Power sector is concerned with decline in electricity demand due to Covid-19

GlobalData Energy 17 June 2020 (Last Updated June 17th, 2020 11:46)

Power sector is concerned with decline in electricity demand due to Covid-19

The imposition of stay-at-home and industrial shutdown orders has reduced the electricity demand and consumption across geographies. The capacity factor at power stations have fallen and the curtailments on renewable power have increased. The efforts taken to restrain the spread of Covid-19 has affected the power utility business.

Recently, a poll was conducted to assess how the sector is concerned about the decline in electricity demand in the current situation of Covid-19 lockdowns. Readers of www.power-technology.com participated in the poll between 26 March and 27 April.

Results of the poll conducted during the period show that 21% of the respondents are very concerned with the declining electricity demand and approximately 20% of the respondents shown slight concern on the falling demand. Whereas the poll indicates that 19% of the respondents are neither concerned nor unconcerned, 13% of the respondents are not very concerned and 26% are not concerned with the impact of Covid-19 on the electricity demand. The analysis was based on 381 responses received during the period mentioned above.

Covid-19 impact on electricity demand: What leading analytics firm GlobalData says

Global energy demand for the Q1 2020 fell by more than 3.5% compared to Q1 2019. More than half of the global population under restricted lockdown, the energy demand is still expected to be lower in Q2 and Q3 2020. The global energy demand is expected to decrease by 6% in 2020 compared to 2019. IEA analysis of data for 30 countries through to mid-April shows that the level of energy demand is driven by the length and severity of lockdowns imposed.

Country-level load impacts reveal that the reduction in the total demand is in proportion to the reduction in the industrial and commercial loads. States or provinces that had most of the confirmed cases have seen more decline in electricity demand as lockdowns were extended and only essential businesses were allowed to operate. Power sector in the US, UK and India have seen their country-level power demand falling significantly to the range of 15%-20% during the survey period.

According to the short-term outlook of the US Energy Information Administration (EIA), US electricity consumption will collapse by a record 4.6% in 2020 as businesses shut due to government lockdowns to slow the spread of coronavirus. EIA projected total US power demand will drop to 3,716 billion kilowatt-hours (kWh) in 2020 from 3,896 billion kWh in 2019. The major drop coming from commercial and industrial sectors, showing more than 6% drop in power demand in 2020 compared to 2019 as many offices close and factories shut or run at reduced capacity.

Countries, including Italy, Spain and France, are experiencing a reduction in electricity demand, peaking at 15%-25%, while the electricity prices across Europe have dropped by approximately 20% since the beginning of the year. The decline is attributed to the slump in the economic activity in the wake of the lockdown due to the coronavirus outbreak. Electricity consumption has levelled out in Germany, France and Italy, after falling for several weeks due to restrictions aimed at stemming the spread of the coronavirus but demand continued to drop in the UK and Spain.

The decrease in the electricity demand has also resulted in driving a major shift towards low-carbon sources of electricity, including wind, solar photovoltaic (PV), hydropower and nuclear. Low-carbon sources are set to extend their lead to reach 40% of global electricity generation in 2020. As a result, the combined share of gas and coal in the global power mix is set to drop by 3 percentage points in 2020. Coal-based generation is expected to hit the most with a decrease to be approximately 10% and natural gas to decrease by approximately 10%.

Renewables are set to be the only energy source that will grow in 2020 because of addition in the capacity as a result of the projects completed in 2019 and early 2020, preferential access to grids and low operating costs. Despite facing supply and logistics issues during Q1 2020, solar PV and wind are expected to increase renewable electricity generation by 5% in 2020 aided by higher output from hydropower.

GlobalData anticipates that the global demand for electricity will continue to witness a slowdown in Q2 and Q3 2020. As most countries are seen lifting their emergencies and allowing industries to resume their operations to bring back the economy on track, the easing lockdowns will not produce an immediate rebound in demand as economic activity will remain depressed for the whole of 2020. Though the demand has shown an upward trend in countries after the lifting of lockdowns, it will be a while before it reaches the normal demand levels.