System shocks will continue to test the resilience of the energy sector. One of the most important shocks in recent years was the COVID-19 pandemic. It is important to analyse the impact of a black swan event such as the COVID-19 pandemic to draw key learnings for future purposes. This examination provides
important lessons for bolstering preparedness, resilience and sustainability in anticipation of future shocks. The critical takeaways include:

The COVID-19 pandemic years witnessed substantial disruptions in global energy markets, with over 100 countries implementing lockdown measures by March 2020.⁵⁰ China, a major player in global clean energy technology manufacturing,
hosting over 80% of the world’s solar PV module manufacturing capacity and accounting for 58% of onshore wind turbine manufacturing,⁵¹ was the first
to initiate lockdowns. In recent years, some countries and regions have sought to localize critical parts of the manufacturing processes, as evidenced by the EU’s 2030 objective to produce at least 40% of key products domestically to decrease greenhouse gas emissions.⁵² Recent geopolitical events, including the Russia-Ukraine war, Middle East conflicts and others, further solidify the need for local resilience, both in clean and conventional sources.

COVID-19 lockdowns and remote work arrangements shifted residential energy demand and consumption patterns, altering peak demand times and overall energy use. Companies have swiftly adapted to changing energy consumption dynamics, exemplified by the proliferation of residential smart energy management solutions like smart thermostats and energy monitoring systems.⁵⁴ Moreover, heightened consumer awareness of electricity pricing throughout the day has spurred the adoption of time-of-use pricing plans from utilities suppliers. Additionally, energy-saving apps have become popular in places like the UK, where electricity prices particularly spiked. These developments enable consumers to adjust their use patterns and flatten the demand curve. As consumers increase the time spent working from home, countries with high energy intensity can adopt time-sensitive electricity pricing to drive down peak demand, which would reduce the total capacity needed.

Some governments were able to tackle immediate economic recovery needs with long-term sustainability ambitions through new policies and stimulus packages. Stimulus packages varied in their support for renewable energy. For example, the NextGenerationEU55 initiative, a €807 billion recovery plan responding to the economic impact of the COVID-19 pandemic, aimed to spur economic growth while accelerating the transition to a green and digital economy. Similarly, the IRA is the largest climate investment in US history, designed to mobilize private capital to achieve climate goals and strengthen long-term growth.⁵⁶

The COVID-19 pandemic also catalysed innovation in the energy sector, with accelerated adoption of digital technologies, smart grid solutions and energy storage systems. Utilities suppliers globally accelerated the deployment of advanced metering infrastructure and smart grid solutions to remotely monitor and manage energy distribution networks. The focus on resilience and sustainability also spurred innovation in renewable energy technologies, energy efficiency measures and decentralized energy systems. The COVID-19 pandemic also underscored the importance of energy security, emphasizing the need for reliable access to electricity and reducing dependence on imported fossil fuels, aligned with the COP28 outcome of transitioning away from fossil fuels.

While the COVID-19 pandemic presented an opportunity to translate the temporary emissions drop into longer-term progress, compounding impacts such as geopolitical tensions, “higher for longer” interest rates and other uncertainties have complicated the energy transition path. However, some effects are enduring, including the need to build resilient supply chains, enhance energy system flexibility and maintain commitment to decarbonization and energy efficiency.

Figure 7: Evolution of key indicators, pre-COVID-19 pandemic (2019) vs post-COVID-19 pandemic (2022)