Cheap oil? A pandemic? No big deal for renewable energy, experts say

The renewable energy market should be able to weather short-term fluctuations and may even be poised to get a boost from efforts to restart economies.
IMAGE: Nunez de Balboa solar park
The 500-megawatt Núñez de Balboa solar park came online on April 6, 2020.Iberdrola

Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.
SUBSCRIBE
By Linda Givetash

When the coronavirus pandemic began to sweep through Spain, workers on the 500-megawatt Núñez de Balboa solar park didn't stay at home while the country went into lockdown.

Instead, they donned protective gear and made other safety adjustments to bring the almost 4 square miles of panels online. On April 6, the array — the largest in Europe, with the capacity to supply power to 250,000 people — was connected to the grid.

The grid, run by Iberdrola, a multinational energy provider headquartered in Spain, is just one of many renewable energy projects that have pressed forward despite the coronavirus outbreak and a sharp decline in the price of oil, which remains central to the energy sector.

Full coverage of the coronavirus outbreak

It's a positive sign for an industry that only in recent years has become a viable competitor to the traditional fossil fuels that had dominated the energy sector in past decades. Now, experts say, the renewable energy market is stable enough to weather short-term fluctuations and may even be poised to experience a boost from efforts to restart economies around the world once the pandemic subsides.

"What is clear now is we need jobs and activity," said Xabier Viteri, director of the renewable energy business for Iberdrola. "Because renewables are competitive, it is a mature technology. This is actually the kind of activity that you can do straightforward, immediately."

Since 2015, the development of renewables has outpaced that of nonrenewable energy worldwide, accounting for 72 percent of all new power generation in 2019, according to the International Renewable Energy Agency.

East Anglia One's offshore wind farm's final turbines were installed in April despite challenges to construction posed by the coronavirus pandemic lockdowns in Britain.ScottishPower

Overall, renewable power capacity is expected to grow by another 50 percent by 2024 with solar leading the way, according to the International Energy Agency. It's also the only part of the energy sector the agency projects to grow in 2020, while fossil fuels are expected to take a major hit because of the decline in energy demands stemming from the pandemic.

Fossil fuels may be similarly poised for a boost. Dan Jørgensen, Denmark's minister for climate, energy and utilities, said he's concerned that the recent decline in oil prices might lead countries "that are built on an old-fashioned fossil economy" to see the transition to cleaner energy as unnecessary.

Jørgensen co-chaired a meeting for the International Energy Agency last month with lawmakers and businesses from around the world to discuss the role of renewables in the economic recovery post-pandemic.

A common priority was developing recovery plans that didn't repeat mistakes after the 2008 financial crisis that benefited fossil fuel-driven industries, Jørgensen said.

"We should use this as an opportunity to make the right investments in the green transition," he said, adding that investing in renewables isn't just an ideological choice but that it's also a good business strategy.

The slump in oil prices could also disincentivize the adoption of electric vehicles, Francesco La Camera, director general of the International Renewable Energy Agency, said in a statement. But the impacts are expected to be short-lived as many jurisdictions tighten emissions policies.

Other subsidies, taxes and regulations can also help to counteract the attraction to fossil fuels and instead lead to more investment in green technology like renewables, Jørgensen said. It's especially needed as the sector hasn't been immune to the global economic downturn.

The Global Wind Energy Council said last month that while wind power would see continued growth amounting to more than 355 gigawatts of capacity over the next five years, the industry would "undoubtedly be impacted by the ongoing COVID-19 pandemic, due to disruptions to global supply chains and project execution in 2020." It added that it was too soon to predict the immediate impact on the sector, but it said it would release updated forecasts in the second quarter of the year.

Meanwhile, the energy research firm Wood Mackenzie downgraded its forecast for global solar installations in 2020 to 106.4 gigawatts, from 129.5 gigawatts — an 18 percent reduction.

East Anglia One's offshore wind farm.ScottishPower

"Green technology companies and companies invested in green infrastructure are under pressure right now because that is what happens when the global economy goes into a huge crisis," Jørgensen said. "That's also why it's so important for governments and institutions to look at economic recovery packages to support these industries."

Iberdrola, the company behind the Spanish solar farm, has been pushing ahead on construction at more than 40 sites worldwide, including wind energy projects in the United Kingdom and the United States, thanks in part to continued investor interest.

The company issued 750 million euros in green bonds in the European market on April 1 and an additional $750 million of green bonds in the U.S. through its subsidiary Avangrid. Demand was strong in both markets, according to Iberdrola. The funds will be used for renewable projects in Spain, Mexico and the U.K., as well as onshore wind in the U.S., and they are viewed as a vote of confidence for both the company and the industry.

Download the NBC News app for full coverage and alerts about the coronavirus outbreak

If anything, the pandemic has amplified interest in protecting the environment, said Anirban Ghosh, chief sustainability officer for the Mahindra Group, a multibillion-dollar federation of companies based in India that includes renewable energy and electric vehicle businesses.

"The biggest learning of the lockdown is the realization that we were actually living beyond natural boundaries, and when we stepped back, nature seemed to rejuvenate herself in as short a time as a month," he said, pointing to improved air quality in cities and the return of wildlife to waterways.

"The negative effects of pollution have become so much clearer," he said.

While lockdowns have disrupted work and supply chains, Mahindra's renewable energy companies are expecting an acceleration — not setbacks — as the world recovers from the pandemic, Ghosh said. Similarly, the group is sticking with its sustainability targets, such as having more of its businesses achieve zero waste to landfill in their operations.

"What we found to be both good for the business and good for the planet will at least get some extra attention as we go forward," he said.