As the global economies try to mitigate the Covid-19 impact, investment in renewable energy expansion becomes a critical cog in the wheel towards the economic recuperation journey. Expanding the renewables will not only help countries deliver stronger climate action under the Paris Agreement but also fuel the economic activities across the value chain forming an effective recovery mechanism to recuperate from the Covid-19 crisis.

Amid the Covid-19 pandemic, renewable energy took the centre stage. With declining electricity demand, utilities focussed on generating electricity from cost-effective renewable sources. By the conclusion of 2030, the cumulative renewable installed capacity is estimated to be 3,600GW, approximately 1,900GW more than that of 2020, which is significantly lower than the required build-up of approximately 2,800-3,000GW for restricting the global temperature rise to 2°C.

Due to technological advancements, economies of scale and competitive auctions, the Levelised Cost Of Electricity (LCOE) for renewables has seen a steep decline. The LCOE of solar PV had witnessed a drop of 86% to reach 0.05USD/kWh in 2019 when compared with 2010. Likewise, for onshore wind, the drop was 50.0% to 0.05USD/kWh.

The declining LCOE has brought renewables at par with fossil fuel and in few countries even cheaper. This trend of cost competitiveness and innovation is likely to continue and could attract countries and investors to increase their appetite for renewables. For instance, 2019 saw the highest solar power capacity additions and also the highest investment in the offshore wind segment.

However, the planned investments in this sector until 2030 is lesser than the investments made in the last decade. The Covid-19 pandemic recuperation stimulus provides an excellent window of opportunity for governments to channelise their investments in the renewables to offset the silos in the future investment schedule. These were earlier incapable to reach the desired 2030 installations target, decarbonising the economy and putting forward a solid step towards climate sustainability.

Incorporating higher investments in renewable energy might provide an opportunity to increase the investments and make up for the shortfall in the required installed power capacity by 2030.

Hence, increased investments in renewable energy in the recovery packages would benefit greatly and usher in a multitude of economic benefits. Not only will it provide a better opportunity in addressing climate change goals and global warming issues but also creates new employment opportunities and stimulate economic activities.

All operations in Sydney, Australia – including street lights, pools, sports fields, depots, buildings and the historic Sydney Town Hall – are now run on 100% renewable electricity from locally-sourced clean energy.

The switch is expected to save up to half a million dollars a year over the next 10 years. It will reduce carbon emissions by around 20,000 tonnes a year – or the power used by 6,000 average households. For more information see the IDTechEx report on Energy Harvesting Microwatt to Gigawatt: Opportunities 2020-2040.

Sydney sources renewable energy from 3 different generators – the Bomen Solar Farm in Wagga Wagga, Sapphire Wind Farm near Inverell and the Shoalhaven solar farm in Nowra.

The green energy switch was made using a power purchase agreement with Australian retailer, Flow Power. Valued at over $60 million, it’s the biggest agreement of its kind by a council in Australia. The new agreement will generate jobs, support communities impacted by the Covid-19 pandemic and create new opportunities in drought-affected regional NSW. Around three-quarters of the power will be wind-generated, and remaining will be solar.

The Shoalhaven project is being developed by Flow Power in partnership with local community group Repower Shoalhaven, a not for profit volunteer community enterprise that develops community solar projects. When finished, the 3-megawatt solar farm will have around 10,000 panels and generate enough energy to power 1,500 homes.

Speaking on behalf of Repower Shoalhaven, member Bob Hayward said the power purchase agreement will directly support the regional community. “Shoalhaven solar farm could not have become operational without the City of Sydney’s investment. By partnering with this project, we’re creating local jobs and helping the renewables sector grow,” Bob Hayward said. “The City of Sydney’s decision to include a regional community-based scheme brings us a step closer to a sustainable decarbonised future, while also supporting regional investment and employment. We congratulate the City of Sydney for this significant commitment.”

Owned by the Australian-listed company, Spark Infrastructure, the 120MW Bomen Solar Farm has more than 310,000 solar panels on 250 hectares of land. It’s one of the first projects in Australia to use bi-facial panels that absorb sunlight on both sides, with tracking technology that shifts each panel throughout the day to capture the sun’s energy.

COVID-19 has brought the generation of energy from fossil fuels to breaking point. As the lockdown measures were introduced, global energy demand dropped precipitously at levels not seen in 70 years. The IEA has estimated that overall energy demand contracted by 6% and energy-related emissions will decrease by 8% for 2020. Oil demand is expected to drop 9% and coal 8% for this year, while crude oil is at record-low prices.

Previous energy crises provide insight into what happens when the oil price crashes and how the use of fossil fuels has subsequently rebounded. But this crisis is different, because it is demand-led. The scale of the fall in demand, the speed of change, and how widespread it has been have generated a radical shift that seems to be more than a temporary short-term drop in demand for fossil fuels, at least in the power sector.

With the fall in demand, renewable sources (mainly wind and solar) saw their share in electricity substantially increase at record levels in many countries. In less than 10 weeks, the USA increased its renewable energy consumption by nearly 40% and India by 45% (see graph). Italy, Germany, and Spain set new records for variable renewable energy integration to the grid.

