The novel coronavirus pandemic has cut power demand by 8% to 9% power in various US markets, with some market regions – New York City, for example – having much more demand destruction, an S&P Global Platts Analytics analyst said Wednesday.
"Weather-adjusted load growth was sluggish in 2019, even before we were seeing the coronavirus impacting demand," said Manan Ahuja, Platts Analytics' senior director of North American Power, during a webinar entitled, "Demand Destruction in Global Power: How the Dispatch Stack is Faring."
Weather-adjusted average load for the Lower 48 states was down 0.6% in 2019, versus 2017, and so far in 2020, that average is down 0.8% from 2017, according to Ahuja's written presentation.
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"If we take into account the weather, load should have been quite a bit higher," Ahuja said. "It has been eight to nine percent lower than what we would expect in a world without the coronavirus pandemic."
In New York City, the coronavirus-related load decreases, after adjusting for weather, have been down about 16%, the presentation states. In Washington state, coronavirus-related decreases have averaged about 9% since February 1.
As these declines have coincided with significantly lower natural gas prices, coal's share of the generation stack has fallen 22.3 average GW so far in 2020, while natural gas' share has surged 13 aGW, the presentation states.
Without adjusting for weather, average daily peakloads for 2020 through Tuesday were down 16.4 GW, or 5%, compared with the same period of 2019, across the seven US independent system operators plus the Bonneville Power Administration, which maintains peakload information for part of the Pacific Northwest.
Only in the Electric Reliability Council of Texas is the average daily peakload up, just 529 MW or 1.2%, compared with the same period of 2019.
The biggest absolute and percentage difference among the various power market regions is in PJM, where the peakload has so far averaged just 93.1 GW in 2020, down 7.6 GW, or 7.5%, compared with the same period of 2019.
'UNPRECEDENTED' BUSINESS SHUTDOWNS
A.J. Goulding, a nonresident fellow of the Columbia Center for Global Energy Policy and president of London Economics International, said "while mild weather is a factor, the declines are real and COVID-19 related."
"While there are regional variations, the number of businesses that are shut down is unprecedented, and any moderate increases in residential load from working from home cannot offset the declines in commercial and industrial load," Goulding said Wednesday.
As transportation has fallen dramatically, cutting oil demand, the entire fossil fuel energy complex has collapsed, with May West Texas Intermediate crude plunging to negative $37/barrel Monday before recovering to roll off trading Tuesday at about positive $10/barrel.
So far this year, May Henry Hub futures fell from a high of $2.203/MMBtu January 13 to a low of $1.552/MMBtu April 2 before rebounding to settle at $1.821/MMBtu Tuesday.
These changes have caused massive coal-to-gas shifting, with gas-fired units operating at an average level of 13 GW more than in the same period of 2019, while coal-fired units have been operating at a level 22.3 GW less than in the same period of 2019, Ahuja's presentation states.
Wholesale power prices have also plunged. Among the 30 power pricing hubs included in Platts' monthly Power Trackers, day-ahead on-peak prices in the first quarter were down an average of almost 36% in comparison with the same period of 2019.
Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, an interdealer commodities broker, said "the decline in power prices is directly attributable to the pandemic as it has caused a government-enforced recession."
"If the lockdowns continue total power demand will be sharply curtailed due to the impending global depression," Faulkner said Wednesday. "But, even if things return to 'normal' in earnest, the lasting economic damages as well as general melancholy from consumers and businesses should keep power demand low well into 2022."
Matthew Cordaro, a former Midcontinent Independent System Operator president and CEO who now resides in New York, also offered a bleak outlook.
"We are looking at a long-term economic downturn which is likely to keep power demand and power prices depressed for the foreseeable future, that is well into 2021," Cordaro said Wednesday. "Even when the economy recovers, there will be an emphasis on reducing electricity consumption and using electricity more efficiently, given the tremendous economic upheaval at hand."
London Economics' Goulding said he expects the power usage decrease to persist "until at least June, but I do not expect a return to long-term norms in terms of consumption or future load growth."
"A portion of the demand destruction will be permanent, particularly among commercial customers, as the potentially permanent decline in the number of retail stores is not likely to be fully replaced by warehousing and logistics load," Goulding said.