Where do Utility-Scale Clean Projects--and their Jobs--go in the age of Covid19?
- May 17, 2020 3:57 pm GMT
It’s a cruel irony that while moisture droplets breathed into the air in the normal course of life in the air can today infect a person with a deadly virus, the air in many metropolitan areas is notably, and visibly, cleaner. The price of crude oil has dropped precipitously, so much so that a couple weeks ago it was in negative territory, meaning that producers were actually paying to have it taken off their hands. The price is gasoline is way down, certainly because far fewer people are driving, and when they are, it’s often short distances to the pharmacy, doctor, or grocery store. The US Energy Information Administration (EIA) now predicts that retail sales of electricity in the commercial sector will fall by 6.5% in 2020 because many businesses have closed and many people are working from home, and forecasts that total U.S. electric power sector generation will decline by 5% in 2020.
At the same time, under economic and political pressure from many corners, the economy is starting to “open up” again, and it’s reasonable to expect that will bring with it more energy consumption. To underscore that assertion, at 12:54 pm on Friday, May 15, President Trump announced live that “Vaccine or no-vaccine, we’re back.” On the other side, legions of epidemiologists, emergency medicine doctors, vaccine and pharmaceutical researchers and other scientists say that a safe and effective vaccine is far in the future…very far, and that a resurgence of Covid19 could come next fall, leading to the “darkest winter in modern history.”
Yet many sectors of the economy in many states are regions are indeed coming back, and the pace of that resurgence will, by all accounts (not least the which have been “vigorous” anti-lockdown demonstrations in state capitals and reopening of “non-essential” businesses contrary to state governors’ orders), continue apace and will certainly increase after Memorial Day. And if per-capita Covid19 testing can be appreciably increased, more employees testing negative will feel comfortable returning to the workforce, as will their employers.
Well, where does all of this leave renewables? According to a brand new analysis by the BW Research Partnership titled “Clean Energy Employment Initial Impacts from the COVID-19 Economic Crisis, April 2020” many states lost large numbers of renewable and clean-energy jobs over just the last two months, including New Jersey and New York, which lost 21% and 13% respectively; California, which lost the largest total number of clean-energy workers (77,000) while the country as a whole lost over 18% of clean and renewable-based jobs. Energy efficiency was hit hardest, followed by renewable generation; clean vehicles, T&D and storage; and clean fuels. According to the report, “(we) conservatively project that the clean energy sector will lose about a quarter of its workforce or 850,000 jobs by the end of the second quarter if no actions are taken to support the clean energy industry and its workers.”
These are not trifling numbers. They not only represent lost incomes for families and individual workers, but major downstream retail losses, major project delays, supply chain losses and interruptions, and the threat of cancellation of entire projects. Much of the production of solar panels, eVs, LED lighting, wind turbine parts, and energy-efficiency contracting services were shuttered or dramatically reduced on account of the virus, and re-starting them isn’t like flipping a switch. In addition, the Federal Production Tax Credit (PTC) for terrestrial wind development (already reduced over the last few years) sunsets at the end of this year. The Investment Tax Credit (ITC) for solar and offshore wind got a bit of reprieve last year, but the full credit was already reduced for this year, and will ratchet down in the next couple years. So, the delays in construction and equipment investment that Covid19 created may make many clean energy projects less economic, or entirely uneconomic, taking more jobs with them.
The picture is not entirely bleak. Many pundits say that a Democrat victory in November for the White House, Senate, or both could dramatically improve the picture, and in any event, clean and renewable energy projects already have momentum than may be slowed, even interrupted, but probably not entirely halted. Sheer economics and the end of their useful operational life will continue to shutter coal-fueled power plants, and dispatchable, utility-scale energy storage, which many say is the key to making renewables viable, improves its efficiency and capacity seemingly month-over-month. EIA estimates that electricity generation from coal will fall by 25% in 2020, while generation from renewables will rise by 11%. That, I think, would be historic.
But there’s also an unfortunate issue here. New York and New Jersey have among the most ambitious clean energy programs—especially offshore wind—renewable energy goals, and supportive governors, but have also been hit the hardest by Covid19—and so have their state budgets.
And yet there’s hope…one hopes. For example, according to ROI-NJ, Bellwether Research on behalf of Ørsted found in a recent survey that most New Jersey voters (82%) favor expanding wind energy in the state, compared to 13% who don’t approve. Nearly two-thirds (73%) said that offshore wind will impact the environment in a positive way.
For his part, New York Governor Cuomo, in July of last year, signed the nation's largest offshore wind agreement and the single largest renewable energy procurement by any state, selecting offshore wind projects that will create enough energy to power over 1 million homes, create more than 1,600 jobs, and result in $3.2 billion in economic activity. At that same time, the governor announced $287 million in cutting-edge infrastructure in multiple regions of the state, including the Capital Region, Brooklyn, Staten Island and Long Island. What happens now with those projects and investments is probably less certain than before the current crisis. But according to Politico NY, during a May 14, 2020 conference call meeting the NY Public Service Commission ordered the state’s investor-owned electric utilities to submit initial plans with potential projects to support the interconnection of new renewables by Nov. 1.
When this pandemic starts to recede in earnest, it’s likely that utility-scale clean and renewable projects will begin coming back to life. We’ll see then if Covid19 has been mostly a bump in the road, or a real obstacle that will remain in place for some time.
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