COVID-19 Energy Industry


Covid-19 (Coronavirus Disease 2019) is a new addition to the family of viruses earlier known as Severe Acute Respiratory Syndrome (SARS) in December 2019. The World Health Organization has described COVID-19 as pandemic as it has spread all over the world, irrespective of the cultural and religious boundaries. More than three million peoples have been affected by the deadliest virus and more than two lac peoples have lost their battle against the COVID-19. Apart from the life-threatening effects and psychological problems for human beings, it has created an unprecedented multiple global economic crises.

Impacts of Covid-19

The only successful preventive measures against the COVID-19 are considered to be social distancing. Therefore, lockdown measures have been taken all around the world to cope with the situation. All educational institutions have been closed, social gatherings have been banned, sports activities have been delayed, factories or engineering units have been shut down and access of the peoples to shopping malls and market places have been limited to only a few hours to minimize or control the spread of Coronavirus. There is a huge decline in the production of goods and various products across the world, and it has to lead to an overall increase in the prices as well. The fall in demand for goods has also contributed to the plummeting prices of goods and services. This has caused huge impacts on the economy of the world, especially the countries like United States of America and China.

Impacts of Covid-19 on the energy sector

It has resulted in economic contraction and a consequential drop in energy consumption like electricity, gas, and oil. People around the globe are practicing social distancing, and factories or engineering setups are closed, therefore, the movement of vehicles and fuel consumption has been reduced to a considerable figure.

In many countries, nuclear reactors are being used to meet the requirement of energy and maintaining electricity supplies. It is almost accounted for 10.3% of world total power generation, as per figures of 2019. Nuclear Technology is growing in many countries as the requirements are not being met through other sources. For the purpose of electricity generation, almost 31 countries are using nuclear reactors. Robust safety culture is already in place in the nuclear industry worldwide. Keeping in view the guidelines circulated and Standard Operating Procedures implemented in various regions and countries, actions were taken to cope with the situation. Companies worldwide had the alternate plans to execute, after knowing about the coronavirus first detected in China’s Wuhan region and prior to being known as a global pandemic.

Electricity demand:

Due to the COVID-19 pandemic situation, electricity demand has been reduced and thus its price reduction has been observed in the electricity sector. Electricity prices have collapsed and turned negative in some European countries

If such lower electricity demand is sustained for a longer period of time, it will result in a very difficult economic situation for wedge fossil fuel generators. If demand is limited then definitely revenues will be reduced depending upon the reduced output. It can result in the closure of some fossil fuel power plants (privately-owned) and unemployment as well. However, renewable energy operators will face lower economic crises as compared to fossil fuel counterparts. Government power utilities can survive only if the Government subsidizes them for survival.

Oil Prices:

The energy sector has been hit very badly by COVID-19. On the other hand, during the COVID-19 pandemic situation, an oil price war has begun between relevant countries or authorities. Less consumption of fuel and oil price war has considerably reduced oil prices even into negative pricing. As per IEA Oil Market Report – global oil demand is expected to reduce by a record 9.3 MB/d year-on-year in 2020. Such a demand situation was last observed in 1995. Sustained low oil prices can potentially discourage the idea of biofuels and will have an impact on electric vehicle uptake. Governments can give incentives to minimize the impacts on electric vehicle uptake. Covid-19 has also accelerated the continued drop in gas prices as well.

Solar Energy:

The main suppliers of solar photovoltaic and equipment for energy storage are China, the Republic of Korea, and the United States. COVID-19 came very hard on these countries and have hit very badly. Lockdowns in these countries have disrupted the supply of the equipment. Therefore, 2020 will experience a major downfall in renewable energy additions. It has given rise to questions that COVID-19 will affect the Asia-Pacific’s 200 million people who are without electricity and most vulnerable. Furthermore, cold storage and refrigerated transport will be required for the expected coronavirus vaccine over large areas for underdeveloped countries. The role of solar energy will be indispensable. Delays are being experienced from China for deliveries of energy sector equipment, therefore, renewable energy companies are failing in meeting the deadlines for completion of their project works. For example, 3,000 MW of solar and wind energy projects in India has been delayed due to a lack of timely delivery of energy equipment. World’s leading producer of rechargeable batteries, has faced the same problem due to a pandemic situation and was unable to complete the test of new rechargeable batteries in time and failed to deliver the same in time for the European market.

Role of Governments:

In many countries, the Government has relaxed the end users by providing them relaxation regarding the submission of energy bills. End users can delay their bills for up to a few months. Defaults of payments have increased the problems and financial hardships of the energy sector. Resultantly, revenues of the energy sector companies will decrease, and if the crisis continues for a long period. Their financial status will face vanishing effects and this would negatively impact the cash flow.

Roger Lewis

By Roger Lewis

Hi, I'm Roger, a long time energy nerd and advocate for clean energy. For the last 10 years, I have researched and studied the energy industry and now I'm sharing my thoughts with the world.

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