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About half the world's population is now affected by measures to contain the coronavirus pandemic. At the same time, demand for electricity is falling and the risk of a global recession is increasing, according to Wood Mackenzie in a market report released recently. This situation will have a number of different impacts on the future deployment of renewable energy.
WoodMac analysts expect to have a huge impact on demand for solar photovoltaic projects and storage systems, as well as electric vehicles. As a result, the research company reduced its annual forecast of new installed photovoltaic capacity by 18%, from 129.5 GW to 106.4 GW in 2020. The consequences of the coronavirus crisis will be felt, at least, throughout the year. Then, the company also reduced its forecast for 2021 in terms of demand for solar energy by 3% compared to previous forecasts.
Containment measures for the coronavirus pandemic are having different impacts in different segments. These problems will manifest themselves mainly in delays in the installations of large solar plants, as well as in the decrease in demand for residential and commercial photovoltaic systems, since customers are now under considerable economic pressure as a result of the Covid pandemic. 19
WoodMac also expects a drop in module prices in Europe and the United States. In recent weeks, several manufacturers of photovoltaic systems in China have been able to start resuming production, and some of them have already recovered their total production capacity. The consultancy said it has contributed to falling prices in Europe and the United States since the beginning of this month.
The outlook for the global storage market is also bleak. For example, WoodMac has reduced its baseline scenario for 2020 by 20%, mainly due to delays in project execution. However, storage growth worldwide will continue to exceed the levels seen in 2019. As in the photovoltaic market, the company assumes that demand for residential solar energy + storage will be more affected by pandemic containment measures than demand for large-scale projects.
Currently, the decline in demand for electric vehicles can be even more drastic. WoodMac expects the market to decrease approximately 43% compared to 2019. This is mainly due to the measures taken in the United States, while a recovery in China and Europe is expected by the end of this year, with a return to levels. observed in 2019 at least.
WoodMac says that the main risks to regional energy markets will be linked to the duration and extent of the current economic stagnation and the consequent decrease in demand due to the global recession. In Europe, there is still a shift in fossil fuel plants from coal to gas in the electricity markets. Declining demand for electricity and favorable weather conditions for wind and solar photovoltaic energy have recently contributed to low electricity prices. In some countries, such as Germany, France and the United Kingdom, this has also led to negative electricity prices. This is complicating the economy of gas plants in Europe at the moment, according to analysts.
Similar trends can already be seen in the United States and Latin America. For Latin America, the financing of new renewable energy plants and gas plants is expected to be complicated due to inflation. Falling oil prices may also delay the expected shift from oil to coal in many countries.