA forecast that 2020 would be a record year for renewable electricity additions. Global installations of solar PV and wind were set to outpace 2018 levels by over 20%.
Renewable policies in China, the European Union, the US and India were expected to drive this rapid expansion.
However, in several key markets that have been considerably affected by the coronavirus crisis, major incentives to invest in renewable projects are set to expire at the end of 2020.
In China and the US, developers have to connect wind and solar PV projects by the end of December in order to qualify for expiring incentives.
In the European Union, 2020 is a milestone year for member states to reach binding renewable energy targets. And in India, the financing and deployment of renewable projects need to accelerate this year to reach the country’s ambitious policy targets by the deadline of March 2022.
“Considering the unprecedented economic impact of the coronavirus crisis, the growth of renewable capacity additions this year may very well slow down for the first time in history.
“However, governments have the ability to change this trajectory with targeted policies that can enable renewables to grow sustainably in the coming years,” the IEA expert wrote.
As governments continue to work on repairing the economic damage and spurring renewed activity in the week and months ahead, Bahar said there are a number of actions that can achieve these goals while also helping the deployment of renewable energy.
First, policymakers can extend deadlines for commissioning projects beyond 2020 in order to account for delays due to supply chain disruptions or labour constraints.
Second, governments can include specific financing measures and incentives for renewable projects in upcoming stimulus packages. These should focus on reducing the risks for capital-intensive utility-scale solar PV and wind projects under dire macroeconomic conditions, especially for small developers.
Third, short-term policy actions on renewables should align with a new medium- and long-term visions that aim to achieve a rapid peak in greenhouse gas emissions this decade and a steep decline thereafter.
Bahar concluded: “The coronavirus pandemic poses a significant threat to the timely deployment of renewables and their vital contribution to clean energy transitions.
“But governments can enable these technologies to emerge from the crisis with renewed momentum and play an important role in the global economic recovery.”