This rise in renewable energy is not circumstantial
Although the pandemic is circumstantial and unexpected, the current outcome for the power sector is not. The ongoing increase in renewable energy into the grid results from a mixture of past policies, regulations, incentives and innovations embedded in the power sectors of many forward-thinking countries.

These are three key factors behind the increase in renewable energy during this crisis:

1. Renewables have been supported by favourable policies. In many countries, renewables receive priority through market regulation. The priority for the first batch of energy to the network is given to the less expensive source, favouring cheaper and cleaner sources.
2. Continuous innovation. Renewable energy has become the cheapest source of energy. IRENA recently reported that the cost of solar had fallen by 82% over the last 10 years, while BNEF states that renewable energy is now the cheapest energy source in two-thirds of the world.
3. Preferred investment. Renewable energy has become investors’ preferred choice for new power plants. For nearly two decades, renewable energy capacity has grown steadily, and now 72% of all new power capacity is a renewable plant.

Dominion Energy, one of the nation’s largest utilities, in late June erected wind turbines off the Virginia coast — only the second such installation in the United States — as part of a big bet on renewable energy.

The company is also planning to build new power plants that burn natural gas.

Utilities around the country are promoting their growing use of renewable energy like hydroelectric dams, wind turbines and solar panels, which collectively provided more power than coal-fired power plants for the first time last year. But even as they add more green sources of power, the industry remains deeply dependent on natural gas, a fossil fuel that emits greenhouse gases and is likely to remain a cornerstone of the electric grid for years or even decades.

Utilities maintain that they need to keep using natural gas because the wind and the sun are too unreliable. They are also reluctant to invest in energy storage, arguing that it would cost too much to buy batteries that can power the grid when there isn’t enough sunlight or wind.

“We’ve got to have a resource that has an ‘on’ and ‘off’ switch,” said Katharine Bond, vice president for public policy and state affairs at Dominion.

For years, environmental activists and liberal policymakers fought to force utilities to reduce coal use to curb emissions and climate change. As the use of coal fades, the battle lines are rapidly shifting, with the proponents of a carbon-free grid facing off against those who champion natural gas, an abundant fuel that produces about half the greenhouse gas emissions that burning coal does.

Coal plants supply less than 20 percent of the country’s electricity, down from about half a decade ago. Over that same time, the share from natural gas has doubled to about 40 percent. Renewable energy has also more than doubled to about 20 percent, and nuclear plants have been relatively steady at around 20 percent.

Countries have in low-cost solar and wind a chance to revive economies battered by COVID-19 but also rekindle the fight against climate change, according to the UN Environment Programme (UNEP), BloombergNEF (BNEF) and the Frankfurt School of Finance and Management.

The trio recently analysed commitments by state and private players and concluded that current pledges would deliver 826GW of new green energy by 2030, far below the 3,000GW the world would need by that year to avert catastrophic global heating.

According to the new review, the present 826GW pipeline – split (see table below) between government (721GW) and private sector targets (105GW) – would also fall short of the deployment that was achieved last decade, when 1.2GW of solar, wind and others was installed worldwide.

In a statement alongside the report, German Environment minister Svenja Schulze noted that 80% of power new-builds worldwide were renewable last year. Investors and markets, she said, no longer need convincing about the “reliability and competitiveness” of green energy.

According to the study, it is up to governments to act on the private appetite, and make renewables a core part of the COVID-19 recovery. Missing this chance now may make it even harder to find money later, as the pandemic tightens its hold of public and private budgets alike.

Should states move to ramp up renewable funding, they would find every dollar spent yields more, thanks to years of tumbling technology costs. As the study pointed out, the world only invested 1% more in green energy in 2019 but delivered 12% (or 20GW) higher installs year-on-year.

The death of coal has run hand-in-hand with the rise of renewable energy, though the real credit for killing king coal might just go to U.S. shale. Even if the renewable revolution is growing too big to ignore.

There are plenty of environmental and ideological reasons that many academics and pundits are pushing for placing renewable energy at the heart of COVID-19 economic recovery plans. But it turns out that there are plenty of economically compelling reasons for a renewables-forward strategy as well. Last month the World Economic Forum published a report pleading with the energy industry to use the novel coronavirus’ unprecedented disruption of the economic and societal status quo to begin building a “new energy order.” Although COVID-19 has severely battered (in some cases irreparably) huge portions of the global energy industry, this is a unique opportunity to redirect resources, investment, and research and development into renewable energy ventures that we may never see again in our lifetimes–and then it will be too late.

“Though this is the worst possible way to begin a decade, the coronavirus pandemic and the collapse of oil prices also offer an opportunity to consider unorthodox intervention in the energy markets and global collaboration to support the recovery phase once the acute crisis subsides,” stated the World Economic Forum. “This giant reset grants us the option to launch aggressive, forward-thinking and long-term strategies leading to a diversified, secure and reliable energy system that will ultimately support the future growth of the world economy in a sustainable and equitable way.”

Writers at the Verge also argued that renewable energy should be the way forward and is the clear answer to employing the tens of thousands of oil patch workers that have been fired or furloughed thanks to the oil price crash of recent months. As business as usual has ceased to become an option, “transforming America into a country that runs on clean energy is one-way experts hope to alleviate the devastating economic downturn caused by the COVID-19 pandemic,” the Verge reported.