Long-term energy demand impact of COVID-19 is modest

Oil&Gas Materials 27 February 2021 14:18 (UTC +04:00)

BAKU, Azerbaijan, Feb.27

By Leman Zeynalova - Trend:

Long-term energy demand impact of COVID-19 is modest, Trend reports citing McKinsey & Co.

After a decade of rapid technological and policy shifts in energy sectors, 2020 has brought unprecedented disruption across the energy landscape, the company said in its latest insight.

“In our Reference Case, a rebound to pre-COVID-19 demand levels takes one to four years for power and oil and gas, whereas coal demand does not return to 2019 levels. As a result of COVID-19, government policies are more important in the energy transition. Given the unparalleled size of many economic-recovery packages, the focus of the stimulus measures plays a key role in shaping energy systems in the decades to come.

In the longer term, fundamental shifts in the energy system continue, and the coming decades will see a rapidly changing landscape. In our Reference Case, demand for fossil fuels peaks in 2027, as electrification increases and the role of renewables in power systems grows rapidly. These shifts accelerate in the coming years, as decarbonization and climate change are increasingly important on the agendas of global policy makers and business leaders, and as the consequences of climate change play out and prompt greater action,” reads the report.

“Power consumption doubles as energy demand electrifies, increasing its share of final energy consumption from 19 to 30 percent in 2050. COVID-19 has limited impact on long-term powerdemand growth. At the same time, low-cost renewables dominate power markets, outcompeting existing fossil assets in most regions before 2030. By 2036, half of the global power supply comes from intermittent renewable sources. As green hydrogen becomes cost competitive in the 2030s, “indirect” power demand for electrolysis accounts for approximately 40 percent of electricity demand growth from 2035 to 2050, primarily in industry and transport. To enable this shift to intermittent resources, both traditional capacity and new, flexible capacity are needed to ensure system security. Batteries play an important role, but gas peakers also remain relevant to cover longer spells of low output for renewables.”