Pandemic and electricity demand: Now what?

Source: By Edward Klump, E&E News reporter • Posted: Wednesday, November 4, 2020

The COVID-19 pandemic has lowered U.S. electricity demand and shifted usage in ways that may linger once the current health crisis is over, according to new research from Columbia University’s Center on Global Energy Policy.

The report, publicized last week, says net load reduction after the coronavirus lockdown may be about 1.6% to 4% of 2018 U.S. demand. That’s cumulative, looking out three to five years from June 2020.

“Failure to properly account for these declines in demand could lead to excess capacity in the electric power sector, added costs for consumers, and losses for investors,” the paper says.

The document focuses on how U.S. demand may change over those three to five years, suggesting the future need for baseload generating capacity may drop significantly. And it says the effect on power consumption may be less than what occurred after the global financial crisis of 2008-2009.

The COVID-19 crisis also is likely “to accelerate changes in the structure of electricity demand that were already underway,” the paper says.

The report arrives as power providers, regulators and customers are deciding how to proceed as vaccine timing is unclear and the pandemic shows no sign of ending. Many residents are still working from home while others are struggling to pay bills. Utilities continue to pursue new generation around the U.S., though questions about demand and costs may weigh on regulatory reviews given current economic conditions.

Among the factors to consider, according to the new research, are energy efficiency measures potentially moderating growth in the industrial sector. Permanent work-from-home setups may flatten load shapes, the paper says, while not boosting residential load significantly. At the same time, it suggests commercial load may shift as the retail sector contracts and more warehouse and logistics space is tied to electronic commerce.

The report was authored by A.J. Goulding, the president of London Economics International LLC who also is a nonresident fellow of the Center on Global Energy Policy. He had research support from two consultants at LEI on the power demand work.

One feature of the research — and its look out three to five years — is a coronavirus load reduction impact model. In a high-impact case, there’s a potential reduction equivalent to about 28.1 gigawatts of generating capacity at a 65% capacity factor. That would surpass the amount of new capacity added in the U.S. last year, the paper says.

Implications for policymakers, it says, include a need for grid operators to revise demand outlooks. Definitions of peak and off-peak hours may need to be revisited, the paper suggests, and smart-grid components may be some of the best uses of possible stimulus funding.

The report also features a section of caveats, noting everything from potential de-urbanization to possible long-term structural changes in the restaurant and education sectors.

“The pace of transportation and heating electrification was one of the primary uncertainties for load forecasting prior to the COVID-19 crisis, and continues to be so thereafter,” the paper says.

For some grid regions, it says, “transportation and heating account for all of projected load growth and make up for declines due to energy efficiency.”

Joshua Rhodes, a research associate with the Webber Energy Group at the University of Texas, Austin, said it may be smart to focus on better using existing assets as the future remains uncertain. That could include modernizing the grid and upgrading transmission.

But Rhodes, who reviewed an earlier draft of the Columbia report and saw the final version last week, said more electricity may be used in the future given electrification trends in the coming decades. That could depend in part on the aggressiveness of measures to tackle climate change, such as an energy-intensive process for creating green hydrogen.

“Electricity transitions happen over time,” Rhodes said.