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Forecast growth in new solar, wind plants to be wiped out for 2020

Oil&Gas Materials 28 March 2020 11:33 (UTC +04:00)
Forecast growth in new solar, wind plants to be wiped out for 2020

BAKU, Azerbaijan, March 28

By Leman Zeynalova - Trend:

The forecast growth in newly commissioned solar and wind projects will now be wiped out for 2020 and cut by a further 10 percent next year as the US dollar surges and currencies fall across the globe, Trend reports citing Rystad Energy.

“We expect these movements in the foreign exchange market to cause companies to pause contracting key components, which are typically procured in US dollars. Renewable projects in Australia, Brazil, Mexico and South Africa will be especially impacted, as projects in the procurement phase could face capital cost increases of up to 36 percent due to the rapid depreciation of local currencies in these countries,” the company said in its report.

Before the novel coronavirus epidemic, Rystad Energy expected 140 gigawatts (GW) of global solar PV additions and 75 GW of wind capacity additions in 2020, a year-on-year increase of 15 percent and 6 percent respectively. “This eradication of this growth is due to government restrictions on movement that will impact construction timeframes, bringing this year’s commissioned projects on par with 2019.”

In 2019, about 126 GW of solar and 71 GW of wind capacity were commissioned.

“The effect of the virus will be felt even more from 2021, when a reduced amount of financial investment decisions due to capital expenditure reductions, and the strengthening of the US dollar, will reduce commissioned projects by at least 20 GW, or 10 percent versus this year,” the report reads.

“The foreign exchange impact will decimate the 2021 outlook for solar installations and the outlook from 2022 and beyond for wind installations, as orders for new equipment will halt from currency-hit emerging countries, which would otherwise account for much of this growth,“ says Rystad Energy’s Product Manager for Renewables Gero Farruggio.

The full extent of the impact of Covid-19 on the renewable energy market is just beginning to reveal itself, the company says.

“Initial reactions focused on possible mass production shutdowns and supply chain bottlenecks in China. The lion’s share of renewable asset components is sourced from China, and projects under construction or in the procurement phase appeared particularly exposed when Covid-19 first struck.”

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Follow the author on Twitter: @Lyaman_Zeyn

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