In the year 2020, a pandemic has hit the world and has thrust us all into a state of uncertainty. Many jobs have been lost, which led us all into an economic recession. In spite of this, cities and businesses have announced green decarbonization plans throughout 2021 and will continue to do so in 2021 and beyond. Several countries are introducing massive stimulus plans to support their economies, which include renewables. These increasingly competitive renewables engender a bright future for both the environment and the economy- helping create jobs, reducing emissions, and promoting technological innovation.
In the US, renewable growth is expected to accelerate throughout 2021 as the new administration plans on rejoining the Paris Agreement, investing $2 trillion in clean energy, and fully decarbonizing the power sector by 2035 in order to achieve a net-zero carbon economy by 2050. This administration will likely bring about changes at the Federal Energy Regulatory Commission, whose policies will become more supportive of the transition to clean energy. So far, the demand of renewables have edged out other sources of energy, as shown in the share of renewables that has exceeded that of coal in generation for 153 days in early December 2020, compared to 39 days in 2019. Due to the pandemic in 2020 and slight recovery in 2021, the EIA projected electricity consumption to fall in 2020, but rise slightly in 2021. Currently, there are 232 GW of wind and solar projects in the U.S. pipeline, and over 21 GW of wind and roughly 15 GW of solar capacity is expected to come online by the end of 2021. Battery storage development, which was about 1,500 MW in 2020, will be projected to grow by a truly impressive 15,000 MW by 2024!
Due to the growing demand for energy in 2021, in most countries, the cost of renewable energy is becoming cheaper and cheaper, even more than fossil fuel plants. Wind and solar costs continue to go down due to policies in Europe, and this success should soon be repeated in emerging wind markets in North America and Asia. Because of an increase in production, economies of scale will also further bolster the reduction of costs. Despite supply disruptions possibly leading to occasional cost fluctuations, it is not likely that the Covid-19 pandemic will interrupt these declining cost trends. For example, the manufacturing of solar panels is expected to reach record levels in the coming years. Almost one-third of solar panel projects planned up until 2025 have already been contracted or financed, and will likely become operational this year or next year. However, some projects are postponed due to the challenges that the Covid-19 pandemic poses.
Covid also has a potential impact on biofuels markets, as the market disruption in 2020 would affect the maximum permitted share in member states in years beyond. A sustained period of decreased oil prices also affects biofuels markets, as in the ASEAN region, governments have abandoned the more expensive biofuels for the more budget-friendly oil. However, the staggering impact of the Covid-19 crisis on aviation paves the way for the scale-up of aviation biofuel use as companies start taking into account environmental conditions in bailout packages. For example, the Air France-KLM group proposed a 2% sustainable aviation fuel requirement in a rescue package.
Due to the progress in renewable energy so far and increased demand, energy convergence and the transition from fossil fuels to renewable energy is surely accelerating. Some trends responsible for this include increased competition, the rising economy of green hydrogen development expanding clean energy infrastructure, reinventing battery business models, the wind industry's frontiers going offshore this year, and taking measures to prevent disasters, such as onshoring to address COVID-19 and digitalizing supply chains.
References:
https://www.spglobal.com/marketintelligence/en/news-insights/blog/the-2021-us-renewable-energy-outlook
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