Impact of Coronavirus on the Energy Sector
“Coronavirus, energy?” Over the past few weeks, we have seen the Coronavirus – COVID-19 – having a health and economic impact over the globe. It has been on everybody’s mind and impacts us directly. The French government has forbidden any gathering above 5,000 people, canceling the Paris half marathon this weekend. But it also has an impact on the energy and environmental sector.
When it comes to renewable energy, China is definitely the world powerhouse for wind turbines and solar panels manufacturers. With a wide-spread quarantine in the country, the entire sector has been shaken with at least a 10% decrease in the production output of wind turbines. With China constantly needing more energy, Wood-McKenzie also had a look at the number of expected commissioning of wind turbines within the country. Based on their different scenarios, it is expected to see a decrease between 10% and 50% of new installed wind turbines in the country this year.
COVID-19 also influences the oil and gas sector. China has been feeding the crude oil demand over the past few quarters, but with a slowing down of its industry, the International Energy Agency has reduced its expectations in terms of oil demand. Only 435,000 barrels per day are forecast for the first quarter of 2020; this can be considered as the first decrease in a decade. Before that time, it was the 2008 financial crisis that slowed down the demand. China is not the only one impacted in this crisis, the United States is too. One part of Trump’s pact with China following the trade war was the energy industry. China was meant to buy $18.5b of oil from the U.S. to fuel its growth, but now the trade is mostly compromised as the country does not need that much energy to fuel its quarantined economy.
The big Spanish players are also impacted by COVID-19. Acciona, one of the main Spanish energy manufacturers is starting to show delay on two Engineering, Procurement, Construction (EPC) projects due to its Chinese manufacturers being late to deliver some parts. At the moment, only one solar project in Chile and one desalinisation plant in the Middle East are experiencing some delays. More could be expected.
Although Coronavirus is having a negative impact on our economy, it actually shows some positive signs when it comes to environment. NO2 pollution has decreased by 36% in China compared to 2019 levels and has cut by 100Mt the CO2 world’s emissions.
So if someone asks “Coronavirus, energy?”, you can now say yes.
Do you want to hear more about energy and how it impacts our world ? Why not attend our Global Energy Day on March, 27th in Barcelona !