What a second COVID-19 spike means for electricity RSS Feed

What a second COVID-19 spike means for electricity

The worst of the COVID-19 pandemic in the United States seemed to have passed in mid-May as governors began the phased reopening of their states from coast to coast.

Restaurants, retailers, offices and manufacturers unlocked their doors. As they did, electricity demand — a vital sign for the economy — began to steadily increase. Grid operators like PJM Interconnection LLC and the Midcontinent Independent System Operator Inc., whose territories cover half the U.S., have seen power demand rebound over the past month and a half, aided by warming weather that has air conditioners humming.

But a return to normal for the electric industry, as it is for most other sectors of the economy, is far from certain. A new surge in coronavirus cases, especially across the Sun Belt, is raising questions about the rush by states to reopen. The increase is also sowing doubt about a continued rebound in electricity demand.

So what will happen now as temperatures rise?

“I think we just don’t know,” said Warren Lasher, senior director of system planning at the Electric Reliability Council of Texas, the state’s main grid operator.

Another dip in power use could lead to lower revenues and more cost-cutting by utilities, some of which trimmed budgets earlier this year. Some companies also deferred work on new grid infrastructure. A deeper demand plunge also could put pressure on aging fossil fuel plants that are already struggling to compete.

Still, grid operators are quick to point out that electric reliability shouldn’t be threatened by COVID-19, the disease caused by the novel coronavirus.

Andrew Bischof, an analyst at Morningstar Inc., said utilities face more uncertainty than usual going into the second half of the year.

“A lot of them had pretty aggressive mitigation efforts in response to the headwinds from COVID,” he said. “There’s still a lot of unknowns, but I think utilities have a pretty good game plan.”

Bischof said a hot summer could also benefit utilities by offsetting any demand losses as a result of further economic shutdowns related to the pandemic.

In June, the U.S. Energy Information Administration estimated total power demand this summer would be 5% lower than last year.

But throughout the pandemic, demand from more profitable residential customers has been up as many companies continue to have employees work remotely. In fact, U.S. residential demand in April had never been higher for that month, according to the EIA.

One state being watched especially closely this summer, both in terms of an increase in COVID-19 cases and the impact on electricity use, is Texas.

Read full article at E&E News