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New York — With more than half the world's population under severe lockdowns due to the coronavirus pandemic, S&P Global Platts Analytics expects China's power demand to normalize by the third quarter, while there is more uncertainty in the US where stay-at-home orders remain in place in most states.

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There is some evidence of manufacturing recovery in China, but concerns remain regarding grid-parity solar PV projects going forward, according to a Platts Analytics webinar held Tuesday.

Long-term renewable energy targets remain important in China, but there is an emphasis on market reforms and stable deployment of renewable energy generation resources, according to the presentation.

In the US, the pandemic has come at a delicate time for the solar power industry as the federal Investment Tax Credit is stepping down and policy support for the industry post-pandemic remains unclear, Platts Analytics said.

To date, clean energy industry support has not been included in any of the stimulus measures taken in the US. Recent power purchase agreements for solar have ranged between $16/MWh and $35/MWh, according to Platts Analytics.

A decline in permits for solar installations has been observed since stay-at-home orders were issued in most states, according to trade group Solar Energy Industries Association.

Prior to the pandemic, SEIA had expected strong growth for the solar industry in 2020, which is reflected in permit numbers growing before mid-March.

"When the data is broken out between those states that announced early shelter-in-place orders (week of 3/16 or early the week of 3/23)," the impact is the most severe with permit activity declining by nearly 44%, SEIA said recently.

LOWER DEMAND COULD BITE

The US has been a bright spot for renewable energy generation capacity growth in recent years, but Platts Analytics expects weaker power demand from utilities and corporate buyers due to the coronavirus pandemic could impact the industry.

Other power industry stakeholders agree, with 51.6% of respondents to a webinar polling question on power demand recovery saying they do not think demand will recover until 2021 and later. However, 31.2% of respondents expect power demand could recover by end 2020.

Lower procurements from utilities along with the commercial and industrial sectors is seen as one of the larger emerging risks for renewable energy deployment in the US, according to Platts Analytics.

The US wind industry continues to benefit from some federal and state policy support. Federal tax credits were extended for 2020, but permitting and other delays create uncertainty around eligibility to receive the Production Tax Credit for wind, Platts Analytics said.

State mandates along the US East Coast also provide support for offshore wind development, although some of those projects could be delayed due to pandemic-related restrictions.

"There is still risk of delay, but there is also a lot of policy support with Northeast US states pursuing offshore wind development initiatives," Bruno Brunetti, head of global power planning analytics at Platts Analytics, said.

US natural gas-fired projects could also be vulnerable given power demand weakness, renewables mandates and tighter gas balances as demand erosion causes oil wells to be shut in along with the associated gas they produce, according to Platts Analytics.

"US gas prices are supported by the risk of loss of associated gas production from oil supply cuts," the analysts said. Higher gas prices can disadvantage the fuel against less expensive resources that are dispatched first in wholesale power markets.

Coal-fired power plants could also suffer due to pandemic-related demand reductions if plants are unable to survive being idled for an extended period. A webinar audience polling question showed 38.6% of respondents think the pandemic could drive coal-fired power retirements, which is the answer that received the most support among other power generation resources.