Power Loads Changing as Coronavirus Impacts Energy Sector

Power industry analysts who’ve spoken with POWER agree there will be an impact to power load due to the COVID-19 pandemic, with the loss of much of the U.S. commercial and industrial demand for power, and certainly an uptick in the amount of demand from the residential sector as more people work from home, away from their normal office setting.

Innowatts, a Houston, Texas-based energy analytics company, has forecast that daily residential energy use during the COVID-19 outbreak will rise by 6% to 8% as people remain in their homes. The company’s founder and CEO, Siddhartha Sachdeva, on his LinkedIn page said the rise in residential electricity consumption will coincide with a “commercial consumption decline, most notably schools (-30%) and commercial buildings (-25%).”

S&P Global in a report last week said, “In the near term, utilities will likely see some reduced sales volumes as major sporting events, concerts and businesses scale back drastically, compounded even further by social distancing requirements being mandated or recommended by federal and local governments across North America … the majority of North American regulated utilities are well positioned to handle the immediate impact of COVID-19, [but those with] disproportionate exposure to [the] commercial and industrial class of customers could be vulnerable to reduced sales volumes.”

S&P Global/Platts reported March 23 that there have been “significant load declines in a number of areas and projections that mild weather and business shutdowns will continue to suppress load over the coming weeks.”

A spokeswoman for the Midcontinent Independent System Operator (MISO) told the group that the regional transmission organization’s peak load for March is off 18% compared to March 2019, and down 13% month-to-date compared to the monthly March average since 2014.

The New York Independent System Operator (NYISO) told S&P Global/Platts it had not yet noted major statewide reduction in peak power demand, though load declines are being observed in New York City, mostly between the hours of 9 a.m. and 5 p.m.—a typical workday, when office buildings that would be occupied are empty or mostly empty due to the state’s shelter-in-place edict.

Plans for the Pandemic

Utilities have pandemic plans in place, with some ready to house critical personnel at power stations to keep electricity flowing.

POWER is keeping abreast of the rapid developments in the power sector due to the coronavirus and will continue to share information and insight into how the pandemic is affecting the operations of utilities and other energy companies.

The utilities sector fell 17% on Wall Street in the past week, with analysts saying a variety of factors played a role: difficulty in assessing load demand shifts; possible earnings reductions from shutdowns of industrial facilities; lower cash flow due to less business activity and longer grace periods for bill payments, which could make it more difficult to repay debt; and the widespread pattern of de-risking across all sectors as investors flee.

Bottom line? Utilities will collect less revenue, and could look to government officials for help, perhaps through cost-recovery measures—which could mean rate increases.

Impact to Renewables

The energy analysts at BloombergNEF (BNEF) last week downgraded their expectations for the solar, wind, and energy storage sectors for the year. The group said it had cut its forecast for global solar demand capacity additions in 2020 by 16%, in large part because the sector relies heavily on demand in China, where there have been widespread impacts due to the coronavirus.

BNEF had expected solar capacity additions to reach around 121-152 GW this year. It has lowered that forecast to between 108-143 GW. A drop in 2020 would be the first annual decline in solar capacity additions in at least 30 years.

The group said the wind energy industry should fare better, but noted there is “considerable downside risk” to its original 2020 forecasts for new wind installations. Its original forecast called for as much as 75.4 GW of new wind deployments this year.

The Solar Energy Industries Association (SEIA) last week warned of a “crisis” in the sector due to the coronavirus, with lost jobs and supply chain disruptions causing project delays, among other things.

The group on March 23 sent a letter to Congress, in which it cited analysts’ estimates of  “losses between 16% and 30% of volume this year and some sectors could see as much as 50% reduction.” The group has said as many as 120,000 jobs in the solar industry could be lost, nearly half of the sector’s workforce of about 250,000.

Three major renewable energy sectors—solar, wind, and energy storage—all are seeking relief in the coronavirus stimulus package being debated by Congress. Industry trade groups are lobbying for an extension of federal tax credits, and changes to existing investment tax credits (ITC) legislation to allow more projects to be eligible for tax relief, particularly those that might otherwise miss out on ITCs due to delays caused by COVID-19.

The American Wind Energy Association (AWEA) last week said the global pandemic puts $43 billion of wind energy investments and payments at risk. AWEA CEO Tim Kiernan in a statement said as many as 35,000 wind energy jobs are in jeopardy.

The U.S. Energy Storage Association (ESA) postponed its annual conference, which was scheduled in Pittsburgh, Pennsylvania, April 8-10. The ESA now expects to hold the event Aug. 26-28 in Pittsburgh.

Vogtle Expansion Project Continuing

John Kraft, a spokesperson for Georgia Power, said the utility “remains focused on protecting the safety and health of workers at the Vogtle 3&4 site, and the company has implemented comprehensive plans in response to the COVID-19 pandemic.” Kraft said workers at the site—there have been as many as 9,000 involved in the construction of two new reactors at the Vogtle plant near Waynesboro, Georgia—have adjusted break schedules and work schedules in response to the coronavirus. Kraft said Georgia Power’s “proactive steps employ worker distancing strategies, including adjusting break schedules and setting up mobile facilities to add more distance between individuals onsite, as well as expanding our onsite medical clinic. We continue to draw on the expertise of medical professionals and consult the latest recommendations from the Centers for Disease Control and Prevention, as we encourage the workforce to more closely monitor their health, report health concerns, and stay home if not feeling well.”

Kraft said the project is “avoiding in-person, large group meetings and gatherings. Instead, we are communicating as much as possible in smaller groups in the field and increasing the use of mobility communications devices, such as smartphones and tablets.”

Tesla Closes Two Plants

Tesla on March 19 announced plans to close two manufacturing plants, one making electric vehicles (EVs), and the other supplying products for the energy storage and solar markets. The company said it will close its Fremont, California factory, where it makes EVs, and its Buffalo, New York factory, where it produces solar and energy storage products.

Momentum for sales of EVs could stall as gasoline prices continue to fall. A dramatic drop in the price of oil, along with lessening demand with fewer cars on the road as schools and businesses close, means consumers may be comfortable sticking with gas-powered vehicles. And a quickly receding U.S. economy, with Wall Street in bear market territory, means consumers that might buy an EV may well decide to put off the purchase until the economy stabilizes.

Darrell Proctor is associate editor for POWER (@DarrellProctor1, @POWERmagazine).