With a lot of uncertainty around the impacts of Covid-19 on global supply chains and renewable project delivery we are starting to see the effects in the Irish Energy market, notably the announcement that prequalification for the Renewable Energy Support Scheme in Ireland will be extended.
The global energy sector has already felt the impacts of the coronavirus with consumption levels declining and global markets plummeting, especially in the wake of the oil price disputes between the Organisation of the Petroleum Exporting Countries (OPEC) and Russia.
When Covid-19 was first identified in China, it caused an economic slowdown leading to a significant decrease in demand. This led to fears of over-supply for fuel and oil products, and a fall in prices. OPEC wanted to cut production to impede the price drop, however Russia would not agree, and OPEC decided to increase production until Russia relented. Talks continued while markets closed on Friday 6 March and when they reopened on Monday 9 March, many companies lost millions. As the economic impacts of Covid-19 are spreading globally, oil prices are continuing to fall, with Brent Crude oil prices reaching a 17-year low last week. This has reverberated into the carbon market, with the price of EUA’s falling more than 30% to a 16-month low of just over €15/t. As things progress, the energy sector will need to simultaneously contend with low oil-prices and supressed demand, whilst managing debt obligations, business continuity and the safety of their workforce.