According to the International Energy Agency, electricity demand dropped significantly under lockdown, with the dramatic reduction in services and industry over the course of the COVID-19 outbreak only partially offset by a higher residential use.
Additionally, across all major regions, the power mix saw a shift towards renewables following lockdown measures due to low operating costs and depressed electricity demand. Natural gas remained the leading source of electricity in the United States, but renewables, coal and nuclear power found themselves trading second place amongst themselves as lockdown measures ebbed and flowed and temperature averages shifted across the country.
In general, across the planet, the IEA found that electricity usage typically fell by up to 20% for each month a nation’s lockdown persisted, and overall electricity demand faced a slump unparalleled since the Great Depression.
As different nations employed different lockdown methods and regulations, their energy consumption rates followed suit. France, India, Spain, the UK and the north-western United States saw their consumption fall by nearly 15% during lockdown periods. In China, the first nation to implement lockdown regulations, energy usage dropped 6.5% in the first quarter. At the height of its outbreak, Italy saw electricity demand drop as much as 75% at times.
One positive of the pandemic could be the dramatic rise of renewable energy, which is now accounting for a record amount of overall energy usage. According to the IEA, this rise could be partially attributed to the fact that you can’t simply shut off a solar or wind farm in the same way that you can turn off a gas-fed power station. This rise in renewables and an overall reduction in industry saw global CO2 emissions reduced by more than 5% in the first quarter of 2020, which increased to nearly 8% by December. This drop in emissions is not only the largest drop ever recorded, but the largest relative drop since the second world war.
The COVID-19 crisis has added a brand new layer of uncertainty to the energy industry, and the resilience of investments will continue to be tested in the coming years. The pandemic will continue to trigger behaviour changes at home and in the workplace and the market will continue to adjust to shifts – for example, the drop in aviation transport and its recovery efforts.
On top of all that, government policy and response to the pandemic, as well as the focus of stimulus spending, will continue to have a major impact on the industry.
One thing is certain – turmoil in the energy industry means that now is the perfect time to analyze your energy bills and usage to best prepare for the future.