The global renewables market has generally been resilient this year and will be in the longer term, despite the impact of Covid-19 on new build activity, according a report from S&P Global Platts Analytics.
The ‘The Energy Transition: COVID-19 Could Make 2020 Crucial For Renewables’ report said that with more sizeable downward revisions to fossil fuel demand, renewables are expected to have a larger market share compared to its pre-Covid outlook.
Solar additions are expected to slightly decline year-on-year in 2020, but wind capacity additions could be up over 10%, it said.
“The renewables industry continues to face some roadblocks to scaling up globally, but more constructive market and policy developments have been emerging in recent months that are signalling upsides to renewables investments in the years to come,” the report said.
“Even in the face of growing uncertainties about power demand recovery and prices, players continue to show robust commitments to invest in renewables across the globe as costs decline,” it added.
S&P Global Platts Analytics said that declining costs, combined with more renewables-friendly policies should offer support in a number of markets.
The report noted that pipeline of renewables projects have remained generally stable over the past year, suggesting that Covid-19 will only marginally reduce the outlook for the industry.
However, it said that policy responses to Covid-19 on renewables vary greatly across regions.
For example, policy support for clean energy and decarbonisation is leading to significant upside to renewables additions in Europe, S&P Global Platts Analytics said.
Plans for green hydrogen will also add further stimulus to renewables.
But across the Atlantic the US has not provided any support for green initiatives in stimulus measures to date.
However, if Joe Biden wins the US Presidential election in November the result could spark the next boost, the report said.
It added that the main risks for the sector are reductions in direct subsidies and tax credits, permitting issues and a cloudy outlook for long-term prices.
On the upside, there continues to be strong investor appetite for renewables and declining costs that are allowing clean power to increasingly compete at grid-parity prices but with lower returns and rising market risks, the report said.
“As a result, larger renewables players, with strong balance sheets and vertical integration to mitigate merchant risks, may be better positioned and could move to consolidate the industry,” it added.