The COVID-19 pandemic has disrupted economies around the world, forcing both governments and companies to downsize budgets, shift priorities, and delay capital projects.
The renewable energy sector has, like nearly every other, been impacted by the global crisis, according to the International Energy Agency, an intergovernmental organization focused on energy issues.
Prior to the pandemic, 2020 was set to be a record year for new renewable energy capacity — meaning the amount of new solar panels, wind turbines, and other sources of energy installed around the world.
But the pandemic has disrupted supply chains, causing construction projects to be slowed down or delayed. Growing financial uncertainty, meanwhile, has further postponed projects.
“The lockdown in some countries created slowdowns in deployment of renewable energy projects,” Heymi Bahar, senior analyst of Renewable Energy Markets and Policy at the International Energy Agency, told Global Citizen. “Social distancing rules were a lot stricter, and fewer people were allowed in construction sites.”
“The supply chains for solar PV [photovoltaics] and wind were disrupted because manufacturing facilities were not providing [materials] at the pace that they should provide them,” he added. “Logistical problems were also making it difficult.”
Ongoing supply and demand disruption could cause the amount of new renewable energy capacity added in 2020 to decline by as much as 13% compared to last year, according to IEA estimates.
But the renewable energy industry is resilient, and the world will continue to increase the amount of energy generated by clean sources through the pandemic.
IEA estimates that renewable energy generation will grow by 5% this year — the only source of energy production with an upward trajectory. The world currently gets about a third of its energy from renewable sources.
“Compared to other fuels, renewables will be the only ones that will increase in 2020,” Bahar said. “Natural gas, coal, nuclear, all of their output will decline.”
As economies begin to recover from COVID-19, governments can shape stimulus packages and broader economic plans to accelerate the growth of renewable energy and lock in decreasing greenhouse gas emissions.
“This is an opportunity,” Bahar said. “There will be billions of dollars spent in the next few years. But structural change requires structural policy change.”
Here are seven trends that will define renewable energy in the years to come.
China is key to the continued growth of renewable energy worldwide. The country is responsible for around 70% of all solar photovoltaic panels, and is enmeshed in the global supply chain for wind turbines.
As COVID-19 lockdown measures began spreading throughout the country, solar panel production declined in various provinces, disrupting construction projects worldwide, Bahar said.
But because China’s containment measures have largely proven effective, local economies have reopened, and manufacturing is returning to pre-COVID-19 levels.
The supply chain supporting solar energy installation can therefore once again meet demand.
COVID-19 recovery plans have the potential to vastly increase renewable energy generation and decrease greenhouse emissions around the world.
Already, governments have spent trillions of dollars to rescue companies, keep citizens financially stable, and stabilize entire economies.
And that’s just coping with the pandemic. In the aftermath, countries have the opportunity to “build back better” by focusing on environmental goals.
Rather than returning to the status quo, countries can use massive stimulus plans to boost renewable energy generation, improve energy efficiency in buildings, phase out environmentally harmful industries, and protect ecosystems.
“Stimulus packages should have a component supporting a sustainable recovery instead of just an economic one,” Bahar said. “A clean transition should be at the heart of it.”
Policymakers have the opportunity to support the renewable energy industry in important ways post-COVID-19. They can expedite permits for renewable projects, expand tax credits, provide substantially more grants and loans, extend deadlines for projects disrupted by the pandemic, and directly invest in emerging sources of clean energy such as offshore wind.
“We need to reduce the way we consume energy,” Bahar said. “This presents a good opportunity for job creation by [for example] renovating buildings. A good portion of emissions come from buildings, it’s important to renovate them.”
Wind turbines and solar panels generate energy based on weather conditions, unlike fossil fuels that can be burned at any time. As a result, there are surges and dips in energy production that don’t always correspond to energy demand, and energy generated from renewable sources must be stored in batteries.
In the past, insufficient storage capacity and poor storage options have limited the potential of renewable energy, while being prohibitively expensive.
Going forward, the costs of renewable electricity storage are expected to continue to decline, allowing for greater storage capacity, while new forms of storage are emerging, including “flow batteries” that have a longer lifespan than the standard lithium-ion batteries.
Offshore wind projects alone have the potential to meet humanity’s energy demands. The problem, however, is these projects are incredibly expensive, difficult to execute, and remain logistically uncertain.
In recent years, pioneering efforts throughout Europe have overcome many of the learning curves involved in offshore wind and have provided insight to other countries that are now beginning to roll out their own projects.
“The prices have come down significantly over the last five years; now offshore wind is on track to go outside of Europe,” Bahar said. “The next few projects will be expensive, because it includes a lot of port restructuring to accommodate those huge turbines, but then you reach economies of scale.”
Bahar said that countries including China, the US, Japan, South Korea, and elsewhere have begun to increase investments in offshore wind.
Off the coast of New York, for example, two offshore wind projects are currently in development. Together, the massive installations could generate 1,700 megawatts, enough to supply electricity to more than 1 million homes.
By 2030, offshore wind projects could generate 234 gigawatts of electricity annually, a massive increase led by China.
It’s unlikely that renewable sources of energy can meet humanity’s energy demands in the decades ahead.
As a result, countries have to develop mixed energy portfolios that focus on reducing the greenhouse gas emissions that cause climate change and enacting “degrowth” policies that shrink economies and resource consumption in a sustainable way.
The energy mix portfolio will likely include nuclear power, biothermal energy, and hydropower.
Countries are also increasingly factoring in “green hydrogen,” a type of fuel created by separating hydrogen particles from water through a process called electrolysis. When this process is made possible by renewable energy, the resulting hydrogen generates no carbon dioxide.
Green hydrogen can be used to heat homes and fuel hybrid cars. Many countries are betting on green hydrogen as an alternative to emissions-intensive fuels like natural gas.
The European Union, for instance, is making green hydrogen a key part of its economic recovery plan.
Over the past two decades, renewable energy production costs have plummeted because of technology breakthroughs, the exponential growth of manufacturing, and the sophistication of supply chains.
These costs will keep falling in the years ahead, according to Bahar, allowing low-income countries to more easily pursue renewable energy projects.
“Over the longer term, the dynamics and fundamentals of renewables will not change, they will continue to go down,” he said. “It’s a fact that renewables are cheaper than fossil fuels, and this trend will continue in more and more countries, renewables will be cheaper than fossil fuel alternatives.”
“But one thing is important to remember,” he added. “Cost reductions on their own are not enough for renewables to grow; you need the right policy framework around it to grow.”
Communities around the world are already investing in solar and wind projects that bypass traditional energy suppliers to achieve energy independence and efficiency.
Decentralized systems can also help countries better adapt to natural disasters, public health emergencies, and other crises that are becoming increasingly common as climate change intensifies.
Because of the COVID-19 pandemic, greenhouse gas emissions will decline by up to 10% in 2020, the sharpest annual drop in recorded history. While emissions will rebound in the years ahead, countries can make sure they never exceed 2019 levels by capitalizing on the trends above.
That in and of itself would be transformative. Previous estimates suggested emissions would peak around 2030 and then begin a gradual decline.
If countries commit to a clean energy future in the wake of the pandemic, then the goals of the Paris climate agreement could be achieved.
"There will billions of dollars spent in the next few years," Bahar said. "The clean energy transition globally could make 2019 the peak of the emissions."