(Bloomberg) — The global plunge in electricity demand will drag on long after nations lift stay-at-home orders, leading to the biggest annual drop since the Great Depression and fundamentally reshaping power markets.

As economies struggle to recover, worldwide electricity consumption will decline 5% in 2020, the most in more than eight decades, according to the International Energy Agency. In the U.S. last week, government analysts projected the nation’s biggest drop on record. And in Europe, analysts say a full recovery could take years.

The prolonged slowdown will increase economic pressure on older, uneconomic power plants — especially those that burn coal — and help speed the transition toward cleaner and cheaper wind and solar. It will also contribute to the biggest annual decline in greenhouse gasses from energy ever recorded.

“This unprecedented drop in demand is foreshadowing the grid of the future,” said Steve Cicala, an economics professor at the University of Chicago. The world is “getting an early look at what high penetrations of renewables will do.”

Lower demand is pitting generators against each other in a fight to produce the cheapest power possible. Wind and solar farms have an upper hand in many regions because they don’t need to buy fuel. Natural gas, which is trading near historic lows, remains competitive. Coal power, which is more expensive, is shouldering the majority of the cuts as generators scale back.

“Renewables will be the biggest beneficiaries,” said Joshua Rhodes, a research fellow at the University of Texas at Austin Energy Institute.As coal and oil use ebb, energy emissions are set to drop by a record 8% this year, according to the IEA.

While wind and solar are producing a larger share of power, they’re not unscathed. Power auctions are being suspended in France, Brazil, Saudi Arabia and elsewhere, sapping the need for additional clean-energy projects. For the first time in two decades, the number of new wind and solar farms globally is set to decline this year, the IEA said in a report Wednesday.Read More: U.S. Power Demand to be ‘Profoundly’ Hit as Lockdowns Spread

Some of the steepest drops in electricity consumption will be in Europe, where 2020 demand is forecast to fall 8%, according to the IEA.  In Germany, companies including RWE AG and Uniper SE are running coal generators less and relying more on gas plants. Electricite de France SA warned low demand will mean output from its nuclear reactors will fall by more than a fifth this year.

A similar dynamic is playing out in the U.S. retail power sales across the 50 states will sink 4.5% this year, the most since the U.S. Energy Information Administration began keeping records in 1949. Coal is on pace for the first time ever to produce less electricity nationwide than renewable energy.

In Asia, power consumption is forecast to rebound faster. Nations where industrial production accounts for a large chunk of the economy, such as China and India, also had some of the strictest lockdowns — a combination that hammered demand, according to BloombergNEF analyst Ali Asghar. While the IEA sees demand in China, the world’s top energy user, falling this year, official estimates put consumption in May already above last year’s levels and on course to grow as much as 3% in 2020.

Eventually, global demand for power will resume growing as nations turn more to electricity to power cars, heat homes and more, analysts said. But for now, the power sector faces a long, slow recovery.

“I don’t think we are going to turn everything on tomorrow,”  Melissa Lott, a senior research scholar at Columbia University’s Center on Global Energy Policy. “I don’t see how that happens.”

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(Bloomberg) — The coronavirus lockdown will cause the biggest drop in energy demand in history, with only renewables managing to increase output through the crisis.

As people around the world consume less oil, gas and coal, electricity generated from the wind and sun will keep flowing, resulting in an unprecedented 8% decline in global carbon dioxide emissions this year, according to a report from the International Energy Agency.

“The energy industry that emerges from this crisis will be significantly different from the one that came before,” Fatih Birol, the IEA’s executive director, said in a statement released from the organization’s headquarters in Paris on Thursday.

The pandemic has infected at least 3 million people worldwide and killed more than 200,000 people as of April 29. With no drug to treat Covid-19 and a vaccine not expected until at least the end of the year, reducing the interactions between infected people is the only effective way to control the spread.

Those measures, however, have severe impact on economic growth and energy demand. Each month of lockdown on the scale of what’s in place this month reduces annual energy demand by 1.5%, IEA estimates.

