As countries plan for an eventual economic recovery from COVID-19, the global energy sector has the opportunity to move beyond “business as usual” and expedite the development of energy systems which are more accessible, efficient, affordable, and clean.

Opportunity in Crisis: Building a Cleaner, More Resilient Energy System

By Emily Chen

As we all know too well, the coronavirus pandemic has left no one untouched, fundamentally altering billions of people’s daily lives, disrupting the global economy, and most notably, with millions contracting the virus and the resulting strain of severe illness, hospitalizations and the tragic loss of human life. The crisis has also laid bare many of society’s weaknesses, including economic inequalities, institutional shortcomings, and inadequate health care delivery systems, leaving vulnerable populations to bear the brunt of the effects of the pandemic.

In the developing countries where USAID works, the impact from COVID-19 on vulnerable populations may be further compounded due to unreliable electricity access hindering health care delivery and existing high levels of air pollution which impair respiratory health. As the highest greenhouse gas-emitting sector and largest contributor to air pollution in many countries, the energy sector needs to transition to more sustainable solutions to address both urgent climate and health concerns. Peer-reviewed studies have found that air pollution is linked to higher mortality during previous respiratory infectious disease outbreaks, such as the 2003 SARS epidemic and the 2015 avian influenza.

In its ongoing work to provide policy, regulatory, and technical assistance to its partner countries, USAID’s energy officers are actively working to better understand the effects of the pandemic and address evolving needs in rapidly changing landscapes. COVID-19 impacts are straining electric utilities that were already struggling financially in USAID’s partner countries. Without sufficient resources, these utilities are unable to maintain power systems and provide reliable service, making them even more vulnerable to demand and price shocks.

In addition, off-grid power companies, which are essential for expanding energy access in rural areas, are often small businesses without adequate capital to weather service and demand disruptions for extended periods. For instance, 789 million people, primarily in sub-Saharan Africa, still lack electricity access. USAID Power Africa’s Off-Grid Project (PAOP) is developing off-grid energy access solutions to power critical medical equipment in healthcare facilities in sub-Saharan Africa; this infrastructure will improve these countries’ resilience in their fight against COVID-19.

Other key global COVID-19 impacts within the energy sector have included:

  • Reduced utility revenue, due to an overall decrease in electricity demand and an increase in non-payment;
  • Infrastructure development delays, due to mandated halts in procurement and construction of new infrastructure;
  • Uncertain energy and commodity prices, due to production surplus and uncertainty in energy demand;
  • Reduced private capital investment, due to the economic impacts of COVID-19;
  • Modified operations and maintenance practices, due to social distancing restrictions, need for personal protective equipment, and increased infection control safeguards.

While the myriad of challenges we face may seem overwhelming, crises can be a catalyst for societal change. And with great change comes great opportunity. As countries plan for an eventual economic recovery from COVID-19, the global energy sector has the opportunity to move beyond “business as usual” and expedite the development of energy systems which are more accessible, efficient, affordable, and clean.

Going forward, decarbonizing the energy sector and better enabling the conditions for clean energy development will be essential to minimize further health risks, mitigate climate change, while simultaneously spurring economic growth. Enterprise-driven development in green technology and research can provide greater access to local, reliable energy while decreasing emissions. And the bottom line is that investing in green technology just makes good financial sense. The International Renewable Energy Agency (IRENA) has estimated that transitioning to clean energy systems can boost global gross domestic product (GDP) growth by $98 trillion and add 42 million jobs by 2050. In addition, IRENA estimates that investing in renewable energy would significantly reduce health care costs by an amount eight times greater than the initial investment in new renewable energy generation.

USAID leverages its technical expertise to provide much-needed support to scale up investments in green technology within different country and regional contexts. USAID provides regulatory and policy support, institutional strengthening, and technical analysis to host government agencies, electric utilities, and private energy developers to:

  • develop energy efficiency programs,
  • enable market-based development of renewable projects,
  • develop electricity markets,
  • provide technical support to renewable and off-grid energy companies,
  • provide strategic planning and development of new resources,
  • analyze cost-effectiveness of subsidies and tariffs, and
  • develop distributed energy systems, such as microgrids.

For example, USAID’s “Scaling Up Renewable Energy” (SURE) program supports competitive auctions for clean energy and renewable energy integration in 20 countries, through a combination of capacity-building workshops, exchanges, and trainings, and direct regulatory and auction design assistance. In Colombia, USAID’s assistance included assessing the Colombian energy sector, drafting regulatory documents, informing the design process, and co-hosting 13 events that trained 1,200 participants, including the distributors and retailers (buyers) and private sector developers (sellers), to attract participation in the second renewable energy auction. Colombia’s resulting second renewable energy auction resulted in contracts to develop 1,374 megawatts (MW) of new solar and wind generation at a historic low price for the country of $28 per megawatt hour.

To accelerate decarbonization, USAID can further engage in providing guidance to countries where large-scale clean energy development is a priority, fostering policies and regulations which may fast-track the electrification of transport and buildings to decrease fuel consumption, and further enable public and private sector investment in electricity grid upgrades. In turn, these upgrades can increase penetration of variable renewable resources.

As we continue to work toward containing and recovering from the COVID-19 pandemic, let us embrace the opportunity to build back better--towards a cleaner, more resilient energy sector which can generate much-needed economic growth while enabling better healthcare delivery, reducing air pollution, and mitigating the impacts of climate change. This will not be an easy task, but if we embrace the many challenges ahead of us as opportunities—from electrifying transport to greater investment in modernizing the electricity grid—we can work towards a healthier future for tomorrow.

For more information on USAID's clean energy programs: 

Sectors
Energy
Strategic Objective
Mitigation
Topics
Climate Change, Climate Policy, Conflict and Governance, Clean Energy, Health, Mitigation
Region
Global

Emily Chen

Emily Chen is a Scholars in the Nation’s Service Initiative (SINSI) graduate fellow rotating in the Global Climate Change Office in USAID’s Bureau for Economic Growth, Education, and the Environment (E3). Her interests are in renewable energy and energy efficiency development, energy market regulation, and energy and climate nexus. As a part of her SINSI fellowship, she has previously rotated with the Department of Energy, Federal Energy Regulatory Commission, and the National Renewable Energy Laboratory.

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