IEA report on Covid-19 impact

Beyond the immediate impact on health, the current Covid-19 crisis has major implications for global economies, energy use and CO2 emissions.

Analysis of daily data through to mid-April by the International Energy Agency (IEA) shows that countries in full lockdown during this period experienced an average 25% decline in energy demand per week and countries in partial lockdown an average 18% decline.

Daily data collected for 30 countries until 14 April, representing over two-thirds of global energy demand, show that demand depression depends on duration and stringency of lockdowns.

Global energy demand declined by 3.8% in the first quarter of 2020, with most of the impact felt in March as confinement measures were enforced in Europe, North America and elsewhere.

At the start of 2020, it was forecast that global energy investment would grow by 2%; instead, it has fallen by 20% – a fall in spending of $400billion.

Covid-19 impact: the IEA’s sector-by-sector energy breakdown (for the first quarter of 2020)

  • Global coal demand was hit the hardest, falling by almost 8% compared with the first quarter of 2019. Three reasons converged to explain this drop. China – a coal-based economy – was the country the hardest hit by Covid‑19 in the first quarter; cheap gas and continued growth in renewables elsewhere challenged coal, and mild weather also capped coal use.
  • Oil demand was also hit strongly, down nearly 5% in the first quarter, mostly by curtailment in mobility and aviation, which account for nearly 60% of global oil demand. By the end of March, global road transport activity was almost 50% below the 2019 average and aviation 60% below.
  • The impact of the pandemic on gas demand was more moderate, at around 2%, as gas-based economies were not strongly affected in the first quarter of 2020.
  • Renewables were the only source that posted growth in demand, driven by larger installed capacity and priority dispatch.
  • Electricity demand has been significantly reduced as a result of lockdown measures, with knock-on effects on the power mix. Electricity demand has been depressed by 20% or more during periods of full lockdown in several countries, as upticks for residential demand are far outweighed by reductions in commercial and industrial operations. For weeks, the shape of demand resembled that of a prolonged Sunday. Demand reductions have lifted the share of renewables in the electricity supply, as their output is largely unaffected by demand. Demand fell for all other sources of electricity, including coal, gas and nuclear power.

Public appetite for renewables remains strong

A quarterly poll issued by the Department for Business Energy and Industrial Strategy (BEIS) shows that the public appetite for renewable energy remains very high.

The overwhelming majority of the people questioned (82%) in the Public Attitudes Tracker, commissioned by an independent research company, back the transition away from oil and gas to greener sources of energy. Only 2% opposed the shift.

Plenty, however, remain to be convinced by the validity of fracking as a potential energy source moving forward, with a new high of 45% against the extraction of shale gas.

Just over three-quarters of those polled said they were concerned about climate change.

Net-zero target

Quoted in an article on the Energy Voice website, Renewable UK’s deputy chief executive Melanie Onn said: “Even while we face the unprecedented challenges posed by Covid-19, the public supports continued action to avoid the worst the impacts of climate change and make our economy more sustainable.

“Investment in new renewables, which is supported by 82% of people, will stimulate growth and employment as the economy recovers from the impacts of the virus.

“Renewable energy capacity will grow rapidly this decade and beyond to meet our net-zero emissions target, and our industry will be investing tens of billions of pounds and creating much-needed jobs across the UK.”

For public sector bodies looking to reflect the mood of the pubic and reduce their carbon footprint, our Green Energy Framework could provide answers in terms of green energy procurement and a host of other areas.

The GEF includes a shortlist of green energy suppliers who have been chosen based on the following criteria: tariff competitiveness, billing accuracy, green certification and the most favourable terms and conditions.

All change for the energy industry as emissions hit a record low

Global emissions are set for unprecedented fall this year as a direct result of the coronavirus pandemic, according to a report in Bloomberg Green.

As less oil, gas and electricity is consumed due to the slowdown in industrial activity across the globe, and renewables take up a larger share of the energy market, global emissions will fall by 8% (2.6 billion metric tons) in 2020 – the largest fall in history.

“The energy industry that emerges from this crisis will be significantly different from the one that came before,” Fatih Birol, the International Energy Agency’s (IEA) executive director, said in a statement released from the organisation’s headquarters in Paris on Thursday.

Even though overall energy demand has decreased by as much as 6% this year, renewables in many countries get first priority to feed electricity into the grid.

While fossil-fuel generators shut down to prevent a system overload, there is nothing to stop solar, wind and hydro power producers selling all their output.

Unseasonably warm, yet windy, weather throughout April has also been favourable for solar and wind farm owners and the dominance of green energy in the overall market is only set to continue with low-carbon sources set to be responsible for 40% of global electricity generation.

It’s not all a breeze for renewables

Renewables are still facing challenges of their own, however. In the wake of Covid-19, renewable energy has been rocked by global supply chain disruption and heightened part costs.

Around 11% of the world’s wind turbines were shut this week because of the virus, according to Bloomberg, while work on constructing new wind farms has been delayed by restrictions on the movement of workers and regulatory processes.

