The health crisis caused by the coronavirus has turned society and the economy upside down. Thus, when barely a handful of weeks have passed since the curtain dropped on # COP25, the reality is that the statement «we must act now» still resonates in the environment. But COVID-19 stopped everything in its tracks. Or not?

In the context of the future energy, renewables must play an essential role, but all of this has been shaken, to a large extent, by the health crisis.

This is expressed by the director of EKON Strategy Consulting, Kim Keats. Based on his statement on the sharp drop in electricity demand since the health crisis began, he estimates that renewable energy faces a situation for which it may not have been prepared: low demand and affordable prices for other technologies, as is the case right now for gas.

This double impact, worsens the economic prospects for energy renewable. When demand falls, less renewable capacity is needed to reach the same level of penetration and when thermal generation costs fall, electricity prices fall, reducing the renewable capacity that can be sustained economically.

But it does not finish here. Kim Keats deals a severe blow to the renewable sector and warns that, if things do not change, it will be necessary to review renewable development plans in the medium and long term.

In particular, the planned capacity expansion at the NECP would lead to average prices captured by wind and photovoltaic well below its normalized costs (LCOE). This involves a “missing money” problem, referring to the fact that prices do not adequately reflect the value of the investment. If we do not return to the previous status quo, the plan and its implementation will need an adjustment.

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