More than 106,000 clean energy workers in the U.S. lost their job at the onset of the coronavirus pandemic in March 2020. (Photo: gopixa/Shutterstock)
As with other industries, the renewable energy sector has experienced a series of challenges brought on by the COVID-19 crisis. Today, over 10-months into the pandemic, renewables continue to be hard hit.
For insurance brokers in the renewable energy space, understanding clients' issues today can help when advising on insurance and risk management matters. Below are the three key areas that have been significantly impacted by the pandemic.
Job losses
Before COVID-19, an estimated 3.4 million Americans across 50 states and the District of Columbia worked in clean energy occupations. According to E2's Clean Jobs America report, that's more people working in the real estate, banking or agriculture industries and three times the number of Americans with jobs in fossil fuels. In fact, at the start of 2020, the American Council on Renewable Energy predicted that employers would be adding more than 175,000 green energy jobs.
But when the pandemic hit in March, more than 106,000 U.S. clean energy workers lost their jobs. Fast-forward just two months, and that number climbed to an astounding 447,208.
For full-year 2020, that number is expected to reach 478,000 based on an analysis of Department of Labor data. According to the E2 report, the top three hardest-hit industry sectors by job losses were energy efficiency (336,670 losses), renewables (75,669) and clean vehicles (34,151). Unfortunately, experts' consensus is that the renewable energy industry may not have yet hit rock bottom when it comes to job losses.
Project delays
As the job losses indicate, many renewable energy industry sectors have put green projects on indefinite delays because of COVID-19. According to the Solar Energy Industries Association and as reported by Green Tech Media, social distancing efforts and stay-at-home orders — including mandates that have put limitations on door-to-door sales and installation of residential solar and solar farm operations — have brought solar industry construction projects to a crawl.
Wind companies were also expecting a banner growth year in 2020 until the pandemic hit. According to the American Wind Energy Association, COVID-19 has put an estimated 25 gigawatts of wind projects at risk, representing $35 billion in investments and including the potential loss of over $8 billion to rural communities in the form of state and local tax payments and land-lease payments to private landowners.
Less liquidity and fewer financing options
With more projects sitting idle and incomplete for an indefinite period of time, it has been difficult for some sectors to meet their contractual/financial obligations for specific projects. For example, an analysis by the AWEA reports that there were a record number of wind projects under development at the start of last year.
However, due to pandemic-related delays, it has become increasingly difficult for projects to come online to meet financial/economic contracts, which could ultimately result in project cancellations. With liquidity becoming scarcer, the industry sees investors move away from what they feel may be risky business opportunities. Unfortunately, this can also impact new and emerging markets that may be looking to finance projects, as well as smaller developers with a limited pool of liquid assets.
Conclusion
Across the nation, many firms working in different green energy sectors will have to adapt as new challenges created by the pandemic continue to unfold in 2021. The good news is that with the new administration, there will likely be an emphasis on how to sustainably rebuild the economy as the nation recovers from the pandemic.
Loren Henry is a broker with Worldwide Facilities, a national wholesale insurance broker, managing general agent and program underwriter. He can be reached at 619-541-4265 or lhenry@wwfi.com.
This piece first appeared on Worldwide Facilities' blog and is republished here with consent.
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