Effect of the COVID-19 Pandemic on Renewable Energy Firm’s Profitability and Capitalization

Abstract

The COVID-19 pandemic has led many governments to impose restrictive measures that have contributed to a decline in the demand for goods and services, leading to an economic crisis. This study proves a novelty that implies a rise in the capitalization of renewable energy companies during the coronavirus pandemic. The study is based on the hypothesis that, at a time of economic crisis, the prospect of investing in clean energy has increased, through the need to protect the environment and ensure clean air. The analysis provided additional results that there is an inverse relationship between two economic indicators of firms, namely, the percentage change in profitability and capitalization of firms between 2020 and 2021. Analysis of data from companies included in TRBC Industry Name Renewable Fuels provided numerical results that show an average increase in firms’ capitalization of 86%. The study uses analysis techniques such as covariance and correlation. The results show an increase in capitalization of renewable energy companies by 150%, while there is a decrease in income by 2%. However, the capitalization of fossil fuel companies has increased, with an average growth rate of 35%. This situation in the fossil energy market is that company revenues fell by 32% while capitalization increased by 35%. It proves a bubble in the non-renewable energy market. This paper suggests that the period of coronavirus infection has seen a slowdown in economic growth in many countries around the world, but a switch to renewable energy will help improve the quality of life of the population and ensure economic growth.

Financing Planning in New Normal Era for Increasing Profit

“…Surprisingly, according to the study, inflation does not have a significant impact on bank profitability in the short or long term, a subsequent study from (Shaikh et al, 2022) with the results of research that the capitalization of renewable energy companies increased by 150% while revenues decreased by 2%. However, the capitalization of fossil fuel companies has increased and the average growth rate is 35%.…”

Reviewing the Situation and Prospects for Developing Small Renewable Energy Systems in Poland

“…"Consequently, due to the economic crisis during the pandemic, the revenues of many companies around the world have fallen. However, renewable energy firms have felt an increase in investment as the need for their product to restore economic growth in many countries is evident" [153].…”

Designing the profile of industrial consumers of renewable energy in Romania under the impact of the overlapping crisis

“…In spite of the fact that the findings of the abovementioned study are more than agreed by the law-makers, they do not take into account the uncertain conditions generated by a series of crises in which industrial consumers no longer have predictable policies and are unable to ensure the sustainability of their activity. On the other hand, there are also studies according to which during an economic crisis, the investements in a clean energy are highly likely to take place as a result of the need to protect the environment and to preserve a clean air (Shaikh et al, 2022), therefore the industrial consumers should have a stronger voice in terms of the importance hierarchy of using the renewable energy sources and ensuring the energy security.…”