COVID-19 and Renewable Energy Industry
The coronavirus that has troubled the entire world since last year has not only impacted daily life but also various industries. Except for a few sectors suitable for contact-free conditions, almost every industry worldwide has been struck by lockdowns resulting in slowdowns in production activities.
Despite this, use of renewable energy in 2020 was up by about 1.5% compared to 2019, while its share of global power production increased to 28% from 26% in 2019, according to IEA (International Energy Agency) data. In particular, the share of solar power and wind power generation grew 9% in 2020 after increasing 8% in 2019. It is remarkable that the renewable energy industry maintained its growth, despite the negative conditions, such as lockdowns, and negative economic growth.
As the global pandemic led to an economic downturn and reduced global power demand in 2020, energy investment has also slowed considerably. If the pandemic situation can be gradually controlled and the global economy recover in 2021, a full recovery would be expected by 2023.
Renewable Energy of World Leading Countries in 2020
World Smart Energy Week (WSEW) 2020, held early this year in Japan, had fewer visitors due to COVID-19. However, the global energy technology trends, including solar self-consumption; zero-energy house; rechargeable battery; ESS (energy storage system); hydrogen station; and offshore wind system installation technology, were well presented by firms from various countries, such as Korea, China, Japan, German, U.S.A., Netherlands and Canada. Regarding solar systems, matured technology and supporting policies of each government have lowered the power production cost, and many countries now realistically aim to achieve grid parity, generating renewable energy at a lower cost than using fossil fuel.
The U.S. renewable energy sector keeps growing even though the nation has been among the hardest hit by the coronavirus. According to global consulting group Deloitte, PV and wind power generating capacity in the U.S. increased by 20% in the first quarter this year, and experts forecast that renewable energy era of the nation will come even sooner, thanks to President-elect Joe Biden’s pledge of a ‘Green New Deal Policy’.
According to a report released by the EIA (U.S. Energy Information Administration) under the U.S. Department of Energy, solar and wind showed the fastest growth among renewable energy sources, growing by 21% to 27% in 2019 from 6% in 2009. Due to the increase of renewable energy using solar and wind power, nuclear power plants are gradually decreasing.
Source | U.S. Energy Information Administration (EIA)
The German government has set a goal to meet 30% of the power consumption with renewable energy by 2020. It has already exceeded the goal by about 10% as renewable energy accounted for 40.4 % of the country’s gross power generation in 2020. Hence, the government suggested setting an increased goal of 65% for the renewable energy power production in 2030, which is up by about 15% from the previous 50% target. Moreover, Germany announced a plan to expand PV energy by two-fold and increase renewable energy supply with onshore wind development by 2030.
Australia exceeded its 20% target, and renewable energy generation accounted for 24% of the total electricity generation in 2020. Each state sets a higher goal and actively promotes policies to meet the target. Victoria, New South Wales and Queensland presented their renewable energy generation targets of 30%, 20% and 20% for this year and 65%, 38% and 35% by 2030, respectively.
Source | Clean Energy Council
The Korean government announced, the ‘implementation plan for development, and use and diffusion of renewable energy technology,’ this year. The plan involves a total of KRW 11 trillion investment over the next three years, including KRW 1.9 trillion this year, and commencements of 32 large-scale construction projects (2.3 GW), such as Jeju Hanlim offshore wind project and Saemanguem solar project, within the year.
Source | Ministry of Trade, Industry and Energy of Korea
Moreover, the government, this year, increased the renewable obligation rate of power suppliers by the law (6% in 2019 → 7% in 2020) therefore expanded REC (Renewable Energy Certificate)¹ demand. The obligation in 2020 increased by 16.4% to 31,402 GWh from 2019 (26,967 GWh).
It introduced the minimum performance standard for PV module (17.5%) and carbon certification standard introduced this year to encourage the spread of highly efficient and eco-friendly facilities and an expansion of R&D investment. It also has focused on promoting the R&D in high value-added areas and announced investments of KRW 20.3 billion in solar and wind power and KRW 43.1 billion in hydrogen.
Performance of Korean Renewable Energy Businesses
The Seoul Metropolitan Government, early this year, has signed a memorandum of understanding (MOU) with Hyundai Motor Company to supply green FCEV (fuel cell electric vehicles) and hydrogen charging stations, and announced a plan to expand the operation of fuel cell electric buses for regular bus service. There have been agreements about supplying hydrogen cars and charging stations, but this would be the first concrete agreement for hydrogen-powered public transportation.
Source | Ministry of Trade, Industry and Energy of Korea
/ Korea Institute for Industrial Economics & Trade
Korean hydrogen fuel cell technology is internationally well recognized. In February, Hyundai Motor Company has collaborated with the U.S. Department of Energy (DOE) for ‘technical innovation and global base expansion’ to realize hydrogen society. It also provided the DOE five NEXO FCEVs and said that it would support the installation of hydrogen charging stations in the Washington D.C. area and the smooth supply of fuel cells in the U.S. It is expected that this hydrogen project would expand the market through a collaboration of Korean fuel cell technology with one of the biggest global markets, the U.S.
Q CELLS, a leading PV manufacturer, has been selected as a provider of ‘solar system lease service 2020’ by the Korea Energy Agency for seven consecutive years. Q CELLS has been recognized as a premium PV brand in the global market as it has been receiving ‘Top Brand PV’ hosted by specialized PV research institute EuPD Research for seven consecutive years in Europe and five consecutive years in Australia. In April, it was recognized as a luxury brand by millions of customers as it received the grand prize at Germany Life & Living Awards 2020 in solar technology sector.
Renewable Energy Industry Growing Into the Future Growth Engine
The IEA (International Energy Agency) strongly expects that photovoltaic energy will play a key role in the renewable source-oriented energy market. According to its most recent report, renewable energy will account for 80% of the global power consumption increase for the next ten years, and hydraulic power will remain the main renewable energy source while solar energy will lead the growth of the renewable energy market, followed by onshore and offshore wind power.
Source | The Export-Import Bank of Korea
/ BNEF(Bloomberg New Energy Finance)
It is expected that the renewable energy sector will witness accelerated growth next year, as well an approximate 50% increase by 2025, surpassing coal and becoming the world largest power source. U.S. President-elect Joe Biden’s announcement to rejoin the Paris Agreement that the Trump administration had withdrawn from also delivers a good message to the market.
Between 2009 and 2019, the installation cost for PV modules and wind turbines decreased by 80% and 30–40%, respectively. In some countries, it is anticipated that production costs of onshore wind and solar power might come down to the level that they can replace fossil fuel as early as 2022.
Energy service is very important to human welfare and economic growth of a nation. Eco-friendly energy is essential to tackling climate change and supporting environmental conservation.
Moreover, the energy transition due to industrial development of the future renewable energy is creating an enormous market along with meaningful jobs. Hence, it is necessary to understand that the energy industry is the future growth engine and that utmost efforts should be devoted to creating greater added value.
1. REC (Renewable Energy Certificates) is a certificate given to a power supplier that produces and supplies electricity using renewable energy facilities.