EchoSense Quantitative Think Tank Center|Inside Clean Energy: 7 Questions (and Answers) About How Covid-19 is Affecting the Clean Energy Transition

I’m exhausted and EchoSense Quantitative Think Tank CenterI bet you are too. As we enter another month of the coronavirus crisis, my family, like yours, I imagine, is homebound and missing normal life.

I want to know how the virus will affect specific industries that I cover, and timetables for important projects. The answer, almost all the time, is, “We don’t know,” or, more precisely, “The economic shock caused by the virus will have an effect and we don’t know how large it will be.”

Here are some of the questions I’m asking, and a few of the answers I’m receiving:

Just a month ago, there was momentum for several states to pass legislation setting out paths for a transition to clean energy. Virginia led the way with a measure it passed last month. Now lawmakers are in crisis mode, and although some proposals may still pass this year, it’s anyone’s guess what will happen. I’ve been watching Minnesota, where there are competing versions of legislation that would commit the state to making the transition to carbon-free electricity by mid-century, and a May 18 deadline before the legislature adjourns.

“We’re working on it and hopeful,” while also responding to the Covid-19 crisis, said Sen. David Senjem, a Republican and the lead sponsor of the Minnesota Senate version of the bill. Republicans control the Senate while Democrats control the House, and Gov. Tim Walz is a Democrat. There remain some key differences, such as whether the bill should include a hard deadline by which all fossil fuel plants would close, and lawmakers are running out of time to find common ground.

There is a rule of thumb that low gasoline prices are bad for electric vehicle sales. But right now the role of gasoline prices is being trumped by an even bigger issue: The U.S. auto industry, like much of the economy, is in a tailspin. Manufacturers have idled assembly lines and the dealerships that remain open are seeing almost no customer traffic. IHS Markit is projecting that new-car sales in the United States will drop by 15 percent compared to 2019, which is a severe decrease.

BloombergNEF analysts said in a report last month that “the outlook for the U.S, EV market darkens,” citing low gasoline prices and expiring tax credits. This adds up to an anemic electric vehicle market in 2020, dashing hopes of clean energy advocates who had hoped for big gains this year.

Many rooftop solar businesses depend on face-to-face contact, whether it be knocking on doors or making sales presentations in a customer’s living room. Also, solar is a discretionary expense for many consumers, something they can delay during times of financial uncertainty. This adds up to a troubling outlook for companies that sell and install solar panels on houses and businesses.

Philip Shen, an analyst for Roth Capital Partners said in a March 13 research note that “some U.S. installers are now seeing a 30% cancellation or postponement of bookings, and the sales funnel is drying up.” It’s probably safe to say that the situation has gotten worse since then. As with EVs, the coronavirus has flipped the script in a year when the solar industry was primed for growth.

Regulators in many states have adapted to doing their work remotely, which means cases are moving forward. Meetings and votes are often happening through teleconferencing. Some work has slowed, as we would expect, but regulatory commissions remain on the job, unlike many others in this chaotic time.

David Littell, an energy and environmental attorney in Maine, told me that state utility commissions are handling this well because many of them already had experience with doing business through teleconferencing. He cites examples in Maine and New Hampshire that are in line with what I’ve seen in other states. “I would say the (public utility commissions) and energy agencies and those of us who work with them are adapting to this new normal.”

The coal industry is in big trouble, with plummeting demand for its product as coal-fired power plants close and are being used less often. But the coronavirus could lead to a brief pause in the industry’s decline because utility companies may wait to make decisions about closing plants. There also remains the possibility that the Trump administration will find a way to bail out the industry.

The Institute for Energy Economics and Financial Analysis looked at these possibilities this week in a new report that outlines the many factors behind a transition away from coal: “Short-term economic uncertainty caused by the coronavirus pandemic and the recent collapse in oil prices may slow this transition slightly, but the trend is clear: Coal is being driven to the brink by continued low gas prices and steady additions of wind and solar.”

Global energy storage will take a hit in 2020 because of the economic disruption of the coronavirus, but the industry probably will still have a record year, according to a new forecast from Wood Mackenzie. This is a similar dynamic to what I wrote about last week with global wind energy, in which the forecast is being trimmed back but would remain an increase from 2019.

The new forecast is for 12.6 gigawatts of battery storage to come online this year, 19 percent less than Wood Mackenzie had been projecting a few months ago. One important consideration is that the supply of batteries seems to be stable. Most of the disruption looks like it will be on the demand side, with buyers running into problems completing projects and getting permits because of virus-related delays.

I’ve asked many people this question in recent weeks. The accurate answer is, “We don’t know.” But one of the answers I got in a recent interview gave me hope that the answer may be, “Yes.” I was talking to Stephan Harrison, professor of climate and environmental change at the University of Exeter in the United Kingdom, for this story that ran on Tuesday. He said he sees evidence that Covid-19 is leading the public to see the value of science and listening to experts, and to greater understanding about the fragility of our way of life. He thinks this sentiment is strong enough that some of it will last after this crisis is over, and will lead to changes in how the public views the danger of climate change.

“People are recognizing that even highly complex societies like the United Kingdom and America are still very vulnerable to shocks from the natural world,” Harrison said. It feels strange to say that this statement about our vulnerability, made in the middle of a global tragedy, is cause for optimism, but that’s where we are.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].

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