IEA: Renewables are exposed to new risks from Covid-19
Like other industries, renewables are exposed to new risks from Covid-19, varying significantly by market sector and technology,Trend reports with reference to the International Energy Agency (IEA).
“On 5 April 2020, global lockdown measures had reached a peak with over 4.2 billion people – more than half of the global population – being subject to complete or partial lockdowns. Even though countries all over the world began to gradually lift some of these measures in early May, their impacts are still far-reaching. Social‑distancing guidelines and lockdown measures have been triggering supply chain disruption and delays in project construction, having a direct impact on the commissioning of renewable electricity projects, biofuel facilities and renewable heat investments,” reads the IEA report.
Restrictions on business activities, travel and border closures have sharply reduced energy demand in transport and industry, decreasing the consumption of bioenergy and other renewables, according to the agency.
IEA believes that emerging macroeconomic challenges may prompt cancellation or suspension of investment decisions for both large and small-scale projects under development. “All of these factors may put projects at risk, even if they are at an advanced stage.”
For utility-scale electricity and transport biofuel projects under construction, commissioning delays will depend on the length and severity of confinement measures, according to the IEA.
“These can vary by country, state or even city. By mid-May, the world’s top growth markets in 2020 had undergone four to ten weeks of non-essential business closure or lockdown, with some of the strictest measures in place in certain US states, Europe and India starting mid-March,” reads the report.
While these measures are intentionally strong, in most countries the energy sector counts among the essential services, said IEA.
Therefore, the agency believes that lockdown measures do not necessarily imply that construction activity on energy projects, including renewables, has fully stopped.
“This varies by market, however, as in some countries, access to sites was allowed under full lockdown, while in others, work on some projects could not continue even under a partial lockdown. For instance, India allowed the construction of renewable energy projects to continue during its three-week full lockdown, while major construction firms in Japan suspended works in response to the state of emergency.Delays due to supply chain disruptions and/or closure of construction sites have the obvious result of reducing additional short-term capacity additions, with the impacts most likely seen in 2020,” reads the report.
A second consequence is that delayed projects may run the risk of not reaping the benefit of incentives ending in 2020, according to the IEA.
“Even with site access, almost all lockdown measures and social‑distancing guidelines require companies to follow precautionary safety measures. Limitations on the number of workers allowed on site and/or stricter hygiene protocols inevitably slow construction down, increasing the risk of delays. Delays in components or construction put companies at risk of missing critical policy deadlines in China, the United States and Europe, denying them financial incentives they previously qualified for.”
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