Europe’s hopes that green power will soon beat out fossil-fuels on costs will fade unless governments implement shrewd policies to support renewable after the coronavirus crisis.
Propped up over decades by hundreds of billions of euros of government subsidies, power from wind and solar was slated to undercut coal, and even natural gas as soon as a year. But those estimates were made before the health crisis gutted energy demand and sent oil prices below zero for the first time, according to according to a report by BloombergNEF.
In a worst-case scenario where coal and gas prices plummet and environmental subsidies slip down the agenda, renewable energy’s competitive edge over fossil fuels could be delayed to as late as 2025, they said.
Before the pandemic, the outlook for clean power reflected expectations of ever-improving technology, falling costs, and generous government subsidies at a time when it became less profitable to burn coal. Renewable energy’s move to becoming consistently cheaper than coal or gas was expected from around 2021, BNEF forecast.
As the evidence mounts that the world is headed for a prolonged recession from the devastating effects of the coronavirus, policymakers may be tempted to back away from renewable energy subsidies, focusing instead on rebuilding their economies, BNEF analysts Dario Traum and Andreas Gandolfo said in the report.