Economic lockdown reduces electricity demand by 20% per month

Economic lockdowns imposed by countries to contain the spread of coronavirus cuts electricity demand on average by at least 20 percent every month or over 1.5% on an annual basis according to findings by International Energy Agency, a Paris-based think-tank advising European countries on energy efficiency.

Daily data collected for more than 30 countries, representing over one-third of global electricity demand, show that the extent of demand declines depends on the duration and stringency of lockdowns, the IEA said.

“Lockdown measures have significantly reduced electricity demand, affecting in turn the power mix,” the agency said.

While it may have increased residential demand, the benefits were far outweighed by reductions in commercial and industrial operations. This is true even in Nigeria as electricity distribution companies say that revenue and demand electricity demand had fallen since the lockdown was imposed.

In April, the DisCos wrote to the Nigerian Bulk Electricity Trading Company (NBET) that social distancing directives have led to drastic reduction and, in some cases, entirely halted the ability to recreational, religious and industrial clusters within their network to take their usual quantum of energy.

Remote work and skeletal services offered by financial institutions and even some government offices has led to a sharp drop in load demand which their ability to take up grid load allocation have been impaired.

Before COVID-19, Nigeria’s electricity market was already comatose, marked by rising debt but the pandemic has hastened value erosion with power distribution companies (DisCos) report over 50 percent revenue loss as industries who pay the big tariffs are only opening operations gingerly.

With the increasing impact of rising foreign exchange on operating cost, anticipated gas shortage as the bulk of the commodity used in energy generation is associated gas which will fall as low oil prices drive down demand and production, the pandemic has left the sector in worse shape.

Funke Osibodu, CEO of Benin Electricity Distribution Company recently said DisCos have seen supply disruption, rising cost due to exchange rate volatility and loss of revenue “Our costs have gone up but revenue has gone down, as our industrial and commercial customers have been hard hit leading to fall in demand.”

The IEA says demand reductions have lifted the share of renewables in electricity supply, as their output is largely unaffected by demand. Demand fell for all other sources of electricity, including coal, gas and nuclear power.

“In our projection for 2020, global electricity demand would fall 5 percent, with 10 percent reductions in some regions. Low-carbon energy sources would far outstrip coal-fired generation globally, extending the lead established in 2019,” the agency said.

However, faster economic recovery would cut the impact on electricity demand by half, leading to smaller year-on-year falls for coal, gas and nuclear power. But longer lockdowns, slower economic recovery, and wide diffusion of Covid‑19 in developing countries could cut demand even further, says the IEA.

Global electricity demand decreased by 2.5% in Q1 2020, though lockdown measures were in place for less than a month in most countries. Electricity demand fell by 2.5 percent to 4.5 percent in Europe, Japan, Korea and the United States in Q1 2020 relative to Q1 2019, not only because of Covid‑19 but also because weather in January and February was milder than in 2019.

After correcting for weather effects, full lockdowns have reduced daily electricity demand by at least 15 percent in France, India, Italy, Spain, the United Kingdom and the US northwest.

The largest impacts have been felt in economies that implemented strict measures and those where services make up a larger part of the economy. Both of these criteria apply to Italy, where electricity demand fell by over 25 percent. Periods of partial lockdown measures had lesser impacts on electricity demand, up to 10 percent at most, during initial containment phases in Europe and the United States and ongoing measures in Japan.

 

Source: Business Day

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