The COVID-19 pandemic has caused global power demand to decline, forcing developers to temporarily stall new projects. As lockdown restrictions continue, the demand is expected to remain below normal forcing utilities to reconsider their capital expenditure.
Power Technology has conducted a poll to assess the impact of the COVID-19 pandemic on the capital expenditure in the power industry.
Analysis of the results shows that the pandemic will have a high impact on the power industry’s capital expenditure, as opined by 72% of the poll respondents.
While a majority 42% of the respondents voted that the pandemic will have a high impact on the capital expenditure, 30% felt that the impact will be very high.
Another 15% of the respondents opined that the impact will be low, while 10% anticipate no impact. A minority of 4% felt that the impact will be very low on the capital expenditure in the power industry.
The analysis is based on 499 responses received between 01 May and 01 June.
Another recent poll conducted on the site has found that a majority expect capacity additions especially in non-renewable sector to decline.
COVID-19 to affect power utilities and projects
The COVID-19 pandemic has forced utilities to operate with a reduced workforce and implement strict hygiene regulations. Subdued remand due to the lockdown restrictions imposed across the world has presented utilities with technical challenges such as managing voltage levels, reactive levels, and avoiding reactive shunts, according to PricewaterhouseCoopers (PwC).
The pandemic has also forced power companies to reconsider investment in new projects. New utility-scale projects of approximately 4.8GW in the US are expected to be either cancelled or postponed, as quoted by Bloomberg.
Further, up to 3GW of renewable energy projects are expected to be cancelled or postponed in Australia due to the economic downturn caused by the pandemic, according to Rystad Energy.
Utilities may delay investments and cut CAPEX: GlobalData
Utilities will focus on maintaining liquidity to ensure smooth operations during the uncertain environment, according to GlobalData. They may initially focus on delaying investments and retaining capital expenditures at the same levels before the pandemic.
Based on the evolving economic conditions, utilities may focus on further reducing capital expenditure, adds GlobalData.