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[vc_row][vc_column][vc_column_text]By: AJ Traynor 

The COVID-19 pandemic and its associated stay-at-home orders have caused a significant decrease in energy demand. Demand has decreased in the commercial space with offices vacant and hotels running at low occupancy. In the industrial sector, staggered employee shifts and reduced production have contributed to the decline. This drop-in overall demand has caused a significant decrease in energy costs and may have long-term effects on the energy market. While the long-term effects are still uncertain, there are a variety of strategies customers can use now to mitigate risk and keep energy costs low.

During the height of the pandemic, in April and May, electricity demand dropped 5.8%, the largest two-month decrease in over 50 years of recordkeeping. While this demand has picked up a bit as states began their reopening process, U.S. electricity use is still expected to be down roughly 2-3% for 2020, making this the second year straight of reduced consumption. The U.S. Energy Information Administration (EIA) is also predicting a slight decrease in demand for 2021 overall. However, it is important to note that market experts anticipate demand will slowly bounce back to pre-pandemic levels as the economy recovers over the next few years.

Electricity sales to the U.S. residential sector are expected to be down 1.3 % due to lower electricity demand caused by a milder winter. This decrease is offset slightly by increased household electricity consumption as many families are spending more time at home due to the virus. The typical morning and evening consumption peaks are not as pronounced as children attend virtual classes and adults work from home. Similarly, the line between weekday and weekend peaks has become blurred. Weekday residential demand now resembles typical weekend patterns as families spend more time at home; for example, running the dishwasher and doing the laundry in the middle of the day.

 

Move to Renewable Energy Sources

Even with the decrease in demand, it isn’t all bad news for the electricity sector. In the coming years, electricity will begin to take share from other fossil fuel sources such as coal and oil partially due to the increased adoption of electric vehicles and machinery. The generation supplying this increased demand will be derived primarily from renewables, which make up nearly two-thirds of new global power generation and accounted for 100% of new generation capacity added in the US during the summer.

Throughout the pandemic, renewables have almost entirely avoided the economic downturn, and are on pace to post record growth in 2020. This is thanks to a variety of factors, including expiring incentives in the US and China along with technology advances and economies of scale. The growth in the renewables sector is so significant that the International Energy Agency (IEA) predicts that renewables will overtake coal as the largest source of global electricity generation by 2025.

[/vc_column_text][vc_cta h2=”With challenge, comes opportunity.”]Although the pandemic has caused a decrease in electricity demand, energy prices have dropped to extreme lows. Now is the time to take advantage of these low prices by restructuring your current utility contracts. Contact the EEP team today to schedule a contract review to take advantage of these savings.[/vc_cta][vc_column_text css=”.vc_custom_1609787593639{margin-bottom: 0px !important;border-bottom-width: 0px !important;padding-bottom: 0px !important;}”]AJ Traynor was a Fall 2020 intern at Evolution Energy Partners. Thank you, AJ for your contribution! 

 

Sources:

https://www.morningstar.com/articles/1012080/electricity-demands-covid-comeback

https://epic.uchicago.edu/area-of-focus/covid-19/

https://www.reuters.com/article/usa-electricity-outlook/u-s-power-use-to-drop-over-2-in-2020-due-coronavirus-eia-idUSL1N2G61J6

https://www.iea.org/reports/covid-19-impact-on-electricity

https://www.eia.gov/outlooks/steo/report/#:~:text=Milder%20winter%20temperatures%20in%20early,rise%20by%201.3%25%20in%202021.[/vc_column_text][/vc_column][/vc_row]