Renewable energies are currently riding a huge wave of success. This is a trend that has been building for decades, but it has finally reached the point where renewables are not only competitive with fossil fuels; they can surpass them in terms of cost.

The renewable energy industry is booming, and it’s not just because the planet needs to reduce its carbon footprint. It’s also because renewables are a cost effective way for households, businesses and even governments to power their operations without going broke.

Solar energy is now considered “the cheapest electricity in history†by the International Energy Agency. The IEA admits that solar power is up to 50% cheaper than its estimates two years ago. This means that more and more people are turning to solar power for their energy needs because it saves them money while being environmentally friendly.

Experts predict that the cost of wind power will shatter expectations and become a more affordable source of energy in a shorter time frame. Wind power is an abundant renewable resource, and it is expected to be 50% cheaper than expected by 2050. More and more hydropower projects are approved around the world, and the technology in this space is improving and becoming more affordable.

The cost of electricity from onshore wind and solar photovoltaic is increasingly cheaper than that of new fossil fuel plants and some existing plants. Thus, in most countries, renewables are the cheapest way to meet growing demand.

At first glance, the future looks bright for the renewable energy sector. But there is a potential storm ahead. What if public investments dry up due to the impacts of COVID-19?

The downward trend in costs will not protect renewables from an economic downturn

COVID-19 has ravaged economies around the world across industries, and renewables are not immune to its impacts.

The exact numbers on the extent and severity of these impacts on global economic growth are difficult to determine, but there is no doubt that the biggest impacts are yet to come. Even as the world struggles to control and manage COVID-19, inflation, supply chain disruptions, domestic political conflicts and high levels of national debt continue to soar.

IEA figures show that private sector-led investment accounts for 23% of all renewable energy projects under construction by 2025. So there could be some impact when the private sector feels the pinch. effects, but this impact is likely to be minimal compared to government investment.

Another 31 percent of renewable projects in the pipeline are already contracted, and the vast majority are likely to go ahead. However, the problem facing the energy sector is how many projects will be funded beyond 2025? Almost half of all global renewable energy projects have yet to be implemented under announced government plans. As a result, there is every chance that a volume of these projects will drop in the face of economic uncertainty.

With more than three-quarters of all large renewable energy projects reliant on government funding and support, the sector faces enormous challenges moving forward during the economic recovery from COVID-19.

We are already seeing real fallout around the world. For example, Brazil, Chile, China, France, Germany and Portugal have all implemented recent policy changes to delay or postpone renewable energy auctions.

In Australia we have a government that to date has refused to provide a specific date by which we will achieve net zero carbon. But it may not be all pessimistic.

How the government’s investment in renewable energy will be crucial for our economic recovery

In Australia, there are already three renewable energy strategies being deployed that could pave the way for our economic recovery.

The first is the plan to export our solar energy to Asian countries that do not have the space to build large-scale solar farms. For example, the Australia-ASEAN power link was planned for the Northern Territory, comprising a 12,000 hectare, 30 gigawatt solar farm and an undersea cable to export electricity to Asia.

Second, Australia has announced its intention to become a global powerhouse for the export of clean hydrogen. For example, there are ambitious plans to use clean hydrogen to create steel without coal, the only emissions being water. Australia plans to produce this hydrogen using solar and wind projects, and agreements have already been signed to export this hydrogen to major Asian countries.

The final strategy will be the inevitable deployment of electric vehicles in our country. This will create employment opportunities in construction, potentially in manufacturing and mining, as Australia is rich in lithium, copper and nickel needed to build these electric vehicles.

These three strategies will ensure that renewables remain a solid pillar of our economic recovery. Yet it remains crucial that our state and federal governments maintain their commitment to building renewable energy projects across the country.

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