Essay Sample on COVID-19 Impacts on Fossil Fuel & Renewables: A Power Sector Analysis

Introduction

The COVID-19 hit at the time when the renewable generation appeared ready to take off, and it has interrupted worldwide supply chain, daily activities, and markets. As the pandemic influences human health and society responds resoundingly through the economy, it is more imperative to understand how the disease affects the use of fossil fuel and the renewable sector. The power sector is among the impacted sectors of the economy as a result of the announced lockdown in different countries (Giber 28). The lockdown has led to a significant decrease in electricity demand as industrial consumption takes the largest share in many economies. A poll has been conducted to investigate industrial experiences, and the participants have focused on the effect of the pandemic on the power sector (Fernandes 21). According to the research on the effect of the disease on coal, the product holds more than 40% of the international electricity generation, and it has been recorded that coal plants are operating at lower capacity due to a decrease in demand for electricity (Giber 38). The paper seeks to investigate the impact of COVID-19 on the use of fossil fuel versus renewable energy resources in the global economy.

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Fossil Fuel

The coal industry is taking the major brunt of the pandemic since the demand for electricity has tremendously reduced, which has been caused by the production halts in the main factories as well as in the global industrial units. Again, the projects which are under construction and planned will probably experience difficulties of approvals due to the disruption caused by the disease. Notably, the greater reduction in the demand and the lower prices of electricity is expected to have an immense impact on the gas-based generation because a lot of gas generators are experiencing a financial crisis in 2020 (Kingsly and Kouam 31). Also, some nuclear facilities are operating marginally at a reduced capacity because of the remote operations, as well as the difficulties accelerated by the delayed maintenance effort, which is also affecting such facilities. According to the report on COVID-19 pandemic, the availability of nuclear power in Europe remains perpetual as many economies, including Germany and United Kingdom, are imposing measures to guarantee persistency in their operations (Kingsly and Kouam 35).

Even though countries like France, which has the largest nuclear fleet is projecting a significant fall in the availability of their plant. The prices of crude oil have faced a sudden decrease of approximately 60% as of 2019 (Kingsly and Kouam 39). The abrupt fall in the prices has also affected the prices of gas by about one-third as compared to the previous year. Understandably, the impact of the reduction on the prices of gas and oil on renewable energy may be complex and unclear and can possibly differ based on region and market.

Renewable Energy

The pandemic has immensely affected the use of renewable energy, which has greatly been hit from 2019. Annual Energy Outlook, in their report, projected that the renewable energy would outsmart the quantity of coal-fired by the middle of 2020, but the pace may not possibly be sustainable depending on the global impact of the virus. Concerning the solar energy, about 80% of the yearly demand for the photovoltaic market is met by manufacturers from China, and the pandemic has stopped the production for numerous manufacturers, which has significantly affected the supply chain (Fernandes 28). Therefore, the solar photovoltaic module prices are expected to increase by approximately 10-20% (Fernandes 32).

More importantly, renewable energy development projects are also projected to be adversely affected because the measures for implementing such projects depend fully on the equipment that must be imported from other countries, especially the projects which are in their early stages of development as well as small and medium-sized projects. For instance, according to the research by Wood Mackenzie, India is experiencing delays of about 3GW of the solar and wind projects as a result of the on-going lockdown (Barua 46). Also, the supply and labor disruption is projected to delay about 400MW of the projects 2021 (Barua 49). Other countries, including Greece and Brazil, are holding energy auctions. While the pandemic is increasing in Europe, the Chines manufacturers' market and revenue shares are expected to rise because the European manufacturers will continually reduce their production as many manufacturers face the lockdown (Barua 57).

Conclusion

It is worth understanding that the COVID-19 pandemic has significantly affected the global use of fossil fuels such as oil and gas, as well as renewable energy. Currently, wind and solar industries are experiencing logistical delays, and the pandemic is expected to have negative impacts on the renewable auctions like in the case of Greece and Brazil, as well as causing delays on the renewable energy projects around the world, where such impacts are greatly felt through the supply chain. In many economies where the imposed measures and policies sound unfavorable to the use of renewable energy, the country may opt for gas and oil generation, which will often remain cheaper. Some more sensitive countries can choose fossil fuels, which are more cheaply compared to the use of renewable energy. It is worth noting that the reduced prices of fossil fuel triggered by COVID-19 will not make the industry change its focus on sustainable development and de-carbonization goals.

Work Cited

Barua, Suborna. "Understanding Coronanomics: The economic implications of the coronavirus (COVID-19) pandemic." Manuscript (2020): 46-57.

Fernandes, Nuno. "Economic effects of coronavirus outbreak (COVID-19) on the world economy." Available at SSRN 3557504 (2020): 21-32.

Giber, Valeria. "An unsustainability issue: the antagonism between fossil energy use and public health in China." Ecocycles 6.1 (2020): 28-38.

Kingsly, Kelly, and Kouam Henri. "COVID-19 and Oil Prices." Available at SSRN 3555880 (2020): 31-39.