Impact of Covid-19 and the Resilience of Renewables

A number of the basics factors that drove the growth of renewable energy in 2019 were declining price of wind and solar technology, advances in battery garage generation, growing grid operators, and expanding toolset for integrating renewable energy into the grid. Stringent government regulations on carbon dioxide and other greenhouse gas emission are anticipated to drive the demand for renewable energy.

Doing all this we can combat climate change that comes with numerous benefits, from reducing pollution and associated healthcare costs to strengthening and diversifying the economy by shifting to renewable energy, among other measures – David Suzuki

According to a report by Renewables Now, the carbon dioxide emission in Europe fall by 12%, whereas renewable energy sources surpassed conventional energy sources such as coal and fossil fuel. Further, new renewable energy policies in EU Emissions Trading System further boosts the demand for renewable energy in well-established regions such as Europe.

Role of Government Regulations

Government regulations have positive impact on the renewable energy industry. Government legislation on carbon dioxide and greenhouse gas emissions has created challenges for those need to comply. This has created new market and opportunities for alternative fuels. In 2003, Europe’s first biofuel policy was introduced siting blending targets for 2010. This policy was combined in the Renewable Energy Directive (RED) in 2009, which set target of achieving 10% renewable energy in transport for 2020. The European Parliament, Council and Commission agreed on the Renewable Energy Directive II (RED II) in 2018.

All these directives require 14% renewable energy to be used in transport by 2030. According to Renewable Energy Directive II, Annex IX Part A, RED II has successfully implemented new markets for conventional biofuels such as ethanol and biodiesel and for alternative biofuels such as renewable methanol. Other directives also impact European industry in a positive way. These includes the Fuel Quality Directive, the Alternative Fuel Infrastructure Directive, and the Air Quality Directive, among others.

Other countries’ regulations are also expected to drive the demand for renewable energy. Regulatory pressure is one of the drivers for the expansion of renewable diesel capacity in the U.S. In the U.S., the demand for renewable diesel is expected to grow significantly by 2025 due to environmental regulations established both at the federal and state levels. U.S. Environmental Protection Agency has set the Renewable Fuel Standard (RFS) to support biodiesel and renewable diesel expansion via provision of tax credits and Renewable Identification Numbers (RINs) for blenders of these fuels.

A shift in trend toward use of localized energy procurements can be seen in the recent years. Various government bodies in countries, such as India, have taken the advantage of community choice aggregation (CCA) policies, which permits government to procure renewable energy resources on behalf of their constituents while retaining their existing electricity provider for transmission and distribution services. In 2016, CCA procured three times more installed solar installation as compared to 2015. These programs enable the customers, who are unable to install solar at their homes or businesses, to get electricity from an offsite distributed solar system. Installed capacity of community solar systems is estimated to quadruple due to these reasons.

Prior to COVID-19

Strong voluntary demand was observed rather than forced demand policy in the market. In 2019, voluntary procurement represented 52% of utility-scale solar projects in development and around 73% of projects were announced in the 2018. The preceding forecast in 2019 introduced that renewable energy additions were set to attain double-digit increase in 2019.

The Renewables 2019 forecast become very close to actual overall performance; the 191 GW new installations truly connected to the grid, which is ultimately a 7% growth on 2018. Renewable energy growth in 2019 was dominated by the solar PV, with capacity additions breaking to reach 109 GW, barely lower than the estimate of 120 GW.

In many countries, the government bodies have invested huge amounts of public money to support the development of renewable energy and require its significant quantities to be sold by energy providers. Solar energy indeed signifies an opportunity for stimulating economic growth in hosting communities. It also requires a complex and flexible policy framework and a long-term strategy. Of all the renewable energy resources, solar energy is relatively abundant in most of the Asia-Pacific regions. As a result, several countries in this region have medium- to long-term policies to support growth in solar and other resources in their overall energy portfolio.

China alone is responsible for over 40% growth of the global renewable capacity, which is largely driven by concerns regarding air pollution and capacity targets that were outlined in the country’s 13th five-year plan to 2020. China is also the world market leader in hydropower, bioenergy for electricity and heat, and electric vehicles. Developing countries, such as India, are witnessing rapid growth in peak electricity demand, and therefore, local governments and the electricity utilities are coming up with plans such as “Development of Solar Cities” to encourage local bodies to come up with road map to guide their cities in becoming “renewable energy cities” or “solar cities.”

Prior to the beginning of the COVID-19 crisis, biofuel production and renewable energy consumption have been both expected to grow around 3% in 2020. Three factors were driving growth, and that is Brazil’s new biofuels coverage, the broader implementation of China’s ethanol mixing mandates and continued biodiesel growth in ASEAN member nations.

Delay in renewables deployment after COVID-19

Like other industries, renewables are uncovered to new risks from COVID-19. Social‑distancing hints and lockdown measures have been triggering supply chain disruption and delays in development and innovation, having a direct effect at the commissioning of renewable energy, biofuel centers, and renewable energy investments. Restrictions on enterprise activities, tour and border closures have sharply decreased electricity requirements for in-delivery and enterprise, decreasing the intake of bioenergy and different renewables. Rise in macroeconomic challenges also spark off cancellation or suspension of investment choices for huge and small-scale organization development.

Consequently, lockdown measures do not stop complete production on few renewable projects. For instance, India allowed the construction of renewable power tasks to retain in the course of its three-week full lockdown, even as foremost construction companies in Japan suspended works in response to the country of emergency.

Other outcome is that behind schedule projects run the risk of no longer reaping the benefit of incentives finishing in 2020. Obstacles on the different types of employees allowed on the website and/or stricter hygiene protocols have brought down the production to a notable extent.  Lacking essential policy deadlines in China, the U.S., and Europe, or denying them monetary incentives previously certified have also hampered the market to a great extent. To cope with these issues, some international locations have brought policy changes, which undoubtedly impacts the outlook, mainly for 2021.