How the Renewable Energy Market Is Being Impacted by COVID-19
The economy is experiencing some major shifts as a result of the coronavirus outbreak. As people stay in their homes and businesses close, many industries across the globe are now in recession. At the same time, a select few markets are experiencing something of a heyday.
While the current need for restaurants and airlines is diminishing, this isn't true of every service. If you work from home now, you've seen first-hand how demand for web-based platforms like Zoom is rising. So, where does all this leave the renewable energy market?
The success of the sustainable energy industry is challenging to determine at this time. While it has some of the same obstacles to overcome as other industries, there are also some promising signs. Depending on the global response to COVID-19, this time could either make or break the renewable energy market.
Obstacles From the Outbreak
As you might've guessed, people are using less energy now. Electricity consumption in the U.S. and Europe has declined by around 5%, while in India, it went down 18.4%. This drop in electricity usage impacts renewables in two significant ways.
First of all, with overall lower energy consumption, green electricity companies aren't getting as much income. Secondly, with less usage, the need for clean energy isn't as prominent. The economic advantage of renewables isn't as relevant when people aren't paying as much for fossil fuels as usual.
Another obstacle to renewable energy's growth is the falling price of crude oil. The COVID-19 outbreak heavily contributed to the recent oil price collapse, which led to dropping gas prices. Fossil fuels are now far cheaper than they were, which may make people hesitant to switch to green energy.
Construction and manufacturing have both slowed, which impacts many other industries, including renewables. Many green energy projects may now have to pause as they don't have the necessary workers or materials. As global production slows down, so does the supply chain, which leads to bottlenecks.
Thanks to supply chain bottlenecks, many renewable energy companies now have fewer materials. Without enough parts, they can't continue to produce things like solar panels or wind turbines as quickly. With slowed production, green energy companies can't make as much money.
Trends Towards Sustainable Energy
Despite these challenges, some factors may make this sustainable energy's time to shine. Recent trends have shown that renewable energy can still grow even with lower electricity demands. Renewables' increased efficiency can be preferable in times of economic distress.
Renewable energy offers the stability and efficiency the economy needs right now. As Congress prepares another stimulus package, some politicians have indicated that it might include energy reform. The renewable electricity industry could take this opportunity to lobby and convince politicians of its benefits.
Government sponsorship of renewables isn't a novel concept, either. The government has participated in initiatives like public-private partnerships before, so it's not a stretch that they'd pursue renewables. This history of involvement makes the inclusion of renewables in the stimulus bill more plausible.
While the oil price collapse may harm renewables in the short-term, it could be beneficial in the long run. Investors may see this as another example of the fossil fuel market's instability. They could then turn to renewable energy as a more reliable alternative.
In some countries, the virus outbreak has caused a surge in renewable energy. A solar energy company in Australia saw a 400% increase in inquiries in just two weeks. As people realize they may need to prepare to live more efficiently, they turn to green energy.
Shifting to sources like solar power allows people to become more self-sufficient. As more people stay home, this concept grows in popularity. The U.S. could see a similar reaction as the outbreak continues.
Renewable Energy After Coronavirus
The immediate effects of the COVID-19 pandemic may slow the renewable energy market. But that doesn't mean that it will be detrimental for it long-term. As the situation goes on, and parts of the economy start to recover, renewables could come out on top.
You can't quite predict the outcome at this point, but it looks like it may be mostly positive. If investors and politicians realize the benefits renewables offer, the sustainable energy market will emerge stronger than ever. Even if it takes a temporary hit, the renewable energy market will eventually recover.
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