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How Will the Energy Industry Change in Light of COVID-19?

image credit: Photo by Chrischesneau via Pixabay

It's virtually impossible to find a sector unaffected by the COVID-19 pandemic. As government leaders issue orders to stay at home, people must work differently, and they often face difficulties getting everyday essentials. The energy industry is one of many facing changes due to the coronavirus. 

It Will Make People More Cognizant of the Need for Energy Security

If the coronavirus has taught people anything, it's that once-plentiful goods are now in short supply. People struggle to get toilet paper, non-perishable foods and cleaning products, among other merchandise. 

Concerning the energy industry, Fatih Birol, the executive director of the International Energy Agency, said the coronavirus is an excellent reminder of how essential electricity is in today's society. He suggests energy security should come to the forefront. Birol tied energy security to stability and prosperity and asserted that government members must be the ones to take action. 

He also commented about how global lockdowns have reduced energy demand while stifling power system flexibility. For example, large-scale power consumers like factories can usually adjust their usage to keep things balanced, but that can't happen if the factory can't operate due to a lockdown.

When the immediate crisis of COVID-19 begins to ease, energy security may remain a crucial part of the conversation. The impact of the coronavirus has been unimaginable to most of us, but now we're living through it. If a similar global catastrophe happens again, the energy supply cannot be at risk. 

It Will Slow Renewable Energy Adoption

Some analysts believe the coronavirus and related events will reduce the rate of renewable energy adoption. For example, Peter Fox-Penner, the director of the Institute for Sustainable Energy, explained how COVID-19, the economic contraction and the oil price collapse are related events. 

He also mentioned how the downturn in the economy would negatively affect renewable energy installations — plus hurt companies that build clean energy parts and must put aside their growth plans. However, the renewable energy outlook is not entirely bleak. Fox-Penner pointed out how many states are already under contract with providers to install equipment designed to meet clean energy goals. 

As people and nations start emerging from the aftermath of the COVID-19 crisis, budgetary issues will undoubtedly arise. When they do, it may become apparent that some parties cannot move forward with their renewable energy intentions as quickly anticipated. However, people are nonetheless raising their awareness of how renewable energy is the way of the future. Many may hold off on their plans but not give up on them entirely. 

The EPA May View COVID-19 as a Potential Reason for Non-Compliance

The U.S. Environmental Protection Agency (EPA) requires its regulated entities to report instances of non-compliance and take specific actions to reduce the duration and following effects. But, the organization recently announced that if it agrees COVID-19 caused the non-compliance, it will not impose penalties for some infractions. 

There's no way to tell at this point what effect the relaxed enforcement may have. But it's worrisome, especially since the EPA also recently scaled back regulations regarding the disposal of coal ash from power plants. The combined impacts of these downgraded rules could prove vast. It's also not clear how long the EPA might accept regulated entities using COVID-19 as a reason for lack of compliance — or how long this may be a valid explanation. 

Solar Panel Companies Will Face Production Delays

If people want to go ahead with their renewable energy plans and chose solar as their preferred option, they may find it takes longer than anticipated to get the finished products. Solar panel manufacturers reported supply chain delays affecting their ability to complete projects on schedule. Even if companies have all the raw supplies they need, those resources may not mitigate the slowdowns. 

After all, many places around the world are under lockdowns that only allow essential personnel to work out of the house, while everyone else stays at home. Regardless of the renewable energy option a person wants, they likely cannot have installation work done right now. 

Thus, when societies reach the other side of the adverse effects caused by COVID-19, installers may experience a sudden surge in demand. This factor may mean people will still wait for months, even though the coronavirus is no longer an issue. 

Uncertain Times Ahead

Energy industry professionals cannot know with certainty how long the coronavirus pandemic will persist or what the total effects may be. However, given the examples here, they should plan for significant disruptions and different priorities. 

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Discussions

Matt Chester's picture
Matt Chester on Apr 16, 2020 4:22 pm GMT

That's the million dollar (billion dollar? trillion dollar?) question, isn't it?

As people and nations start emerging from the aftermath of the COVID-19 crisis, budgetary issues will undoubtedly arise. When they do, it may become apparent that some parties cannot move forward with their renewable energy intentions as quickly anticipated. However, people are nonetheless raising their awareness of how renewable energy is the way of the future. Many may hold off on their plans but not give up on them entirely. 

I've definitely seen a lot of concern for how the renewable industry will hurt especially as a result of this, which is certainly the case-- especially for smaller companies within the supply chain. But hopefully it's just slowing, not preventing, the transition to cleaner energy. I can't imagine a result will be that when new generation needs to be built that it will be less likely to be renewable and more likely to be fossil as a result of COVID, but hopefully it's just delaying the construction of all generation types equally so that renewables can get back on track. It may interrupt schedules and goals, but these are certainly extraordinary times and it's not an indication of renewables being weak

Rick Engebretson's picture
Rick Engebretson on Apr 18, 2020 10:11 am GMT

Living and working in an extremely "green" rural county of Minnesota, with zero virus cases, I am nervous to challenge prevailing current conventional wisdom.

The urban migration now leaves BOTH the urban and rural communities empty. With the urban out of work and the rural working to exhaustion. Sorry urban bars and theaters are closed, but we need forest management labor.

I hold dear the memories of advice from grandparent farmers surviving dust bowl, depression, and world war. And have long advocated the efforts of FDR to enlighten lost urban perspectives with rural conservation work projects.

We have a lot to re-learn. Going bankrupt to restore insane consumption is not a good economic policy.

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