Solar demand could fall for first time in 30 years due to Coronavirus
BloombergNEF (BNEF) analysis suggests that the ramifications of the Coronavirus (Covid-19) will lead to downgrades in forecasts for renewables deployment and electric vehicle (EV) development, with solar capacity set to fall 16% compared to previous estimates.
BNEF has downgraded its forecasts for global solar capacity demand from 121-152GW to 108-143GW in response to the global disruption caused by Covid-19. If the downgrade were to reach the lower end of the estimate, 2020 could be the first year for more than 30 years that annual demand for solar falls below the levels recorded the year prior.
The analysts claimed that factories in China are all at differing stages of restarting production and manufacturing which may well ease supply pressures on key renewables components. However, approaches to containing Covid-19 has led to more localised manufacturing across the globe, which could reduce trade and downgrade capacity demand for cleantech.
Solar demand could fall by as much as 16% due to a reliance on production in China, which has imposed limits on movements and trade activity to halt the spread of Covid-19. Wind generation is set to cope better due to a more harmonised rental, construction and delivery systems. However, BNEF has warned that it's previous estimate that wind capacity could surpass 75GW this year could now be at risk.
Batteries for EV production will also be impacted by the virus, which was declared a global pandemic by the World Health Organisation this week. According to BNEF, battery demand could be downgraded by 4%.
While most of the clean technologies have supply chains in place to account for lost time during the containment phase of the virus, BNEF was more concerned about the longer-term impacts of policymakers diverting away from clean energy legislation to focus on “more pressing concerns" health concerns.
The IEA recently altered its oil market forecast in light of the impact of coronavirus and, where it was predicting an 825,000-barrel increase in daily demand, it is now anticipating that demand will be one million barrels less per day in 2020 than in 2019.
$600bn coal costs at risk
The Agency’s latest oil market forecast, published today (9 March), outlines how the “deep contraction in oil consumption in China”, compounded by disruptions to international travel and trade due to COVID-19’s spread, have led to the first drop in global oil demand since 2009.
The FTSE 100 index fell more than 8% in its first ten minutes of trade at the start of the week. The drop has been largely caused by a 20% decline in oil prices due to a trade row between Saudi Arabia and Russia, compounded by coronavirus impacts.
To build on the oil and gas woes, a new report from Carbon Tracker found that coal developers could be risking more than $600bn as it is already cheaper to generate electricity from new renewables than from new coal plants in all major markets.
Carbon Tracker found that more than 60% of global coal power plants are generating electricity at a higher cost the construction of new renewables. It warns that by 2030 at the latest, it will be cheaper to build new renewables than continue operating coal in all markets.
The analysis found that 499GW of new coal power is planned or already under construction globally, costing around $638bn. However, governments and investors may not see any return on their investments as Carbon Tracker notes that coal plants typically take 15 to 20 years to cover their costs.
In the EU, up to $16bn is at risk due to 7.6GW on planned fossil fuel projects, primarily in Poland and the Czech Republic. But, the bloc currently has 149GW of operating coal capacity, 96% of which costs more than new renewables.