By Chika Izuora Lagos
Abuja (Precise Post) – Global efforts to transit to clean energy is facing critical challenges occasioned by the outbreak of Coronavirus.
According to the latest data released by Bloomberg New Energy Finance (BNEF), it appears likely that the coronavirus outbreak will be a significant global crisis, triggering an economic slowdown.
In the report, Covid-19: Impact on Clean Energy, Transport and Materials, BNEF highlights some of the likely effects over the next year on the transition to a clean economy including renewable power, energy storage, electric vehicles, heating, cooling and the circular economy.
Bloomberg Economics have lowered its global GDP growth forecast for 2020 from 3.3 per cent before the virus hit, to 2.6 per cent as of 10 March. “Not a global recession,” says the report, “but a significant economic hit with potential for localised contractions in certain markets.”
Central Bank rate cuts and the lack of other investment options, means that the world is likely to remain in a low-interest-rate environment.
This is good for clean energy, since the cost of debt is a significant factor in project leveled costs. However, the collapse in stock markets will make it challenging for some investors to raise equity.
BNEF says the one way in which Covid-19 will affect solar, wind and storage is by slowing down legislative processes as parliaments are shut down or work on emergency disease control measures.
For example, in China, a solar mega-auction was pushed back from May to June 2020, with commissioning deadline in 2021. This project may be endangered if the outbreak flares up again.
Also, Poland is in the middle of the legislative process for its offshore wind law. It is expected to detail an auction design, timeline and who is responsible for constructing the transmission to shore. As of January, it was expected to be approved in 1H 2020. We expect the first project in Polish waters to be online by 2026.
