The UK power industry has lost £1.1 billion due to the impact of COVID-19, according to energy trading company Hartree Solutions.
As power prices and demand fell between March and August due to the lockdown, so income fell.
Wholesale power costs fell by £488 million, while non-commodity power revenues saw a loss of £649 million. Utility hedges are set to lose over £35 million, as excess volumes of electricity purchased prior to lockdown are being sold back to the market at lower prices.
Power prices fell to a low of £3.30/MWh on average in April – the month the impact was most acutely felt – with the power industry losing £353 million of revenue directly because of COVID-19 in that month alone.
Hartree Solutions stated that while COVID-19 drove negative price periods in April, this was a ‘brief insight’ into what’s to come in the next few years as renewable buildouts continue to grow.
In April, average monthly demand was 7.5% lower than normal, with a new record low – falling to just 24.18GW – recorded over the bank holiday weekend. Demand destruction was at 14%, but the effects are reducing and are likely to be just 2% in August.
Daily demand is almost back to pre-lockdown levels now, and the low demand and high renewables penetration meant 3 million tons of carbon was spared during lockdown.
In a blog discussing the research, Adam Lewis, co-founder and partner at Hartree Solutions wrote: “While the impact of the first wave of COVID-19 looks to be easing with August showing the power market nearly back to the status quo, attention starts to turn to winter. Here, several unknowns make for an uncertain outlook amid the threat of a second wave of the coronavirus.
“To date, much of the demand loss has been during the morning peak between 7 am to 11 am, largely as a result of school closures. However, with schools scheduled to return in September and reports indicating limited evidence of widescale COVID-19 infections at schools, demand losses as a result of COVID-19 could well be muted by the time winter kicks in.”