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Chart of the Week

2020

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Energy demand falls amid coronavirus outbreak

Sam Holland
Sam Holland

Since the government imposed restrictions on movement in the UK on 24 March, demand for power has fallen around 11% March 2019 levels. Comparatively, demand for gas has been less affected due to the dominance of the domestic heating market on gas demand.

In this Chart of the week, we look at the timeline of the Coronavirus outbreak and the impact of milestone events on the daily gas & power consumption in the UK.

In the first part of March, average daily power demand was 0.78TWh, only slightly below the seasonal normal, however demand began to fall between 20 – 23 March as schools and businesses were asked to close. A number of large end users had already scaled back demand as a result of the pandemic, including manufacturers unable to source parts from overseas. A similar trend was seen in the service sector as most bars, restaurants, pubs, gyms, cinemas and many schools have closed. These two sectors represent around two thirds of total power demand and their partial closure has resulted in total daily demand falling by 0.1TWh on average in the first week of lockdown. Over the initial three working week shutdown period this could result in a 0.5% reduction in total annual demand.

Longer-term consequences driven by the fall in demand could effect non-energy charges. This is due to smaller charging bases for networks and policy subsidies and the changing of consumption patters for households and businesses. We expect disturbances to price caps from Summer 2020 onward. There is also the potential for challenges in electricity system balancing if demand remains low and existing generation fails to operate.

Timeline of UK Events

  1. Initial closure of some schools on 11 March.
  2. On 18 March most schools were closed. Two days later all pubs, clubs, restaurants and indoor sport and leisure facilities were ordered to close.
  3. On 23 March, the government imposed further restrictions on freedom of movement. This saw a further reduction in demand as the majority of the workforce is now working from home.

 

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