While the novel coronavirus pandemic stalled the expansion of the renewables sector in the U.S. and abroad, the industry is ready to ramp up as nations reopen.
“The largest effect from the pandemic we have seen [on the renewables’ industry] is the slowing of construction activity,” according to Erin Decker, director, cleantech client management for Schneider Electric. “It takes a long time for products to get built. There is slowing there, as well as slowing within the infrastructure and supply chain in the U.S. and Europe. There also is uncertainty in the capital markets, and some are slowing to look at new renewables in the U.S.”
Despite the economic slowdown of the past few months affecting construction, the U.S. Energy Information Administration (EIA) has forecasted that renewables will account for the largest portion of new electricity generating capacity this year. The EIA says it anticipates the power generation sector will more than 20 gigawatts of new wind power capacity and close to 13 gigawatts of utility-scale solar capacity in 2020 – in sum, the renewables sector will be the most rapidly growing source of power generation in 2020.
In a boost to the U.S. renewables industry, a recent IRS ruling allows solar and wind power companies with projects in the pipeline another year to get them online, due to the pandemic, and still receive the Federal Production Tax Credit. “Every business has had to adjust for safety, as the world emerges, and that goes for renewable energy as well,” added Decker.
Not to mention that goals for clean energy remain in place and banks and investors view renewable energy as a solid investment, according to Renewable Energy World.
Wind and solar power continue to be the dominant renewable energy in the U.S., and more companies are eager to finance projects through renewable energy certificates and power purchase agreements. “Some have invested directly,” Decker said. “There have been massive amounts invested by corporations already.”
Critical to the continued expansion of renewable energy sources in the U.S. is a renovated and smarter infrastructure. Some argue that infrastructure money should be included in subsequent federal stimulus packages, building on the success of the American Recovery and Reinvestment Act of 2009 (ARRA). Described by its advocates as the largest single energy bill in history, it contained $90 billion for the clean energy sector, which resulted in significant gains.
The desire to reduce carbon dioxide emissions coupled with falling technology costs is spurring many countries to pursue solar and wind projects.
Despite disruptions to the supply chain behind many projects, throwing off the commercial model for privately financed power plants, the Middle East and Africa are other regions eager to pursue renewable energy projects. “The region remains committed to diversifying its energy sources and lowering its costs through renewables,” according to GlobalData.
Globally, regulatory reform remains an obstacle for renewable energy. “Merging renewable energy, primarily photovoltaic solar power, into power grids requires policy adjustments and new regulations,” according to Richard Thompson, editorial director at GlobalData. “This includes ensuring grid flexibility and stability, integrating new technologies such as battery-storage and electric vehicles, and establishing commercially attractive business models.”
As companies and governments map out their pandemic recovery, this is the ideal time to build “more green” into business plans, Decker noted. Similar moves already are underway in Europe, where there is rising demand for wind and solar power. European Union leaders have made it clear they want to see more sustainable development in long-term economic plans and may even tie stimulus funds to those proposals.
“Renewable energy is the cheapest source of power,” Decker said, adding that any new project helps to reduce carbon emissions. “If it has a financial advantage and an environmental advantage, and it could be built in to fight climate change, it should be built in.”
Companies also are conscious of consumer expectations for more sustainable practices on their part. “We’ve seen corporate demand for renewables explode; even during the pandemic companies wanted to expand,” Decker said. “As long as we are recovering, we should move forward as well—anything that makes economic sense. Besides, it is hard to imagine a post-pandemic world where consumers don’t hold companies accountable.”
Image credit: Abby Anaday/Unsplash
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