Renewables take a blow from coronavirus, but recovery expected
March 31, 2020
Wind, solar and battery industries have suffered with the spread of the coronavirus and reports from industry leaders forecast cutbacks and erasing of growth.
John Tobin is professor of practice at the SC Johnson College of Business at Cornell University, an expert on environmental and energy economics and a faculty fellow at the Cornell Atkinson Center for Sustainability. He says that the pandemic, combined with falling oil prices, is detrimental to renewables in the short term, but that the sector will recover with the help of long-term growth in market demand.
“In the short term, investments in alternative energy are likely to be strongly impacted by the COVID-19 pandemic and the ongoing oil price war between two of the biggest oil producers in the world. The impact of the pandemic on the real economy is going to be severe, at least in the short term, and will put a damper on capital expenditures throughout the economy, including on solar, wind, and battery power.
“Add to this the fact that the 2016 oil production agreement between Russia and Saudi Arabia seems to have fallen apart and the price of oil is now lower than it has been for nearly 20 years means that the price incentive to switch to alternative power is not quite there.
“However, the economy will recover and the price of oil will climb back up to more realistic levels—and the growth of alternative energy is part of a secular trend resulting from growing market demand, pressure from policymakers, and a recognition of the negative impacts of fossil fuels. The medium- and long-term outlook of the alternative energy sector does not look materially different at this point compared to before the COVID-19 pandemic.”