The institution that advises nations on energy policy says that demand is likely to fall 6% in 2020, which is seven times the scale of the drop suffered in the 2008 financial crisis. In absolute terms, it’s like losing the energy demand of India. Rich countries will show a steeper decline, with the U.S. falling 9% and the European Union losing 11%.

While all sources of energy — oil, coal, natural gas, and even nuclear — will see a decline, renewable energy is likely to be the bright spot. And though emissions will fall drastically, the IEA expects a sharp rebound without government policies pushing for a green recovery. Here are the key highlights from IEA’s report:

Oil Glut

Global oil demand is poised to slump by 9 million barrels a day, or about 9%, to the lowest level since 2012. By the end of March, road transport activity was down about 50% around the world, while air travel in some European countries had plunged more than 90%. As lockdowns continue, April will see the deepest decline, with fuel consumption slumping almost a third to the lowest since 1995.

With demand in freefall, even prodigious efforts being undertaken by the OPEC cartel and its allies to stabilize markets won’t be enough to shield the global oil industry from chaos, the agency warned. Some producing regions will suffer a “disorderly production shutdown,” it said.

Coal Trend

Global coal demand is heading for its biggest fall since World War II — about 8% — as the case for burning the dirtiest fossil fuel is further undermined by the pandemic. The fuel’s share in the electricity mix has fallen in India, China, Europe, and parts of the U.S. These four regions have large and varied electricity markets, and yet uniformly coal becomes the biggest victim when demand falls.

Burning coal for power in several European countries has become unprofitable and socially untenable — crowded out by cheap gas and the proliferation of renewable energy as well as powerful environmental movements. The pandemic has only served to hasten its demise.

Gas Hit

Natural gas consumption was falling in the first quarter even before the Covid-19 pandemic hit Europe, mainly due to a mild winter in the northern hemisphere. The lockdowns accelerate that decline, with global demand expected to decrease by 5% this year — the first annual drop in consumption since 2009 and a huge shock to an industry that has grown accustomed to continued growth.

Much of this decline will come from power generation as the increasing shift toward renewable energy and low overall power demand is squeezing out the role of natural gas in production. Europe is expected to see a drop of 7%, whereas North America’s decline is likely to be less severe, propped up by ultra-low prices.

Renewables Brighten

Even as overall demand has decreased, renewables in many countries get first priority to feed electricity into the grid. That means producers of solar, wind and hydro power can sell all of the power they produce even as fossil-fuel generators turn down or shut off completely to prevent a system overload. Solar and wind farms have also benefited from windier and sunnier conditions than normal in some places.

In 2019, along with nuclear, low-carbon sources overtook coal for the first time ever. With the boost renewables get this year, the lead is set to extend, leaving low-carbon sources responsible for 40% of global electricity generation.

It hasn’t been all positive for the sector. Like much of the global economy, the coronavirus has disrupted the supply chains for wind and solar farms. About 11% of the world’s wind turbines were shut this week because of the virus, according to Bloomberg NEF. Work to build new wind farms has also been disrupted by restrictions on workers and regulatory processes being delayed. That could lead to a slowdown in new renewable energy projects coming online this year.

Emissions Fall

With fossil-fuel use taking such a big hit, it’s no surprise that emissions will fall. An 8% decline is larger than most early estimates, and bigger than what the most ambitious scenario to keep global warming under check demands. Yet, that decline probably is not enough to hold off further increases in the earth’s temperature or the stock of greenhouse gases that have built up in the atmosphere, the IEA said.

The more ambitious target set under the Paris climate agreement — keeping temperature rise below 1.5 degrees Celsius — will require halving annual global emissions by 2030 and hitting net-zero emissions sometime around the middle of the century. Without deep structural changes, emissions are expected to rise again when economies recover.

“Governments can learn from that experience by putting clean energy technologies — renewables, efficiency, batteries, hydrogen and carbon capture — at the heart of their plans for economic recovery,” Birol said. “Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future.”

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