Energy leaders in 32 countries believe that demand will fully recover from the fallout of the coronavirus pandemic by the end of 2023.
A survey conducted among 100 policymakers by the European Bank of Reconstruction and Development (EBRD) investigating the 5% fall in energy demand worldwide brought by Covid-19 in 2020, have indicated they are confident of a quick recovery.
A third of the respondents across the EBRD regions believe energy demand will recover fully in 2021; a further 45% believe it will have recovered by the end of 2022; and more than 90% believe recovery will be complete by the end of 2023.
The International Energy Agency estimates that demand fell 5% worldwide in 2020, with fossil fuels affected most, and investment in new technologies fell further.
With the energy sector responsible for more than 70% of greenhouse gas emissions, clean energy needs to be at the heart of the world’s economic response and plans to “build back better” after the pandemic, according to the IEA.
The EBRD is committed to making a majority of its investments green by 2025.
The survey’s findings on the impact of Covid-19 on the energy sector are that emergency spending hit energy investment hardest, delaying investments in generation and network maintenance in ways that, in some countries, could damage the future resilience of the sector. Private-sector actors are widely believed to have been more affected than state-owned enterprises.
However, respondents were largely positive about the sector’s emergency response, especially on energy security, with success in putting in place a safety net for domestic customers, especially in European Union countries.
Respondents also stressed the need to ‘build back better’ to reduce the risk of future shocks.
To achieve a swift and sustained energy-sector recovery, the top priority they highlighted in the survey is grid modernisation, followed by investment in renewables. Clean energy and the digital transition also score highly.
Just under half think Covid-19 will provide greater opportunities for the development of renewables, despite it being a top priority for a sustainable recovery.
But more than half say their country will focus on a clean energy transition, while over 90% of respondents consider Covid-19 to have increased the importance of scaling up digitalisation in their countries.
EBRD in Cyprus energy
In Cyprus, EBRD supported the decarbonisation of the energy sector with an €80 mln loan announced in July last year, alongside EU and EIB financing, for a natural gas floating storage and regasification unit.
The loan to the Natural Gas Infrastructure Company of Cyprus (ETYFA) was for the FSRU to be permanently anchored about 1.3 km off the coast of Limassol in Vasilikos Bay and will connect directly to the adjacent Vasilikos power station, the largest power plant in Cyprus, operated by the state monopoly EAC.
The EU is extending a €101 mln grant for the project under the Connecting Europe Facility. The remaining project costs will be funded by a €150 mln loan from the EIB and a €43 mln equity contribution from the Electricity Authority of Cyprus (EAC).
ETYFA is jointly owned by the Natural Gas Public Company (DEFA) of Cyprus and EAC, both state-owned entities.
As Cyprus remains the last EU member state without electricity interconnection, close to 90% of the island’s power supply relies on fossil fuel imports.
The ETYFA project is expected to reduce the country’s CO2 emissions by 10% and lead to a substantial reduction in local air emissions (sulphur dioxide, particulate matter and nitrogen oxides).
To date, EBRD has invested over €460 mln in Cyprus, all in the private sector. These projects include the financing of five solar plants for a total installed capacity of 11.9 MW in the Famagusta and Nicosia districts, cutting CO2 emissions by 15,470 tonnes per year.