Cost-effective renewables continue to get preference in OECD countries amid COVID-19, says GlobalData

Organisation for Economic Co-operation and Development (OECD) countries are experiencing a decline in electricity demand due to the COVID-19 pandemic. This drop is especially prominent in coal-based power generation, which, according to IEA data, saw a drop of over 20% in Q1 2020 compared to 2019. As the solution for COVID-19 is far from near, this trend is expected to continue for the rest of the year as utilities will choose the cost-effective renewable sources over fossil fuels, according to GlobalData, a leading data and analytics company.

The impact of the crisis was felt the most in March 2020, as that was the time when lockdowns were being implemented. As per IEA, in March 2020, coal-based generation in OECD countries was 151.9TWh and solar PV generation was 32.65TWh. GlobalData expects that generation from renewables will be the preference for the next few months as electricity demand is expected to gradually pick up pace.

Somik Das, Senior Power Analyst at GlobalData, comments: “There has been a decline in coal-based generation in OECD countries over the years. Due to climate change targets, and an increase in the push for renewables, the net generation from coal declined from 3,255TWh in 2013 to approximately 2,400TWh in 2019, according to the GlobalData Power Intelligence Center. Furthermore, major OECD countries saw coal-based generation in 2019 decline by 9.8% in comparison to 2018. With the effects of the COVID-19, this generation can be estimated to drop by over 12% this year.

“This year, the COVID-19 pandemic had a severe impact on the demand which led to further fall in coal-based generation as it attracted a higher cost of generation when compared with renewables. The variable renewable energy with lower marginal cost and mandated priority access to the grid saw a likely increase of its share in electricity generation. Besides the climatic conditions in the OECD countries also helped better generation from renewable sources.”

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