Coronavirus: energy industry keeps calm and carries on

As with all industries, the Covid-19 (Coronavirus) pandemic has initiated a rapid response from the energy sector. However, the impact may be a downturn in demand.

With many countries around the world now officially in ‘lockdown’, the energy generators and distributors are focused on meeting new demand patterns caused by populations working from home and industries closing down in the short term.

In fact, most generators are remaining focused but calm in the face of the pandemic crisis.  In the UK, the National Grid ESO is predicting an overall reduction in energy demand. The predictions were included in information on the Energy Networks Association (ENA) website: “National Grid ESO has analysed the anticipated effects on electricity supply and demand of long-term mass self-isolation of the UK’s workforce.

It is expected that demand across the country would reduce. This is largely owing to a likely reduction in industrial and commercial demand, which would likely be greater than the increase in domestic demand as people stay at home.”

In an open letter to the public, the ENA also stated: “In the UK we’ve got one of the most reliable energy networks in the world. There are over 36,000 of us working hard to keep your power on and your homes warm. As you would expect, we’ve taken steps to make sure that we keep your energy flowing: minimising access to our control rooms, splitting teams to reduce risk of cross-infection and by preparing to bring in additionally trained colleagues if we need them.” However, the greatest challenge to operators may be a direct loss of staff as a result of the virus, leading to plans for short-term retraining or re-assigning staff to previous roles.

For supply chain organisations, such as Fundamentals, maintaining service and continuity is the critical factor.  Fundamentals’ Operations Director, Martin Harris commented: “The majority of our strategic suppliers are UK based, relying on UK supply for materials and components. To ensure we are able to offer customer specific product variation we maintain average stock levels at four months from these suppliers. We are maintaining contact with our suppliers to ensure future continuity of supply.”

Meanwhile, regulators around the world were issuing advice and guidance. In the UK, OFGEM reinforced the government’s action plan: “Ofgem is working closely with government to ensure industry is taking all necessary precautions to serve the needs of customers, including the vulnerable and those who may need to self-isolate. We expect industry to take this seriously and want to ensure they have robust plans in place. This means taking proactive steps to maintain business continuity, including if a licensee has a reduced workforce.” The latest statement from their CEO, Jonathan Brearley, can be viewed here.

Across Europe, generators and distributors were implementing plans as demand patterns changed. While declaring ‘business as usual’ in terms of power supply as demand fell under the national lockdown, Spain’s operators expressed concern about the longer-term implications of lost revenue as many of the country’s major manufacturers scaled-back or shut-down operations entirely.

In the US, one of the main grid security monitoring organisations, North American Electric Reliability Corporation (NERC), called for an immediate update of business continuity plans, issuing an ‘all-points bulletin’ to electricity suppliers highlighting the potential impact of the pandemic on supply chain, and the potentially increased risk of cyberattacks on networks.  Many of the state-wide operators were already working to implement the NERC guidelines.

In China, where the virus was first identified, the massive downturn in factory output led to predictions of a drop in 2020 power demand by as much as 73bn kWh – around 1.5% of the nation’s industrial power consumption, but the equivalent of the entire annual power demand for Chile.

In some parts of the world, the surge in domestic power usage was proving more challenging. In Philippines capital, Manila, power distributor Manila Electric Co claimed it was “doing its best” to ensure a stable power supply in its area.  In India, major power projects came under threat with construction based on Chinese-sourced equipment.

If you have any questions for Fundamentals, please do not hesitate to contact our Operations Director, Martin Harris: | +44 (0)1793 847163 

Covid-19 in 3D Image: CDC/Alissa Eckert