Keeping the Lights On: US Utility Sector Braces for Coronavirus Impact

Every industry in the world faces dangers and disruptions from
the COVID-19 pandemic. Not all of those industries are tasked with
keeping the lights on.

U.S. power utilities and generators face an array of risks in
the weeks ahead, from energy ‘demand destruction’ as economies slow
to tightening debt conditions that could ripple through the
commodity markets.

So far, North American utilities have not yet seen the sort of
power demand reductions that occurred during China’s massive
lockdown, or those now hitting European
countries
. But they’re likely to start seeing similar impacts
soon, according to a
Tuesday update
 from the Wood Mackenzie Power & Renewables
and Energy Transition teams.

Italy, as one example, saw an 8.1 percent week-on-week decrease
in energy demand after the country ordered its citizens to stay at
home and forced the closure of all non-essential businesses, as the
chart below illustrates. Power demand fell 7.3 percent year on
year.

Depressed power demand from commercial and industrial consumers
is an obvious source of concern, particularly in power markets like
ERCOT where falling oil and natural gas prices could cripple those
industries. Texas is by far the largest U.S. wind market and the
number-two market for solar behind California, fueled in part by
the state’s voracious C&I power demand.

In contrast to C&I, residential electricity demand is
“relatively more stable under economic distress,” WoodMac’s report
said.

“The key question is how long the situation lingers,”
said Dan Shreve, WoodMac’s head of global wind energy research.
“A months-long economic slowdown will likely induce a minor
recession and will probably lead to a minor reduction in power
demand.”

Keeping the lights on during a pandemic 

If utilities can’t keep operating during a crisis, they risk
disrupting the flow of energy that keeps the entire economy going.
That makes their response to the coronavirus pandemic a matter of
national security. 

Utilities are among the 16 industries labeled as “critical
infrastructure sectors” by the U.S. Department of Homeland
Security, marking them for a heightened level of cooperation with
— and scrutiny from — government agencies tasked with public
safety. 

Like many industries, however, utilities may face workforce
disruptions or shortages as COVID-19 bites. The Edison Electric
Institute (EEI) utility trade group warned
last month
 that up to 40 percent of utility employees could
be out sick, quarantined, or at home to care for sick family
members as the pandemic spreads. 

EEI also warned that during the pandemic, “mutual assistance
programs” that bring utility workers from across the country to
aid those struggling to restore power after storms and natural
disasters “may not be available or may be severely
limited.” 

Utilities are taking steps to protect their most vulnerable
customers, EEI spokesman Brian Reil noted. A growing number have
announced they will stop disconnecting power to customers for lack
of payment, and to work with those struggling to pay their bills
due to the economic dislocations of the pandemic. 

Southern California Edison has already set up telework for about
8,000 of its 13,000 employees, while the remainder working in the
field or in customer-facing jobs are taking steps to keep their
distance from the public and disinfect facilities, the
utility reported
last week
.

Source: FS – GreenTech Media
Keeping the Lights On: US Utility Sector Braces for Coronavirus Impact