Page 7 - AsiaElec Week 21
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AsiaElec COMMENTARY AsiaElec
Power investment
In the power sector alone, investment this year is set to dip by 10%, with almost every part of the sector, from distribution to coal to solar to wind, posting a decline, with solar PV the hardest hit.
Capacity additions are set to be lower than 2019 as project completions get pushed back into 2021. Final investment decisions (FIDs) for new utility-scale wind and solar projects slowed in the first quarter of 2020, back to 2017 levels.
Distributed solar investments have been more dramatically hit by lower consumer spending and lockdowns.
Indeed, solar PV investment is forecast to slide from $137bn in 2019 to $108bn in 2020, and in wind from $99bn in 2019 to $97bn in 2020.
One good piece of news is that renewable energy’s share of despatched power through national grid has risen, explained by low oper- ating costs and priority access to networks.
Birol identified this phenomenon in March at the start of the COVID-19 crisis, describing it as a “postcard from the future,” as grid and sys- tem operations technology adapted to channel renewables energy to power consumers.
Investment on what the IEA describes as clean energy, such as renewables, nuclear power and efficiency improvements, is set to dip just 10% in 2020, although clean energy’s share of total spending is set to rise to 37% from the 33% share seen every year since 2016.
This 10% contrasts with fossil fuels, which are anticipated to take a “heavy hit” in 2020, with a 32% drop in spending.
Climate danger
Despite renewables’ resilience, in absolute
spending terms, investment this year in renew- ables is far below the levels required to meet climate goals and to accelerate the energy transition.
The IEA first said in its 2019 World Energy Investment report that annual green investment needed to double by 2030 if the Paris Agreement targets could be met. Such investment has been unchanged at roughly $600bn per year since 2016.
“These investment levels remain far short of what would be required to put the world on a more sustainable pathway,” the report said.
Birol warned that investment in green energy was too low and “risks undermining the much-needed transition to more resilient and sustainable energy systems.”
Looking ahead
The report warns that “the energy industry that emerges from this crisis will be significantly dif- ferent from the one that came before.”
Future investment will depend on the strate- gic choices of government and companies.
The report is worried that some govern- ments, especially in China and the developing world, will fall back on “familiar levers for eco- nomic development,” which means spending on fossil fuels, thereby pushing up emissions. China is still approving more coal-fired power plants, and there is a long pipeline of coal con- struction projects.
However, the cost of solar and wind is falling, and renewables projects have short project lead times, offering quick returns. Green investments are still concentrated in advanced economies, as is the availability of low-cost, low-risk clean energy finance from institutional investors.
Week 21 27•May•2020 w w w . N E W S B A S E . c o m P7
