How resilient is renewable energy under the threat of COVID-19? Katie Findlay spoke to REN21 Project Manager and Analyst Thomas André about what ‘resilience’ means for the renewables sector.
‘Resilience’ comes up frequently in discussions about the impact of COVID-19 on the energy sector. However, the actual meaning can be hard to pin down. “The term seems to be being used more and more, at the risk of being overused and losing any real meaning,” Thomas André, Project Manager and Analyst at REN21, remarks. A recent article from Le Monde examines the resilience of the renewable energy sector, as it is ‘put to the test’ during COVID-19.
The article predicts that, while the demand for fossil fuels has collapsed during the crisis, the production of renewable power should continue to grow in 2020. Nonetheless, falling investments are threatening new projects. We asked André for his take on what resilience means for renewable energy.
Renewable energy systems are resistant to shocks
According to André, renewable energy offers a good example of resilience. Energy systems with high percentages of renewables are better able to resist global shocks than those based on fossil fuels.
This is because energy systems which are controlled locally are less susceptible to the negative effects of crises elsewhere:
“In most systems dependent on fossil fuels, there is no local independence in energy generation or distribution. This creates issues with sourcing in times of crisis. Renewable energy is locally produced, managed and maintained. Therefore, it does not rely on imports once projects are operational,” he tells us.
Dropping demand and dropping investment
Lockdown measures across the globe caused a drop in global energy demand. According to the International Energy Agency’s (IEA) Global Energy Review 2020, energy demand dropped 3.8% in the first quarter of 2020, compared to the same time period in 2019.
This drop in demand, paralleled with economic decline, means there will also be a major drop in investments in energy. The Agency’s World Energy Investment 2020 report, released in May, predicts a 20% drop in total global energy investments this year, compared to 2019.
Renewables may suffer less than fossil fuels
However, renewable power did not experience a drop in demand during lockdown. On the contrary -renewable electricity generation increased by 3% compared to the start of 2019, according to the IEA. This has three main causes: The priority given to renewable generation in most power systems, the lower running costs of renewable energy generation compared to fossil fuels, and large renewable power projects which have came online before lockdown began.
Free from the fluctuations of the international oil market, renewable energy is more resilient in cases of falling demand and economic decline. “Renewable energy is not dependent on oil imports, or on oil price volatility” André points out. “The volatility in fossil fuels demonstrates instability to investors, who are by nature risk averse.”
Despite the overall economic downturn, investors do appear to be favouring renewable power projects to those based on fossil fuels. According to the IEA World Energy Investment 2020 report, ‘ongoing investment in renewable power projects is expected to fall by around 10% in 2020, less than the decline in fossil fuel power.’
Lockdown – a snapshot of the future?
Renewable energy sources provided a high proportion of total power demand during lockdown. André tells us; “We saw a jump in the proportion of electricity supply met by renewables, which in some areas reached historic highs”. According to Le Monde, Belgium, Italy, Germany, Hungary and the US have set new records for renewables in national electricity production.
The result could be a snapshot of the future. “The COVID-19 crisis has proved that renewables are resilient,” André observes. “Some have stated that we have made a 10-year jump into the energy transition. At least, taking stock of the apparent progress we have made – the lesson learnt should be that we must further integrate renewables into our energy systems.”
We must change our energy system
To support an even greater penetration of renewables, our energy systems must further adapt. As do the policies that support them. The ‘green recovery’ planned post-COVID-19 provides a unique opportunity to implement these changes.
The main technical challenge to integrating renewables is accommodating for variations in power generation. Using variable renewable energy (VRE) sources, like wind power and solar PV, causes variations in supply. “On the power system side, we need to make sure that grids are able to cope with a much higher share of renewable generation,” André tells us.
“There needs to be demand-response, and demand side flexibility. This, combined with energy storage, prevents excess energy from being wasted or curtailed when more is being generated than can be consumed. Then, we need grid interconnectivity – across countries and continents – enabling us to send excess electricity from one place to another. Digitisation can also help with overall production forecast and control.”
To enable these technological changes, decision makers must make policy and legislation changes, and channel financing. The Renewables 2019 Global Status Report (GSR2019) provides recommendations: Appropriate power market rules must be designed for increased participation of variable renewable energy in electricity markets and trading. industries providing enabling technologies must be supported, such as battery storage, electric vehicles and heat pumps.
These changes are far from impossible. Some countries have already integrated high shares of variable renewable energy into their power systems. GSR2019 showed that in 2018, at least nine countries supplied more than 20% of their electricity generation from variable renewable energy. In Denmark, the share was over 50%.
The Climate Crisis is our Biggest Challenge
“Although renewables are more resistant to shocks, adaptation efforts are still necessary to ensure our energy systems can integrate renewables and are resilient to upcoming crises” André explains.
As we emerge from the challenges of COVID-19, we cannot forget the bigger picture. We must align recovery plans with climate goals and prioritise support for renewable energy. André concludes: “The biggest approaching crisis is the climate crisis. We have had a unique opportunity to learn, and now we must link recovery plans to the goals of the Paris Agreement.”
For the latest global data on renewable energy, don’t miss the launch of the Renewables 2020 Global Status Report (GSR2020) on 16 June. Sign up to be the first to get a digital copy, or join our launch events.