15 Jun 2020
Posted in Power
COVID-19 pandemic expected to reduce power consumption in US commercial and industrial sectors by more than 4%, says GlobalData
In the US, the pandemic is pulling down peak loads and the on-peak and off-peak hourly prices in many regional markets. Going ahead, US utilities’ cost of capital is likely to increase due to the increased volatility and cost-recovery risks, says GlobalData, a leading data and analytics company.
Somik Das, Senior Power Analyst at GlobalData, comments: “According to Energy Information Administration (EIA) predictions, electricity consumption in the commercial sector is expected to fall by 4.7%, the industrial sector by 4.2%, and the residential sector by 0.8% in 2020. Electricity demand in the US will decline by around 3% in 2020 due to the COVID-19 pandemic. Some merchant generators, which are directly exposed to market prices and reduced demand, are therefore likely to face financial challenges.
“One can expect a recovery in electricity demand in the second half of the year in the US due to the opening of businesses in various states in a phased manner.”
California grid operator CAISO witnessed a constant decline in electricity demand, starting from the first week of March 2020. Meanwhile, the New York Independent System Operator (NYISO) has seen declining demand across different parts of the state, with drops proportional to the commercial share of the load in each zone. Furthermore, the Electricity Reliability Council of Texas (ERCOT) reported a decline of 4-5% of energy use and 6-10 of the load when compared with original forecasts in the week of April 5, 2020.
Das continues: “Compared to the average of the past four years, there has almost been an 11% load reduction in the last week of March 2020 across many of the Independent System Operators (ISOs) in the US (except for ERCOT), according to EIA figures. Low demand for electricity due to COVID-19 is leading to an oversupply of electricity which in turn led to grid curtailment of renewables. CAISO curtailed 179 GWh of renewable power in March 2020; 46% higher than March 2019.”