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Summer Outlook 2020: COVID-19 could cause 20% demand drop in 'uncertain' period

Image: Getty.

Image: Getty.

Summer demand could fall by up to 20% due to the effects of COVID-19, according to National Grid ESO.

The ESO today (16 April) released its Summer Outlook report, an annual summary of the changes in demand and subsequent challenges in balancing the system expected to occur over the summer period.

Prior to COVID-19, National Grid ESO expected demand to be similar to summer 2019. However, the ESO has now been conducting analysis to create a range of scenarios for demand levels due to the impact of COVID-19, benchmarked against the impact that the pandemic has had on other European countries which are further along in terms of spread.

The initial business-as-usual forecast placed peak demand at 32.1GW and minimum demand at 17.6GW, down slightly from a peak of 33.7GW and minimum of 17.9GW in 2019.

In a high impact scenario this could fall by 20% to a peak of 25.7GW and a minimum of 15.3GW, however a low impact scenario could see demand reduced only by 4%, dropping to 30.8GW and 17.3GW respectively.

The effect of COVID-19 on peak demand. Image: National Grid ESO.
The effect of COVID-19 on peak demand. Image: National Grid ESO.

Already, shifts in demand have been seen due to the pandemic. Energy demand fell to a new record low of 24.36GW on 11 April, and was then subsequently beaten again on 12 April when it fell to 24.18GW.

March also saw large drops in electricity demand, with demand falling to 31.2GW on 25 March, almost 3GW less than the average for March 2019.

Roisin Quinn, head of national control at National Grid ESO, said that the assumption is that lower demand makes the ESO’s job easier, however “it’s just as important” to manage lower demand as it is to manage the peaks.

The challenges are different, Quinn added, but are ones the ESO is “used to dealing with”, enabling it to draw on its experience in the months ahead.

Quinn was also keen to stress that although it is "too early to be precise" about the long-term impacts, in the short term there will be no issues with supply meeting demand.

If the summer demand for electricity remains low, National Grid ESO expects it will need to take more action to balance and operate the system. Normal summer operability issues are likely to be amplified by the demand reductions, and existing balancing services used more often and for longer periods than in previous summers.

Additional sources of flexibility may also be required, the ESO said, and it expects to engage with the industry on existing and new services via its Ancillary Services route as well as through weekly COVID-19 webinars.

The ESO expects to be managing periods where inflexible generation output in addition to flexible wind output exceeds the minimum demand more often than usual as a result of COVID-19, as well as periods where inflexible generation exceeds minimum demand alone.

Therefore, it may need to trade to reduce the level of interconnector imports, curtail flexible wind farm output at a national level via the Balancing Mechanism or direct trade, request pumped storage units to increase demand by moving water back to their top lakes and it may need to issue a local or national Negative Reserve Active Power Margin.

It also highlighted that managing reactive power, voltage levels, low transmission demand and high volumes of low inertia generation will “continue to be challenging”.

In addition, regardless of COVID-19, electricity demand at transmission level remains particularly influenced by the weather, the ESO said, with more sunshine leading to increased generation from distribution-connected solar PV and lower transmission system demands.

It expects solar generation to continue to have a significant effect on system demand at a transmission level, however the lower demand caused by COVID-19 may exacerbate this effect.

Forward pricing and the effect on the Winter Outlook

Also included within the Summer Outlook is an examination of forward prices, with the ESO finding that COVID-19 has put downward pressure on forward prices in Great Britain and continental Europe.

The trend of forward baseload prices for summer 2020. Image: National Grid ESO.
The trend of forward baseload prices for summer 2020. Image: National Grid ESO.

However, forward prices in GB remain higher than in the French, Dutch and Belgian markets, meaning the ESO expects a similar import/export pattern to summer 2019.

There may also be more periods with day ahead negative pricing, the ESO said, as industry participants adapt to the constraints that COVID-19 is placing on normal operations.

April has already seen a period of negative pricing on the day ahead hourly market, with electricity prices dropping to -£66 in part due to low demand and surging renewables.

National Grid ESO is also considering the impact COVID-19 may have on the winter period due to maintenance work that would ordinarily be carried out in the summer being delayed. Maintenance may therefore be pushed into the winter and could potentially change the supply profiles of the generation fleet. However, more details on National Grid ESO’s planning for this will be released in its Winter Outlook document.

“Our modelling will continue as the situation develops and the summer progresses and are keen to continue to engage with industry to understand the potential impacts of COVID-19 on the wider electricity system," Quinn added.

"These are uncertain times and, as always, we welcome feedback on this or any other topic so we can ensure our documents are as useful as possible.”

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