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COVID-19: The impact on Renewable Energy

COVID-19: The impact on Renewable Energy

Paul Callaghan

If nothing else the impact of Covid 19 on the World has opened our eyes that there is no certainty in life.
It is unbelievable to think that it was only in January the headlines surrounding the Renewables industry was a cornerstone of the debates into curbing carbon emissions and alternatives to fossil fuel energy production driven by the 2050 UN targets. Reduction of load shedding (i.e. capacity building that is prevalent in South Africa) and the energy for all dynamic (SE4All) for substantial areas of the developing world. How have these debates and imperatives changed? Each of these debates has or will be radically amended and the thoughts, plans and business direction will change for all industry.
Three aspects immediately come to the fore when considering the pandemics impact on Renewables.
  1. Health and Safety of Society
  2. The Environment
  3. The Demand  
The real practicalities of the Pandemic have and will continue to affect the way we carry out business, whether it be renewables or fossil driven industry. Working practices and maintaining the health of society across all parts of the value chain will be imperative and very soon become regularised through regulation. Whether this be regional, national, or international it will be a dominant factor affecting the renewables business.
The environmental impact is clear to be seen with less planes in the air and less carbon-fuel vehicles on the roads.  Social media shows pollution hotspots quite graphically with images from around the world, from Delhi to Beijing to Venice with clear clean air and water where normally smog, dust and pollution obscure the views. 
On the demand side the World Bank has stated that “Mitigation measures to slow the spread of COVID 19 have resulted in an unprecedented collapse in economic activity and transport, resulting in widespread declines in commodity prices”. Oil prices crashed but are starting to recover (e.g. Oman crude dropped to some USD 20 but has now recovered to USD 34 – still well below the budgeted price of USD 58). Similar economics are seen across all the oil markets. In practice this is driven not only by the inherent nervousness of the markets but a real drop in global power requirements (IEA estimates 6 % drop in 2020).  Similar patterns are emerging in coal demand. (8% drop in 2020 acc to IEA) Investment in new fossil power generation may cease. Demand, quite simply, may not be there.
Unbundling the impact of Coronavirus across the renewables industry is gathering pace through the need for survival of businesses. Governments are reappraising their budgets, to date the estimated cost globally of Coronavirus rests between USD$5.8tn and USD$8.8tn according to Asian Development Bank (ADB). What and who in the energy sector will be will be economic casualties?

The Renewables and associated supply chain, at first glance, would seem to be more a more resilient sector with opportunities increasing.
Covid 19 will be a catalyst to further drive forwards renewable energy sources: wind; solar; geothermal; tidal, amongst others. The renewable market should be better defined as the sustainable market as it will encompass, previously “contentious” and new solutions. Discussions already are taking place around the future of mini self-contained nuclear reactors serving smaller areas, avoiding the need for high cost transmission cables and gas or coal generators – could nuclear be making a comeback as the ‘new’ renewable?
The business case for fossil fuel investment will decline and funding, what remains from decimated Covid interventions will be applied to potential sustainable business that will have the renewable industry at its core.
If the storage issue can be solved (Development of viable alternatives tor lithium batteries) then wider scale introduction of electric vehicles becomes a possibility. Currently the immediate future supply of electric batteries is expected to fall far short of the demand resulting from electric vehicle manufacture. The R&D into storage, the demand for rare earths will increase providing new and accelerated opportunities.
Synergistic opportunities previously thought too tenuous for serious interest will abound, e.g. deep sea water: extremely pure, very cold can be used in hot parts of the world to provide eco-friendly cooling, then heat exchange technology could be added to generate electricity from the process. As a bonus, you would also get incredibly pure water.
Countries such as Oman, whilst striving for diversification of the economy away from hydrocarbon dependence, are still heavily impacted by low oil prices, with Government department budgets currently being cut by some 10% solar and wind projects in the country have been successful and one would expect that the precious gas used currently to generate electricity could to some extent be replaced by solar and wind, freeing up gas to provide petrochemical feedstocks and support industries such as aluminium and steel, to assist in diversification away from oil dependency.
Regulation will have to adapt quickly to allow more integration of renewable energy solutions into the power mix. The rise of distributed power solutions must become the norm and speeded up.
Governments are already discussing that some of the “good” that will come out of this pandemic will be reengineering how we live, work and play as a society. This will manifest itself with potential move out of cities, less reliance on personal/public transport and a public desire to improve living standards across the globe. The world will by necessity be more of a global community, despite the polarisation of some.
In summary Moore anticipates a vibrant sustainable and renewable energy industry to continue in the post Covid world. Its shape and direction will be different and will impact throughout the society in which we operate. The Moore Energy, Mining and Renewables group is fully committed to supporting the development of renewable energy globally.

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