Digital Star Top Job Logo
News

The impact of the current pandemic on the power sector – a New Report by CESI

The impact of the current pandemic on the power sector – a New Report by CESI
03 . Aug . 2020

The COVID-19 pandemic has had hurtful effects globally. The crisis affecting economies of all the countries involved is flanked by the dramatic consequences of the virus on people’s health. It is, undoubtedly, an unprecedented crisis, the heaviest since the second post-war period, which had side effects on all the main industrial sectors. Furthermore, the associated lockdowns have led to unprecedented economic costs around the world. European countries with larger outbreaks (such as the United Kingdom, Spain, Italy, Germany and France) have suffered significantly larger economic losses .

In Italy alone, for example, the International Monetary Fund has forecast a 9.1% reduction in the GDP, while the European Commission has estimated an even direr -11.2%. Therefore, the price of electricity underwent marked reductions on the European energy market, as low demand, the high production of renewables and the fall in the price of fossil fuels dragged cost down significantly. Electricity usage is a very useful high-frequency indicator of economic fluctuations. In fact, electricity usage has been declining in most European countries: on average, electricity usage was about 5% lower than in 2019 during early March and the drop accelerated to 15% during mid-April.

In this respect, to better understand the critical issues caused by the COVID-19 emergency, CESI has prepared a study that reveals how the pandemic lockdown opened up a new window onto the future. Our study focused on the period mentioned above, highlighting a decrease in energy demand connected to the lockdown measures adopted by individual countries: -25% in Italy, -20% in France, -12% in the United Kingdom. In order to understand and face the issues caused by the consequences of COVID-19, the analysis carried out by CESI underlines the need to improve flexibility and resilience measures to manage a system with a high penetration of renewables.

Examining the impact of the pandemic on the energy system, the CESI report highlights fundamental indications for the development of the sector over the coming decade. The analysis is particularly significant as a data-based prediction on what could take place over the next five years in terms of the penetration rate of renewables: the 44% during lockdown is very close to the 44.6% expected for 2026 in the 2030 Horizon program. Following such results, our study shows how, on the one hand, the collapse in energy demand meant that the ratio between the generation of RES (Renewable Energy Sources) and demand increased. On the other hand, however, the study also highlights a drastic reduction in export capacity abroad, due to the need to balance the national energy system and ensure its stability, with a consequent significant drop in imports and market fragmentation.

The analysis we produced, however, underlines some possibilities for the future development of the power sector under unconventional circumstances: an accelerated roadmap to make the electric system more flexible and guarantee a greater integration amongst renewable sources. In order to balance national energy systems in Europe and ensure their stability, the study states it is necessary to anticipate and accelerate both the concrete use of additional flexibility measures (i.e. pumping, batteries , storage, etc.) and the creation of interconnection infrastructures. These infrastructures, according to our research, are key to concretely increase the flexibility of the energy system and, at the same time, they benefit the economy both for the investments necessary for their realization and for the increase in the level of occupation they can determine.

In order to make demand generation and aggregation assets more efficient, it is also necessary to invest on the digitalization of energy, control tools and data monitoring. Furthermore, it is fundamental to modify legislation to provide the transition process with rapid and streamlined authorization procedures; uniform, simplified national regulations; and the adoption of simple and flexible support tools.

Access the our study

Related contents