COVID-19: the impact on renewable energy
Countries’ dependence on reliable electricity has been brought into sharp relief by COVID-19 – and calls for renewable technologies to play a greater part in increasing energy access are getting stronger. Simon Trace, EEG’s programme director, explains more.
COVID-19 has firmly underscored the fundamental role that access to reliable electricity plays in protecting health and wellbeing, and in supporting essential public services, key supply chains, people’s livelihoods and countries’ economies. It has put forward an even stronger case for accelerating energy access efforts, with a lack of reliable electricity – a daily reality for hundreds of millions of people living in Sub-Saharan Africa and South Asia – severely compromising people’s ability to overcome the health and economic impacts of the pandemic.
During the crisis, there has been a heightened focus on renewable technologies and the role they can play in increasing energy access. There have been calls for renewable energy to be at the forefront of countries’ response to COVID-19, with many seeing an opportunity to ‘build back better’ using low-carbon technologies to create more resilient and sustainable energy systems, while boosting economic growth and creating employment opportunities.
It has long been thought that Sub-Saharan Africa’s and South Asia’s wealth of clean, renewable resources, including river systems, sunshine and wind energy, can play a key role in closing energy access gaps, while also helping to address climate change (fossil-fuel dominated energy systems currently contribute to over 60% of global greenhouse gas emissions).
Furthermore, renewable technologies offer increasingly cost-effective alternatives to conventional generation. The cost of electricity from wind, biomass, geothermal, hydro and solar photovoltaics (PV) is now at, or below, grid parity with conventional fossil fuel power plants throughout much of the world. A new report from the International Renewable Energy Agency (IRENA) shows that newly installed renewable power capacity increasingly costs less than the cheapest power generation options based on fossil fuels, and that more than half of the renewable capacity added in 2019 achieved lower electricity costs than new coal.
Solar PV and onshore wind are now the cheapest sources of new-build generation for at least two-thirds of the global population. In South Africa, wind and solar PV are the cheapest sources of grid-connected energy, and it is projected that by 2030, solar will be the cheapest or second cheapest domestic energy source in most Sub-Saharan African countries. Meanwhile, in India, solar energy was auctioned at a cheaper price than new coal earlier this year.
Advancing renewable energy in response to COVID-19
According to the International Energy Agency (IEA), large-scale investment to boost the development, deployment and integration of clean energy technologies should be a central part of governments’ stimulus plans because it will bring the twin benefits of stimulating economies and accelerating clean energy transitions.
IRENA suggests that renewable energy solutions will provide a fast response to the pandemic and will build more resilient energy systems. It has been agreed that IRENA will work closely with the African Union Commission to advance renewable energy across the African continent to bolster the response to COVID-19 and increase access to energy.
The International Hydropower Association has also teamed up with IRENA and more than 100 renewable energy organisations to issue a joint call for action urging policy makers to prioritise renewable solutions as part of their COVID-19 recovery plans.
The South African Wind Energy Association is also pushing for a green economic recovery plan. It has joined major wind industry corporates and associations across the world in support of the Global Wind Energy Council’s drive to secure wind power’s role in the global economic recovery.
Meanwhile, it has been reported that in India, renewable energy sources are proving resilient in the COVID-19 crisis, and that the pandemic has tipped the scale in favour of renewables for cleaner and cheaper power.
Challenges to future investment
COVID-19 is also, conversely, threatening future investment into renewable technologies – and indeed all types of energy generation. According to an IEA report, COVID-19 has set in motion the largest drop in global energy investment in history, with spending expected to plunge in every major sector this year. The report suggests renewables investment has been more resilient than fossil fuels, but that final investment decisions in the first quarter of 2020 for new utility-scale wind and solar projects has fallen back to the levels of three years ago.
In May 2020, the IEA also forecast that additions of renewable electricity capacity will decline by 13% in 2020 compared with 2019, the first downward trend since 2000, and a 20% downward revision compared to its previous forecast (in which 2020 was due to be a record year for renewable power). And, according to Wood Mackenzie estimates, 2020 global solar and energy storage installations are expected to drop nearly 20% compared to pre-COVID-19 projections, and wind turbine installations are expected to decline by 6%. However, according to the IEA, the majority of delayed projects are expected to come online in 2021.
As for current renewable energy construction projects, many of the world’s largest solar panel, battery and wind turbine manufacturers are located in China, and the country’s COVID-19-related lockdowns and travel restrictions are likely to have disrupted supply chains, delayed delivery of key components and potentially increased costs.
The importance of research
The impact that COVID-19 will have on the renewable energy sector is not yet clear – and whether it will ultimately encourage decarbonisation and a ‘build back better’ approach, or whether the economic fall-out will significantly hinder future investment, research will be key.
EEG has responded to the need for evidence on the relationship between COVID-19 and energy in Sub-Saharan Africa and South Asia by issuing a call for research proposals. The aim is to learn lessons that can be applied to future energy system planning, operation and maintenance.
We have also published an Energy Insight that explores the targeted measures being taken by international energy-related organisations to support key players in the energy sector during the COVID-19 pandemic, which includes a section on opportunities to accelerate decarbonisation of power supplies. It builds on an EEG Briefing Note published in April 2020 (which summarised findings from a rapid scan of online resources), using multiple in-depth stakeholder interviews with international energy-related organisations and bilateral and multilateral donor organisations.
In addition to the implications COVID-19 may have for the renewables market, the adoption of renewable technologies across Sub-Saharan Africa and South Asia is also constrained by pre-existing challenges. They include knowledge gaps, limited decision- and context-relevant information and a lack of data and energy planning models and tools. The EEG research programme is looking at these challenges in more detail, with several projects focusing on renewable energy, one of our priority research areas.
 McKinsey & Co. (2015). Electric Power & Natural Gas. Brighter Africa. The Growth Potential of the Sub-Saharan Electricity Sector.