Renewables will be the only energy source to experience growth in 2020, as Covid-19 lockdowns trigger a plunge in demand for all other energy sources amid what the International Energy Agency (IEA) is describing as the “biggest energy market shock since the Second World War”.
A new IEA report, based on an analysis of 100 days of real energy data and released on April 30, forecasts a collapse in energy demand during 2020 that will dwarf the impact of the 2008/9 financial crisis.
At 6%, the slump is seven times larger than the one experienced as a result of the global financial crisis. The IEA’s forecast for 2020 as a whole is based on the assumption of a ‘U-shaped economic recovery’ from the depths of the lockdown recession.
The drop will also result in a record yearly decline in carbon emissions of almost 8%, reaching their lowest level since 2010.
Low-carbon sources, which overtook fossil-fuel sources in power generation for the first time ever in 2019, are set to extend their lead in 2020 to reach 40% of global electricity generation – six percentage points ahead of coal.
Nevertheless, IEA executive director Fatih Birol stressed during a webcast that the decline should not be celebrated, as it was not sustainable and had come at the expense of economic trauma and thousands of premature deaths.
“If the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve. But governments can learn from that experience by putting clean energy technologies – renewables, efficiency, batteries, hydrogen and carbon capture – at the heart of their plans for economic recovery,” Birol added.
Fossil fuels are set for a “dismal” period, with coal poised for its largest decline in seven decades and with oil and gas also to experience sharp reductions in demand.
The combined share of gas and coal in the global power mix is set to drop by three percentage points in 2020 to a level not seen since 2001.
“Coal is particularly hard hit, with global demand projected to fall by 8% in 2020, the largest decline since the Second World War. Following its 2018 peak, coal-fired power generation is set to fall by more than 10% this year.”
By contrast, nuclear demand is expected to fall by only 3% this year, while renewables demand is expected to increase, because of low operating costs preferential access to many power systems and the ramp up of solar photovoltaic (PV) and wind projects completed in 2019 and early 2020.
“This trend is affecting demand for electricity from coal and natural gas, which are finding themselves increasingly squeezed between low overall power demand and increasing output from renewables.”
RENEWABLES GROW, BUT MORE SLOWLY
Supply-chain disruptions have paused or delayed deployment in several key regions this year, but the IEA is still forecasting that solar PV and wind are on track to help lift renewable electricity generation by 5% in 2020, aided by higher output from hydropower.
The report’s lead author, Laura Cozzi, even went as far as likening the impact of the pandemic on renewables to the limited effect that the virus itself was having on younger people.
“The surprise for us was seeing renewables, very much like our youngsters in our societies who are proving more immune than older people to Covid-19, renewables are behaving exactly the same way – they are being more immune.”
The growth of renewables would arise despite the IEA forecast of a 5% fall in global electricity demand, the largest drop since the Great Depression of the 1930s.
Despite the resilience of renewables in electricity generation in 2020, their growth is set to be lower than in previous years.
In addition, renewables outside the power sector are faring less well. With restrictions on transport and travel reducing road transport fuel demand, including for blended fuels, global demand for biofuels is set to fall substantially in 2020.
Covid-19, the IEA said, represented an “historic shock” that would affect both advanced and developing economies.
The full impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures adopted to curb the spread of the virus.
For instance, the IEA found that each month of worldwide lockdown reduces annual global energy demand by about 1.5%.
There had also been dramatic changes in the pattern of electricity use during lockdowns, with weekday demand mimicking the pre-crisis Sunday demand patterns of many countries.
Full lockdowns have pushed down electricity demand by 20% or more, with lesser impacts for partial lockdowns.