Insight Magazine: Global renewables investments hit a speed bump
Editors note from Emma Slawinski
The coronavirus pandemic has rocked global commodity markets, disrupting supply chains and slashing demand for many products.
The spread of the virus has also coincided with a breakdown – and hurried patching up – of the OPEC+ alliance. Crude oil, as the linchpin binding many other raw materials markets and economies, has been on a rollercoaster ride. The outlook for demand and prices remains weak compared with recent years, and analysts forecast an oversupply of 20 million b/d and upwards in the coming months.
Coronavirus has exposed existing weak spots in other sectors too, particularly LNG. Consumption has slumped in an already vastly oversupplied market that is reliant on archaic pricing mechanisms, hampering efforts to rebalance supply and demand.
In the global power generation sector, there has been a sharp short-term shock as industrial sites and commercial premises locked down and workers stayed at home. Planned renewable generation capacity may be exposed to new risks as funding dries up, just as zero-carbon technologies were beginning to achieve cost competitiveness without government support. Bruno Brunetti offers a panorama of recent capacity additions across generation types worldwide from page 38, and points out that wind power support schemes in China and the US will still be in place this year, providing an incentive to bring projects online.
By the end of 2019, it seemed the momentum gathered by the Extinction Rebellion movement was unstoppable, with pressure mounting on energy majors and governments to move faster towards decarbonization. Among other things, this yielded a wave of announcements from global oil and gas majors as they set ambitious targets for renewable energy and emissions reductions.
Meanwhile, a number of US states have been making good progress towards ambitious renewables targets. Rocco Canonica and Kassia Micek look at the challenges of integrating a rising share of renewables onto the grid, and what California’s experience managing excess power supply can teach other regions whose energy transition is less advanced.
This edition of Insight also looks at new frontiers in the energy transition, such as a nascent hydrogen economy, which still needs to surmount issues of cost and scale to really take off and help play a part in decarbonizing the global energy system. And as electric vehicle adoption grows, Felix Maire and Zane McDonald take the US state of Virginia as a case study to examine how power grids can accommodate new demand patterns.
Finally, our correspondents in Washington, Moscow and Shanghai write about the latest policy developments – from gas flaring in the Permian basin to Russia’s turbulent relationship with OPEC and China’s quest for domestic gas growth.