HAS THE CORONA VIRUS AFFECTED THE RENEWABLE ENERGY SECTOR?
If stats are anything to go by, the world’s energy industry experienced a 4,300% increase in energy capacity from solar panels in the ten year period between 2007 and 2017. Wind energy comes a close second having risen 22 fold (from 29,000MW to 539,000MW) from 2001 to 2017. There is no denying that green energy has taken the world by storm. It is the hot topic in energy conversations, and for all the right reasons.
In the wake of perhaps the world’s greatest pandemic so far, we can’t help but wonder what is going on in the renewable energy sector and the current and future effects. We got researching and pulled up the latest in the industry. Here, we have broken it down for you.
A plunge in energy equipment supply
It comes as no surprise that China is the largest supplier of energy equipment – particularly used for wind and solar installations. We are talking solar panels, wind turbines, batteries among other essentials. Thanks to COVID-19, there has been a widespread shutdown of factories in China that produce these items. This has obviously left a huge gap in the demand and supply chain for these equipment.
At the beginning of March, 2020, two of the leading solar panel suppliers for the US utility market – Canadian Solar Inc. and JinkoSolar Holding Co. reported a drop in their stock prices since the pandemic hit the world.
Although China is slowly getting back to its feet and increasing production, the short-term disruption effects have been a huge blow to the renewable energy sector.
Challenge in investment
For a long time now, the clean energy sector has been brimming with a plethora of investment opportunities. The expansion and contraction potential ultimately spikes the reward opportunity. Some of the investment opportunities to look into, include renewable energy stocks, exchange-traded funds (ETFs), mutual funds, equities of energy companies, and the ability to buy commodities.
COVID-19 has thrown a few complexities in the renewable energy investment equation. Currently there are threats to the tax credit viability of power purchase agreements (PPAs) – both of which are making it very difficult for investors to throw their monies into renewable projects. Some of them will unfortunately not meet operational deadlines as per the PPAs between developers and electricity buyers. Project deadlines are essential in recovering the full value of investment tax credit for projects and this has been affected.
COVID-19 has proved and to be a massive threat to not only the health and lives of people but to the renewable energy space as well. In the face of calamity, the economy takes a beating. But there is a hidden gem of opportunity for those with a positive outlook in life. This is the time to shift focus to local strategies to deal with the crisis once and for all. Governments and authorities should rise to the occasion and champion for local manufacture of wind, solar, hydro, and geothermal equipment.
Alice Cheptoo is a chemical and process engineer, blogger, and tech writer. When not publishing posts on her blog (laserengravingtips.com), or creating content for her clients in various tech fields, she is traveling or cooking up a storm in the kitchen.