Due to the COVID-19 pandemic, the two-decade-long growth behind renewable energy is expected to level off this year, but not for long. According to a recent study by Report Linker, the global renewable energy market is on target to reach the 226.1 billion mark in 2021. But while COVID-19 has caused the renewable energy industry to take a hit this year, the damage shouldn’t influence the trajectory of renewable energy over a longer time span. In fact, the outlook presents some promising opportunities in the near future.
The Impact on the Industry
This pandemic has the renewable energy industry exercising caution, resulting in most energy construction starts being temporarily put on hold – including many renewable energy developments. While investors play it safe to protect workers, these delays are having a domino effect that is impacting subcontractors, supply chains, paused procurement phases, etc. Because of these delays, a lot of contracted work remains to be completed. When the pandemic is over, the industry should be able to pick up where it left off. However, just when that is remains to be unknown.
Energy Tax Credits
Continued delays could mean that many renewable projects may not reach completion until 2021 and result in ineligibility for the Investment Tax Credit for solar and the Production Tax Credit for wind – all set to reduce at the end of the year. Depending on when normal work activities can resume, the industry may see a rush to get certain projects completed by year’s end. Currently, whether completed projects will qualify for the federal tax credits or not remains to be seen.
Bottlenecks in the Supply Chain
The U.S. sources many of its renewable components and raw materials from China. And while China is slowly ramping up production and manufacturing, it is with limited capacity. This delay in the supply chain could mean that prices for renewable materials and components will increase before declining again at the end of this year. Efforts to deal with the disruptions in the supply chain have many companies requesting long lead times on orders or even delay’s on projects. One benefit to this disruption is that it is forcing the industry to look at diversifying its supply chain.
Despite the COVID-19 pandemic and its influence on the market, the outlook for renewable energy remains strong with investors and lenders seeing renewables as a positive and an excellent opportunity.
At Worldwide Facilities, we’re experts in renewable energy. From solar to wind, biomass to geothermal, we have the market reach and comprehensive risk management programs to serve virtually every sector of the energy industry. To learn more, contact Loren Henry at firstname.lastname@example.org or 619‑541‑4265.