The pandemic coronavirus has hit most of the sectors globally and the energy sector is one of them and it affected this sector in multiple ways. First, the pandemic all across the globe has delayed the projects related to the energy sector whether it is a solar farm or a thermal power plant. Moreover, the pandemic caused lockdown in many countries including China, Italy, Spain, Germany, France, UK and India which caused lower consumption of electricity and transportation, results in lower demand for energy compared to normal days.
The pandemic is expected to hit the renewable energy sector more as compared to the non-renewable energy sector. Due to lockdown in major economies, and slow down of the aviation sector, a huge supply and demand gap of crude oil generated which created some negation between OPEC countries and Russia related to the daily production of crude oil. It caused a steep downfall in crude oil prices near to $30 per barrel. The downfall in this crude oil price can demotivate people to use renewable energy sources as the initial cost of renewable energy sources are still higher than most of the fossil fuel for an end consumer.
In addition, China is the largest manufacturer of solar panels globally. Disruption in the supply chain of the equipment was the first hurdle witnessed due to the outbreak in the energy industry. As an estimate, due to COVID-19, a drop of around 10% can be witnessed in the global solar energy installation in 2020 as compared to the expected earlier, and the downfall in solar energy installation will be first to be recorded first time in this century.
Along with this, the year 2020 is critical for the US for the wind energy companies in the country as it is the last year to complete projects that are qualified for the full Production Tax Credit (PTC). It is one of the major subsidies in the wind energy sector in the country. There are chances that the construction companies may face labor shortage for some weeks or even months and a slowdown in government approvals can be witnessed. However, an extension in deadlines can be expected from the US government. The pandemic has caused a halt of major economic activities which will cause a global economic slowdown. In the future, it can cause, a decrease in subsidies offered by the government to the renewable energy sector as the government has to cope-up with the economic downfall first resulting in a slowdown in this sector globally for a couple of years.
