UK Lockdown Causes Electricity Demand to Fall by 10%

The demand for electricity in the UK decreased by 10 per cent in the last week after the nation was put into a lockdown to help stop the spread of the coronavirus by the government.

The lockdown forced many businesses to close and therefore meant that there was a drop in the average daytime demand for electricity. This drop also meant that there was a decrease in the wholesale electricity prices due to the fact that renewable sources, which are very cheap at generating electricity once built, are now providing an increased proportion of all electricity generated for the UK.

S&P Global Platts have found that the GB day ahead electricity prices have fallen by 10 per cent in the last week compared to the one prior, whilst being 30 per cent down on prices from this time last year.

The decrease in wholesale electricity prices may take some time to be felt by the consumer, analysts warned, as suppliers will be using hedging strategies. Nevertheless, the decrease in demand for electricity may hit utilities that have a major operation in supplying business and industrial customers, such as EDF, Centrica and Drax, stated Deepa Venkateswaran who is an analyst from Bernstein.

The average demand for electricity remained relatively stable in the UK until Tuesday morning when the lockdown was announced by the government. The lockdown then marked the end of what a normal energy pattern would be.

The forced closure of all restaurants, pubs and cafes along with the voluntary pause in operations from other sectors such as the car industry meant that demand for electricity would have decreased.

EnAppSys did a comparison of the demand for electricity for the 24 and 25 of March, the two days straight after the lockdown, with a day from last year with similar wheather in April.

EnAppSys found that there was a significant and noticeable decrease on average of around 10 per cent. With a more drastic change being noticed in the mornings as there is a lack of factories starting up and people are starting their days a bit later.

The largest differences in demand were found at 6am when the demand for electricity on average was 19 per cent lower than on April 15 2019 which was the day with the most comparable weather conditions to the 24 and 25 of March.

Another consultancy firm, Cornwall Insight, did a comparison of the days after lockdown with an average day in March from 2019 and on average found that there was a difference of around 11 per cent.

An analyst from Cornwall Insight, Tom Edwards, stated that thermal generation plants, which are mainly now gas plants but include a few coal fired power stations, were now being squeezed due to the drop in demand. Whereas, electricity generators which have the lowest marginal cost of production, mainly renewable sources like solar and wind power, are now being used first to meet the reduced demand.

Electricity at cheaper prices has also been coming to the UK through under the sea cables from mainland Europe which has so far been hit even harder by the global pandemic, said Mr Edwards.

On average, the UK tends to be one of the more expensive places in Europe for wholesale electricity prices therefore during this pandemic the excess electricity is flowing to the UK from mainland Europe.

The National Grid, who are in charge of ensuring supply and demand is matched in the UK and keeping a maintained stable grid frequency may have to intervene more with the current market to make sure no issues arise in reliably supplying electricity. However, they have stated that they have a comprehensive plan in place to manage the pandemic and are not anticipating any issues arising with such matters.

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