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Corona Breaks Down Unsustainable Energy Globally. Let It Be So!

Tomas Kåberger, Chair of Executive Board, Renewable Energy Institute

4 May 2020

in Japanese


This article was originally published in Swedish in  ETC (4 May) . Below is the translated text in English:

In the first quarter of 2020, Renewable electricity continued to increase in many parts of the world, while nuclear power and fossil-electricity production decreased.
 
Unsustainable energy is now effectively sown by the corona crisis. We are well on our way to avoiding the climate crises. Unless governments around the world borrow money from future generations' taxpayers to save fossil industries, and expose future generations to climate risks. Today's crisis is an opportunity for future generations.
 
The spread of coronavirus has reduced travel in the world. Therefore, fuel consumption has decreased, as have carbon dioxide production and air other pollution. Many have had a healthier and longer life as a result.
 
But reduced travel has caused oil prices to fall. March 20 it went so far in the United States that those who extract oil had to pay to get rid of the oil. The stocks were full. More oil was pumped up than what was burned. Low prices mean that hundreds of oil companies in the US are expected to go bankrupt.
 
Some worry that low oil prices will soon boost consumption and carbon dioxide emissions. But more important than today's low price is that even fewer will want to invest in oil recovery when so much money is lost. This will lead to higher prices in the future. It may be, that oil consumption in the world will never increase again.
 
But carbon dioxide emissions are decreasing not only in the transport sector but also in electricity generation and in some countries' industries.
 
As an electricity consumer, it is enjoyable that electricity prices are low. In much of the world, the demand for electricity has fallen because industries have closed during the virus epidemic. In the Nordic countries, electricity prices have fallen because it has been a warm winter, a lot of wind and a lot of water.
 
Electricity prices consumers enjoy, at the same time are painfully low for electricity producers. Low electricity prices are especially awful if you are owning fuel-fired power plants. Solar cells produce electricity for free when the sun is shining. Wind turbines cost no more because they produce electricity when the wind blows. If you do not have space to store water in dams, hydroelectric power plants will produce electricity even if the price is zero yen / kWh As long as the electricity price is above zero owners of solar and wind plants earn money, unless owners of other plants have special privileges in the market regulation. 
 
In open markets with free competition, thermal power plants are shut when the price is so low they cannot pay for the fuel. Then the owners lose all revenue and electricity consumers enjoy cheaper electricity.
 
In China, where the restrictions were imposed already during the first months of this year, electricity consumption decreased by 115 TWh in the first quarter of 2020 compared with 2019. Fossil-fired electricity generation decreased by 105 TWh while solar and wind power increased and hydro power plants stored water in reservoirs and reduced production by 21 TWh.
 
In Sweden, the last coal-fired electricity plant, Värtaverket in Stockholm, has finally permanently closed. Other fossil-fueled power plants cannot make money at the electricity current low prices. Prices are so low that not even all the nuclear reactors are operated. In Ringhals, reactor two was closed forever at the end of 2019 because it was not profitable to keep in operation. The oldest reactor, Ringhals 1, will be permanently closed by the end of this year. Already, however, it is at a shut as it is not possible to cover operating costs with today's low prices.
 
In the first quarter, wind power and hydropower in Sweden increased, while nuclear power and fossil and bioel decreased. In Germany, the development was dramatic. Fossil and nuclear power decreased and wind power increased to provide more electricity than all fossil-based electricity generation. In February, wind power provided even more electricity than all nuclear power and fossil fuel combined!
 
Across Europe, fossil and nuclear power decreased by 20-25 TWh each, while wind and hydro power plants increased production by about 20 TWh each during the quarter.
 
The exclusion in the fossil industry will have lasting consequences for the future. If the economy and demand for energy increase again, investments will not be made in fossil energy supply. It is now renewable electricity that provides the cheapest new energy. Solar and wind turbines can be expanded at a cost of USD 15-30 per MWh, fossil power plants or nuclear reactors cost many times more per MWh.
 
Thanks to the fact that batteries have become cheap, the cars that are bought are increasingly electric. Since renewable electricity is so cheap, you will not want to use oil, gas or coal in the industry when you can instead use cheaper electricity, directly or as hydrogen produced by cheap electricity.
 
With large-scale production of fuels from electricity, fuel production can also be used to balance the supply of wind turbines.
 
You can see it as the fossil industry being cut by the hand saw motion of economic fluctuations: When prices are low, the resource-consuming fossil industry is forced out by the competition. When prices are high, cheap renewable electricity generation capacity is being expanded. This is how the system will evolve.
 
The corona crisis has meant a huge cut in demand that has damaged the fossil industry. Then comes investments in renewable energy as the economy recovers. The trend can only be slowed down by politicians using tax money to save the fossil industry. Let's make sure to avoid such waste.
 

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