With the big oil players all having significantly invested in renewable energy, an article in Power Technology says they are expected to respond to the record slump in oil prices by cost-cutting and shifting focus away from their clean energy commitments in the short term.

All things considered, this could lead to a slowdown in new renewable energy projects coming online this year.

Demand for renewables growing quicker than supply in Europe

The pricing of green energy may need rebalancing if growth in demand for renewables across the European market continues to outpace the growth in supply.

According to figures published in a report from the Association of Issuing Bodies (AIB), demand for renewable energy in Europe – that is tracked and documented with guarantees of origins (GOs) – grew at a rate of 11.7% in 2019, an increase of 61TWh from 2018 levels.

ECOHZ managing director Tom Linberg said: “The growth in the supply of renewable energy tracked and documented with GOs during the same period is estimated to be only 3.5%, resulting in a significantly smaller surplus in 2019 than previous years.”

Spain has the highest growth in GO demand with 38%, followed by France (26%) and Germany (10%), the latter having been the first country to pass the 100TWh mark in 2019

UK impact  

The UK is not a member of the AIB and uses the Renewable Energy Guarantees Origin (REGOs) scheme, although the report found that the UK is still impacting the supply and demand balance across the European market.

The UK currently allows for the import of GOs to the European Energy Certificate System Standards (EECS GOs). Demand has grown year-on-year with the European markets ramping up – export volume is around 20% of the UK’s total import volume.

Due to different reporting schemes adopted, the statistics could be skewed, however, ECOHZ believes the positive trend could lead to a “healthy” price market in 2020.

There are some uncertainties which could impact pricing and surpluses going forward, such as Brexit uncertainty, clarity on the UK policy for GO imports and REGO exports and the Coronavirus pandemic.

With the UK declaring a carbon net zero target of 2050, there has never been a better time to look at renewable energy sources for your business.

Energy Management have years of industry experience with green energy procurement at the forefront of our service offering.

We can tailor bespoke green solutions for your business, meaning you can mitigate market uncertainty whilst securing the best possible contract for your business.

For more information on how we can help, contact a member of the team on 01225 867722 or email sales@energymanagementltd.com.

How will leaving the EU affect the UK energy market?

Energy Management’s Senior Energy Consultant, Malcolm Barrington, gives his verdict on what the immediate energy landscape may look like following the United Kingdom’s departure from the European Union on 31 January, 2020.

We do not expect Brexit to have a dramatic impact on the energy industry overnight. This is principally driven by the ongoing progress of change following the conclusion of the “Electricity Market Review” and the UK’s drive to renewable energy generation.

The UK has already effectively phased out coal from our generation mix, and offshore wind is currently the flagship of our decarbonisation strategy. This has resulted in the UK Green House Gas Conversion Factors for Company Reporting reducing from 0.41205 CO2e/kWh in 2016 to 0.2556 CO2e/kWh in 2019.

A Brexit deal is likely to ensure that we remain in the European carbon market, (EU Emission Trading Scheme ) until at least the end of 2020. This is a bullish driver for EU ETS allowance prices, and for the market as a whole. All the uncertainty surrounding Brexit last year led to no auctions of UK-issued carbon allowances. The allowances will now need to be traded, along with the 2020 allowances, and the flood of UK-origin ETS allowances may at least temporarily depress carbon prices in the EU.

We are closely watching the future of Hinkley Point’s new nuclear power plant build. The agreed price for electricity generated at Hinkley Point is twice the price of energy generated from offshore wind. We believe that Hinkley Point electricity should be subject to a renegotiation and failure to do this could possibly lead to the project being cancelled.

To talk to any of our team about this issue or any other matter relating to energy procurement and water management, please give us a call on 01225-867722.

Renewable energy enjoying its moment in the sun

Renewable energy sources are growing quicker than first anticipated and could expand by 50% in the next five years, powered by an increase in solar energy.

A study carried out by the International Energy Agency (IEA) showed that solar, wind and hydropower projects are increasing at the quickest rate in four years. The report also suggests by 2024 solar capacity could expand to 600GW, while overall renewable electricity is expected to grow by 1,200 GW in the next 5years.

At this current time, solar and wind are undergoing huge transformations. Renewable sources currently make up 26% of the world’s electricity today but, according to the IEA, it’s expected to reach 30% by 2024. The recovery comes after a global slowdown last year, due to falling technology costs and rising environmental concerns.

IEA’s executive director, Fatih Birol, has since warned the percentage of renewables in the global energy system needs to increase quicker in order to meet net-zero targets. It is expected that solar will play the biggest part in the growth of global renewable energy, with the expected cost of solar power to further decline by 15%-35% by 2024.

As well as businesses, the number of home solar panels is due to increase to around 100 million rooftops by 2024. Even with this growth, solar will only cover 6% of the world’s available rooftops, leaving scope for further growth.