RE to enjoy easier post-Covid recovery than fossil fuels: report

Renewable energy (RE) is likely to be the only energy source to achieve demand growth for the rest of 2020 and is expected to recover from the impact of Covid-19 more quickly than fossil fuel, according to the International Energy Agency (IEA). Priority treatment given to small-scale RE projects feeding the grid during a fall in demand for energy is believed to be key to renewabes' resilience, the report said. The IEA expected coal-fired electricity generation to fall more than 10% this year, gas consumption to fall 5%, oil to fall 9% and nuclear 3%.

Renewable energy will always fall short against fossil fuels and nuclear because solar and wind output cannot easily be configured to meet demand. That is an argument frequently levelled at the clean energy industry despite the advances being made in energy storage.

However, the report published by the International Energy Agency (IEA) today, examining the implications of the Covid-19 pandemic on global energy systems, points out the decoupled nature of renewables generation and demand has proven a strength during the crisis.

The Global Energy Review 2020 also undercuts the frequent complaint heard from the renewables lobby that clean energy does not enjoy sufficient policy support. The report’s authors point out the priority dispatch afforded renewables is a key reason solar, hydro and wind power have proven resilient in the face of an unprecedented slump in energy demand.

The fall

With the IEA predicting global energy demand will fall 6% this year, electricity generation sources more closely pegged to consumption patterns are set for a crunch time, according to the report’s authors, with solar, hydro and wind expected to be the only winners.

Based on a gradual, ‘U-shaped’ economic recovery from the pandemic, the IEA estimates coal-fired electricity generation will fall more than 10% this year, as part of an 8% demand slump. Gas consumption will see its biggest ever fall – 5% – despite low prices seeing it retreat only 2% in the first quarter, and oil demand will fall 9% this year because of the slump in mobility and aviation. With nuclear-powered electricity set to fall 3% from last year’s record level and biofuels hit by mobility restrictions, renewables are expected to be the only electricity source to grow during 2020.

The IEA reported the share of solar and wind power in the generation mix rose to 9% in the first quarter, compared with 8% in the same period of last year. That rise came on the back of more than 100 GW of solar generation capacity which was added in 2019 along with around 60 GW of wind facilities. Priority dispatch – in part driven by the low operating costs of renewables plants, as the IEA acknowledged – has been key to that Covid-19 resilience. Lump in hydropower, and renewables accounted for almost 28% of electricity generation in the first three months of the year.

Economic recovery

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The IEA noted the material uncertainty about hydropower output for 2020, given its dependence on rainfall and temperature levels, but said: “Solar PV is set to increase the fastest of all renewable energy sources in 2020.” The report did, however, mention the material uncertainty affecting the small scale solar sector, with installations having “stopped or dramatically slowed” as lockdown restrictions were brought in. Economic uncertainty is expected to derail, or at least delay, the plans of many householders to install rooftop solar.

In a note which will no doubt be seized upon by fossil fuel lobby groups and their political allies, the IEA report noted a faster, V-shaped economic recovery from the pandemic would lessen the blow to oil, coal and gas demand whereas an even more drawn-out recession would further accelerate the ascension of renewables. The fact that hinges solely on the amount of damage to fossil fuel demand, however, was reflected by the statement: “Renewables are the only energy source likely to experience demand growth across the remainder of 2020 regardless of the length of lockdown or strength of recovery.”

Carbon emissions

The fall in energy demand prompted the IEA to predict the world would see the largest fall in CO 2 emissions on record, almost 8% – nearly 2.6 gigatons. However the international body warned the rebound in emissions could be even larger – as was the case after the 2008 global financial crisis – unless economic stimulus packages being introduced by governments pegged the recovery to low-carbon conditions. In that respect, the IEA noted the recovery package pledged by the Chinese government could have existential effects on the fate of the coal industry.

Little mention was made of energy storage in the report and, on the subject of e-mobility, the IEA reported that although electric vehicle (EV) sales have held up in Europe so far during the crisis, they have fallen even further than the overall rate of car purchases in China, the world’s largest EV market.

Regardless of the sector-by-sector breakdown, though, there is little denying the contention of IEA executive director Fatih Birol that “the energy industry that emerges from this crisis will be significantly different from the one that came before.”

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