COVID-19 pandemic hurts fossil fuel sector

The coal sector is expected to take the major brunt of the COVID-19 outbreak as electricity demand decreases due to production halts in major factories and industrial units globally, says GlobalData, a leading data and analytics company.

Somik Das, Senior Power Analyst at GlobalData, comments: “Planned coal projects are expected to face challenges in obtaining project approvals amid COVID-19. Projects currently in construction will face delays due to the availability of workforce as countries have imposed lockdowns and social distancing norms. The coal sector is already affected by the growing activism against the new capacity additions planned, due to the concerns on carbon emissions and climate change.”

Certain nuclear facilities have operated at lesser capacity due to remote operations, while delayed maintenance work has impacted the timely operation of these facilities. Nuclear power availability in Europe is expected to remain consistent as many countries, including the UK and Germany, have put in place safety measures to guarantee the continuation of operations. However, France, having the largest nuclear cumulative installed capacity as of 2019, expects nuclear plant availability to decline from the average of the past three years. 

Somik Das, Senior Power Analyst at GlobalData, comments: “The nationwide shutdown has caused electricity demand to fall significantly. Crude oil prices have seen a drastic decline since 2019, reducing by almost 60%. The collapse of oil prices has also impacted natural gas prices, which has gone down by one third, compared to the prices from a year ago.

“The effects of lower oil and gas prices on renewables are yet to be determined. Countries where policies do not effectively mandate renewable energy would continue the use of oil and gas generation, while emerging countries that are more price sensitive will opt for cheaper fossil fuels over renewables.”

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