11.05.2020 | International Energy Agency forecast for 2020
The International Energy Agency (IAE) expects global electricity demand to fall by five percent in 2020, and by as much as ten percent in certain regions severely affected by the Covid 19 pandemic. This decline will affect all forms of production, with the exception of renewable energies, where a slight increase is expected in 2020.
The current Covid 19 pandemic is primarily a global health crisis, but it also has a significant impact on the world economy, energy consumption and CO2 emissions. «The Covid 19 pandemic is the biggest shock to the global energy system in more than seven decades. The drop in demand this year will dwarf the effects of the 2008 financial crisis», comments the IEA.
Its analysis of daily data up to mid-April shows that countries that have imposed a full lockdown have seen a 25 percent average weekly decline in energy demand (all energy sources) and countries that have imposed less stringent restrictions have seen an average 18 percent decline.
Global energy demand fell by 3.8 percent overall in the first quarter of 2020, with the impact most noticeable in March when lockdown measures were imposed in Europe, North America and elsewhere.
More graphics can be found here (PDF).
The Corona crisis caused electricity prices to collapse sharply at the beginning. This applies to both the spot and forward markets. Axpo experts already see a recovery in forward prices. However, it is difficult to provide reliable long-term data on the impact of the corona crisis on energy consumption and the development of wholesale electricity prices.
Nevertheless, the IEA has dared to forecast the current year on the basis of the data it has collected. It has quantified the energy effects of the global recession triggered by the pandemic, which is caused by months of restrictions on mobility and social and economic activities. The scenario anticipates only a slow recovery from the lockdown recession and assumes a significant permanent loss of economic activity in 2020.
The result: energy demand shrinks by 6 percent overall (USA: - 9 percent/EU: - 11 percent). In percentage terms, this is the largest decline in 70 years and, in absolute terms, the largest ever. The impact of Covid-19 on energy demand in 2020 would be more than seven times greater than that of the 2008 financial crisis, and global CO2 emissions are expected to fall by 8 percent to the level of 10 years ago.
Changes in electricity consumption during the lockdown have led to a significant drop in overall electricity demand, with consumption levels and patterns on weekdays similar to those on a Sunday before the crisis.
According to the IEA's 2020 estimate, global electricity demand will fall by 5 percent, with a 10 percent decline in some regions. At the same time, the lockdown will lead to a significant shift towards low-carbon power sources such as wind, photovoltaics, hydropow-er and nuclear power. Having overtaken coal in electricity production for the first time in 2019, they will further extend its lead this year, accounting for 40 percent of global electricity generation - 6 percentage points ahead of coal.
Electricity generation from wind and solar energy will continue to increase in 2020 and will be boosted by new projects completed in 2019 and early 2020. According to the IEA, these forms of energy benefit from low operating costs and, in many countries, preferential access to the electricity grid.
This trend has an impact on the demand for electricity from coal and natural gas, which are increasingly caught between low overall electricity demand and increasing production from renewable energies. As a result, the combined share of gas and coal in the global power mix will decline by 3 percent in 2020 to the 2001 level.
«This is a historic shock for the entire energy world. Only renewables will survive the unprecedented slump in electricity consumption», says Fatih Birol, Executive Director of the IEA. «It is too early to determine the longer-term effects, but the energy industry that will emerge from this crisis will be very different from the one before it.»
The IEA report Global Energy Review 2020 can be found here.
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