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Coronavirus Effects Renewable Energy Sector

Both renewable and conventional energy sectors have been hit with supply chain issues, as the World Health Organisation (WHO) officially declared COVID-19 as a pandemic, reports CSO Magazine.

Global supply chains are currently being limited as part of the effort to fight and contain the novel coronavirus.

Many of the manufacturers of wind turbines and the associated components are based in Asia, in particular the manufacturers and producers of lithium batteries and photovoltaic panels. The measures taken that have seen the restriction of global shipping and transport means there have been significant restrictions on the import of materials.

The detrimental effect of the virus on the renewables sector has seen GE Renewable Energy report Q1 profits drop from $300m to $200m. CEO Jérôme Pécresse was optimistic that the company could recover, although he conceded that the issue could firmly be called a ‘global issue’.

“As of today, we are on track to our quarterly forecasts. We continue the positive recovery of our supply chain in China,” he said.

In the US, solar energy projects have the potential to be cancelled, seen as the only viable economic stance in such unforeseeable circumstances. “I think you’re going to see a lot of force majeure claims under the coronavirus, up and down the supply chain,” said Sheldon Kimber, CEO and co-founder of Intersect Power.

There currently is little by the way of an end in sight for the pandemic, and the energy sector will have to take drastic measures to make sure they can meet targets and continue with relatively normal operations.

Legal analytics publication JD Supra recommends the following actions:

 

  • Maintain communications with critical suppliers and strategically plan contingencies.
  • Comb through purchase and supply contracts to determine when ‘force majeure’ rights apply.
  • Always bear in mind the specific restrictions of the jurisdiction you are operating in.
  • Keep close tabs on customer demands.
  • Be willing to reallocate quantities of scarce materials.
  • Take out corporate insurance policies. 

 

Economists and policy analysts say they are most concerned about how the current financial disruption could harm the efforts of countries, international organisations and companies to reduce emissions.

They think any drop in emissions tied to the virus will be short-lived, while the continuing drop in oil prices could encourage more consumption and hurt demand for low- or no-carbon products like electric vehicles.

At the same time, the response to COVID-19 is demonstrating that in the face of a large and imminent threat, it is possible to get people to change their behaviour - something climate change activists have been trying to do for decades. Some of those changes - an increase in telecommuting, for example - have climate benefits that could last beyond the current crisis.

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