How the Ongoing Pandemic Has Affected the Renewable Energy Sector

It will be years before most industries recover to pre-pandemic levels. While certain select industries like online marketplaces and video call platforms have weathered the storm fairly well, sectors such as airlines and food service shouldered the brunt of the coronavirus. As coronavirus cases remain on the rise and people stay sequestered in their homes, the economy is sure to decline even more.

The renewable energy market, on the other hand, has had a rough go at it, and the industry’s ultimate fate will be determined by how the world handles the coronavirus pandemic. Like most industries, the biggest threat the renewable energy sector is facing is reduced cash flows. With most businesses shut down and millions of folk out of a job, people are using a lot less energy than they were before the coronavirus pandemic.

For example, electricity consumption in the U.S. and Europe has gone down 5% while India has seen an 18.4% reduction in power use. Green energy firms have seen their cash inflows reduce significantly and with everyone using less energy already, the push for switching to clean energy has lost steam. Sure, renewable energy has historically been cheaper but due to the coronavirus pandemic, crude oil recently saw a massive drop in price. This eliminates the affordability angle when comparing green energy to carbon-based energy.

Another factor that has led to the decline in green energy has been bottlenecks in the supply chain. China, which accounts for 35% of the global manufacturing output, shut down factories early this year, leading to supply chain disruptions all over the world. And with construction and manufacturing in other countries slowing, it has had a domino effect on all the industries that rely on it, and renewable energy hasn’t been spared.

However, based on recent trends, renewable energy can still grow with low energy demands as its efficiency might work better for an economy that’s on the mend. Some politicians have even indicated that the next coronavirus stimulus package might include energy reform provisions. For instance, a solar energy firm in Australia saw a 400% increase in inquiries in just two weeks. Impending economic stress could force people to choose energy options that will cost them less, are more efficient and are immune to grid outages.

What’s more, the recent oil price collapse may harm the fossil fuel industry in the long run. It is a testament to just how volatile that market can be, and investors may choose to invest in less risky green energy.

Experts say any stimulus package favoring green energy would undeniably boost the sales of EV makers like Nikola Corporation (NASDAQ: NKLA) since electric vehicles offer long term savings to their owners.

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