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Sustainability

Virus weakens markets for renewable energy

Industries press pause on steep growth trajectory

by Melody M. Bomgardner
April 9, 2020 | APPEARED IN VOLUME 98, ISSUE 14

 

Solvay.jpg
Credit: Solvay
The chemical maker Solvay buys energy from this solar farm in South Carolina, the largest in the state.

The global drop in demand for energy and fuels caused by the novel coronavirus will put a damper on the renewables sector in 2020. Output as well as capacity expansions in biofuels, solar, and energy storage are expected to take a 20% hit from economic and supply chain disruptions.

Changes in 2020 growth estimates

20%: US ethanol production

18%: Global solar installation

20%: Global energy storage installations

43%: Global sales for electric vehicles

Sources: US Energy Information Administration, Wood Mackenzie.

But experts see strong demand for renewables in the long term. Unlike ­fossil energy sources like US shale oil, where many operators may go bankrupt, renewables are poised to rebound as soon as demand ­returns—likely next year.

The cratering price of oil has taken a big bite out of ethanol production in the US, according to the Renewable Fuels Association, a trade group. “We estimate that more than 40 facilities have been idled and approximately another 60 have reduced their output,” says spokesperson Ken Colombini. About one-third of US capacity, or nearly 19 billion L, has been taken off-line since March 1.

On March 31, Gevo, a producer of the biobased fuel isobutyl alcohol, said it had suspended production at its facility in Luverne, Minnesota, and laid off 30 workers.

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Meanwhile, global solar installations were on track to reach nearly 130 GW in 2020 but are now expected to total 106 GW, according to the consulting firm Wood Mackenzie. While utility-scale projects will merely be delayed, residential installations may see an extended slowdown due to economic pressure.

Demand for energy storage, particularly batteries, will also decline 20% from earlier projections. As is the case for solar, large-scale projects will resume after a pause, but consumer purchases of residential battery systems and electric vehicles may be slow to rebound.

Even a worldwide pandemic cannot restrain growing demand for climate-friendly sources of energy, however. The US Energy Information Administration says US renewable energy output will still grow 11% in 2020 and account for most new generating capacity this year.

In Minnesota, Gevo is seeking financing to expand capacity. Customer contracts for large amounts of isobutyl alcohol are moving forward, CEO Patrick Gruber says. “This tells us that customers are looking past the current market disruption to the future.”

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