World Energy Outlook 2020: The Key points for Energy Suppliers

The impacts of Covid-19 pandemic

Energy Network challenges

The outlook report highlights that electricity grids are likely to be the weak link when it comes to the transformation of the energy sector. With many nations including the UK pushing for NetZero, the infrastructure and investment needed are staggering.

The Covid-19 pandemic has harmed the financial health of many economies and the report warns that these NetZero goals may have to be pushed back as governments focus on rebuilding their economies.

The financial health of energy suppliers is also highlighted as a concern as the economic fallout of the pandemic puts ever increasing strain on their bank balances.

These economic pressures are likely to result in a disparity between the spending required to introduce smart, digital, and flexible electricity networks and the necessary infrastructure.

As if to highlight the current argument raging between Ofgem and energy network companies in the UK the report says:

“There is a disparity in many countries between the spending required for smart, digital and flexible electricity networks and the revenues available to grid operators, creating a risk to the adequacy of investment under today’s regulatory structures”

Also read: Lack of investment could lead to Blackouts warns National Grid CEO

Solar is now the cheapest form of renewable energy

The report also lists its predictions and estimates for the costs of different electricity generation technologies.

Solar energy was shown to now be 20-50% cheaper today then it was in last years report as a result of increased investment, more efficient technology, and improved regulations to reduce the risk of renewable investment towards it.

The report also highlights large reductions in the estimated costs for onshore and offshore wind.

Also read: Ofgem to increase monitoring of Renewable Energy Guarantees of Origin (Rego) certificates following Times Investigation

Future Forecast

The IEA forecasts that global energy demand will not return to pre-Covid levels until 2023 at the earliest but warns that if the pandemic drags on this may not occur until 2025.

Before the pandemic, global energy demand was predicted to grow by 12% between 2019 and 2030 but now this is expected to be 9%. Demand in advanced economies is forecast to decline but grow in emerging economies such as India.

This economic challenges created by Covid-19 will also see incomes decline resulting in fewer products such as electric cars being purchased and more energy supplier customers struggling to pay their energy bills. 

Further Reading

As Winter approaches three million households are in Energy Bill debt to Energy Suppliers

Covid-19 fallout likely to see consumers needing government help to pay their energy bills this winter warns Ovo Energy chief

Majority of UK public unwilling to pay higher energy bills to achieve NetZero carbon emissions target

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For more information on how to start and manage an energy company, get in touch with Dyball Associates today.