Renewables have become, today more than ever, as the main route to post COVID-19 economic revival. First, because it ensures a sustainable way out of the crisis, as claimed in Spain and Europe; and second, because it is in full development. Furthermore, the effects of confinement on activity – in operation during the state of alarm due to its essential nature – have only been felt in some areas, such as self-consumption, and are not, for the moment, widespread. But experts warn that the situation can be complicated if the current scenario continues.
But analysts point to another long-term threat: that the fall in energy demand, which has caused both the prices of gas, oil (West Texas, the benchmark in the US market) and that of electricity to plummet, even going negative in some markets, make new investments unfeasible, as “current prices are insufficient to guarantee a reasonable profitability, if we take as reference the average daily price for the month of April of 18.30 €/MWh until the 24th and compare it with the LCOE (levelized cost of electricity) for wind / renewable generation between 33 and 37 €/MWh, it yields negative returns. This would require a review of the 2030 targets ”, illustrate from Deloitte.
«When demand falls, less renewable capacity is needed to reach the same level of penetration. And when thermal generation costs decrease (combined cycles), electricity prices fall, and renewable investment loses attractiveness, «adds Kim Keats, director of EKON Strategy Consulting, who believes that the expected increase in capacity should also be reviewed in the National Integrated Energy and Climate Plan (PNIEC), if the context does not change.