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COVID-19 Reveals Challenge Facing Merchant Renewables

A fundamental problem facing subsidy-free solar and wind in renewables-heavy grids is emerging as coronavirus cuts energy demand in Europe.

The fall in demand is driving up the proportion of clean energy on many grids and highlighting an issue flagged by researchers in February: that merchant plants may be more expensive to run than subsidized projects once non-renewable generation drops out of the picture.

The research, by Imperial College in London, U.K., indicates that removing support for renewables in Europe could increase the cost of capital for new projects by between 2 and 3 percent.

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