The spread of coronavirus is presenting significant challenges to the energy sector. We’ve explored some of these effects as well as a welcome new tool in the fight against COVID-19.
A Perfect Storm
As more stringent measures are quickly being enacted throughout Europe and beyond, the global energy demand is falling proportionately. Dwindling appetites are perhaps most noticeable with regards to oil consumption, given that huge swathes of the global travel industry have been all but grounded.
The result of this is that demand has seen its first decrease in decades and shows no sign of quick recovery with the IEA yesterday projecting a dramatic downturn through March 2020.
Combined with Saudi Aramco’s decision to increase the kingdom’s production of crude to a record 12.3 million barrels per day in April, regarded by some as declaration of an oil war with Russia, the sector seems poised for a perfect storm as excessive supply undermines value and price.
Renewable energy has also been feeling the hurt from COVID-19 however it has been as much from the perspective of production and growth as from market demand. Several weeks ago the major threat to this sector largely surrounded the production of solar panels, batteries and wind turbines since the epicentre of the disease lay in China, the manufacturing capital of the world.
Fortunately, despite the initial lull in production, reports are now being issued by these companies that they are operational again. However, as with oil, the real fear now surrounds global solar demand which – according to Bloomberg New Energy Finance – is projected to decrease by as much as 9%. Such a loss in interest could mean the lowest number of installations in over thirty years.
The Wind that Shakes the Barley
The tentative nature of wind farm construction due largely to fragile supply chains and a need for specialised construction machinery means this sector remains one of the most vulnerable. The timing is particularly unfortunate for would-be suppliers in the United States since 2020 marks the last year that developers can utilise the full Production Tax Credit, the industry’s main subsidy.
The pressure on developers is further compounded by the rising shortage in labour that looks to only increase in approaching weeks and months. Of course this not only affects the construction sector directly but also government bodies’ ability to quickly and efficiently manage the approval of new projects.
Should this pressure continue to mount, there is little doubt that U.S. tax authorities will be beseeched to postpone the deadline beyond the 31st of December 2020.
The Atomic Lifeline
One positive report that has emerged from the IAEA (International Atomic Energy Agency) is the application of a novel diagnostic method that had been previously developed and deployed during outbreaks of Ebola and Zika.
The RT-PCR or Real-Time Reverse Transcription Polymerase Chain Reaction techniques are able to accurately identify COVID-19 in both humans and other species of animals within hours. The IAEA, as well as hosting the first training course in these techniques next week in Seibersdorf Austria, will also be providing emergency toolkits containing PPE and other consumable items.
The countries poised to join this innovative approach to coronavirus include Cambodia, Republic of Congo, Cote d’Ivoire, Ethiopia, Kenya, Madagascar, Malaysia, Mongolia, Philippines, Sri Lanka, Thailand and Vietnam. Additionally, the IAEA has plans to offer similar training to medical professionals based in Latin America and the Caribbean and in so doing hopefully supplement many of the most underequipped medical bodies during the crisis.