The Highs and Lows of Renewable Energy in 2020

IFS Vice President of Energy, Utilities and Resources, Colin Beaney, discusses the highs and lows of the renewable energy sector through 2020, and looks at the factors at play influencing its future

It’s been an up and down year for the renewables sector

In my recent IFS Mindfuel presentation, I talked about the global growth in the demand for energy, and how the share of this demand met from renewable sources was growing fast.

According to the International Energy Authority: “Low-carbon sources supply more than half of this growth, and natural gas accounts for another third. Oil demand flattens out in the 2030s, and coal use edges lower.”

In fact, in the first quarter of 2020, the UK generated more energy from renewable sources than ever before.

Linked to this, the global levelized cost of electricity for renewable sources reached historic lows – a decade ago, onshore wind power for example was at more than $100/MWh, but if those trends continued the LCOE of best-in-class solar and wind projects would be less than $20/MWh by 2030.

But with things looking so positive earlier this year, how has the global COVID-19 pandemic and the economic consequences affected this, and what role will steps towards recovery play? None of the analyst’s forecasts considered the impact of a global pandemic on energy demand.

As industrial energy usage reduced with facilities closing, and the demand from the transportation industry disappeared because local and international lockdowns were implemented, the impact on the oil price was seen immediately. With lasting impacts and no rapid return to pre-crisis levels forecast by some commentators.