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Renewable energy continues to break records despite the impact of COVID-19, states the Institute for Energy Economics and Financial Analysis (IEEFA), a global energy-finance think-tank.

Most strikingly, April 2020 saw the Emirates Water and Electricity Company (EWEC) award a 1.5GW solar tender to French energy group EDF and Chinese solar company JinkoPower. The consortium offered $13.50/MWh for the power generated at Al Dhafra, Abu Dhabi.

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This result is 13% below a January 800MW solar award by the Qatar General Electricity and Water Corp (Kahramaa) at a then-record low of $15.60/MWh to Total and Marubeni Corp., which is highlighted in the think-tank’s report Renewables Continue to Break Records Despite COVID-19 Impacts.

The report’s author and IEEFA’s director of energy finance studies South Asia, Tim Buckley, says one of the most relevant impacts of COVID-19 has been the collapse of interest rates in global developed market.

“For solar, the tariff required is a direct function of the solar resource, the capital cost of installation, and the required rate of return for debt,’ says Buckley. 

He adds: “With dramatic falls in the capital cost of solar (driven by a 20% fall in solar module costs in the last year) and dramatic falls in the cost of funding, the two most important inputs into the solar tariff have fallen hugely relative to even two years ago. 

“As such, the months of April and May saw developments in a number of major renewable energy projects. These range from California awarding seven projects totalling 770MW of battery storage to Siemens Gamesa announcing its launch of a new record 14MW offshore wind turbine, for commercial deployment in 2024.”

Risk to thermal power market

As renewable and battery costs continue to decline, IEEFA foresees increased stranded thermal asset risks.

Unsurprisingly, available capital has continued to restrict, with six new or tightened coal exit policies announced by globally significant financial institutions over April to May, taking the 2020 to-date tally to 37 announcements. 

Additionally, BlackRock completed its thermal coal miner divestment in May 2020 and put KEPCO on notice over the inconsistency of the Korean utility retaining plans to invest in new coal-power plants.

‘Despite, or maybe in acknowledgement of, the global pandemic, April and May 2020 have seen global momentum toward energy transition continue apace,” says Buckley.

Read the report here: Renewables Continue to Break Records Despite COVID-19 Impacts.