Global lockdowns have highlighted the need for universal clean electrification as the natural environment has seemed to "rejuvenate spectacularly" in the wake of reduced human activity, offering a glimpse of what a cleaner world could look like, says global consultancy Kearney.

The Covid-19 pandemic’s abrupt arrival has disrupted the trajectory of many an industry and ushered in an unprecedented new socioeconomic era, the consultancy adds.

“Seismic shifts in human behaviour have catalysed a major disturbance within the energy sector, on both the demand and supply sides,” notes Kearney partner Prashaen Reddy.

He explains that this glimpse of what a cleaner world could look like will undoubtedly spur the already significant traction toward renewable energy supply that was prevalent before the pandemic struck.

Reddy points out that, pre-pandemic, the renewables complex – particularly wind and solar – had in Europe finally achieved equalised cost with conventional nonrenewable energy sources or fossil fuels.

“Financing flowing into these projects was supported by low capital expenditure, low interest rates and growing future power price curves, thereby incentivising purchase power agreements,” he says.

However, the combined shock of the virus and the global jolt sustained by the oil and gas industries has been a significant speed bump in the transition to clean energy.

The economic slump, which resulted in widespread liquidity pressures for many companies that had hitherto been focussed on their transition to renewable energy, forced them to respond by cutting back to “survival-mode” and, as such, to be preoccupied with their own immediate viability.

“Although commitments for the transition to green energy remain firm, the plummeting oil price has removed incentive and contributed to the delay in final investment decisions.

“The situation is further exacerbated by the generally tumultuous state of supply chains globally,” Reddy states.

On the other hand, renewable energy was declared by the International Energy Agency to be the most resilient supply of energy during the Covid-19 lockdowns.

Therefore, despite the lockdown-induced downturn, there is more enthusiasm for sustainability-driven investments as energy production around the world is being decarbonised.

“This is an era in which consumers are loyal to earth-conscious brands, and players across all echelons are now incorporating environmental considerations heavily within their roadmaps to economic recovery,” Reddy highlights.

According to Kearney, governments may even decide to conditionally attach Covid-19 relief grants, or stimulus packages, to climate change mitigation objectives, rather than subsidising fossil fuel-based initiatives, as they have in the past.

“All of this may see the sector agitated into taking the necessary steps to gain the lion’s share of the flow of capital from the ‘investment wallet’ going forward,” says Reddy.

Along humanity’s road to a decarbonised society and the meeting for the Sustainable Development Goals recommended in the United Nation’s Agenda 2030, the Covid-19 pandemic could prove more than a mere hiccup.

“But, with a strong basis and sound strategic decision-making the renewables industry could emerge as one of the more confident sectors in future, although many players would be wise to consider the benefits offered by high-level financial guidance and expertise in avoiding liquidity problems,” Reddy says.

Traditionally, a major criticism with renewables has been its unreliability – the dips and surges in energy supply we experience owing to fluctuations of the elemental forces of sunshine, wind and water.

To mitigate this, Kearney recommends strategies to handle the impact of these natural peaks and troughs, such as increased access to various markets; more sophisticated pricing models; the acquisition of more efficient power-storage technologies; and streamlined mutually beneficial strategic partnerships between players.

Reddy puts forward that the shift towards renewables will not solely be driven by self-centred profitability decisions.  In the era of conscious capitalism, there is far more transparency and information spreads very quickly.

“There is therefore a greater incentive than ever before to make altruistic decisions, and focus on investments which are sustainable, conscientious, and geared towards the greater good.

“Indeed, in this new paradigm and the economic environment that is emerging around it, such decisions may prove to be the most profitable ones,” concludes Reddy.