Researchers from Columbia University have released a report on the potential effects of the COVID pandemic on U.S. electricity demand. “The ongoing COVID-19 pandemic has caused unprecedented changes in the ways people interact and approach economic activities,” the paper reads.

Ultimately, they conclude that electricity demand is unlikely to return to normal levels even after the development of a coronavirus vaccine. “Electricity demand has declined and usage patterns have been altered, changes that could remain even after the pandemic ends.” Compared to 2018, demand is projected to be reduced by anywhere from 65.2 to 158.8 Terawatt hours, or approximately. 1.6 to 4.0 percent. Likewise capacity could drop by more than 28GW. The study warns that a failure to account for these declines could create excess capacity in the power sector, leading to increased costs for consumers.

Pandemic creates shifts in total residential and commercial loads

The scientists predict shifts in both residential and commercial power use, not unlike those that followed the 2008 financial crisis. In the decade after that event, power demand grew by .5 percent, compared with 1.7 percent in the decade prior, as residents and businesses alike took advantage of new energy efficiency and solar technology. Although these comparisons are not intended to imply that the economic impacts of the current pandemic are exactly analogous to those of the Great Recession, it does provide a baseline from the last event to cause such a major decrease in consumption.

Pre-pandemic, most ISOs had projected moderate growth in demand. After controlling for weather differences, actual usage ended up decreasing by more than 10% in some cases. New York ISO (NYISO), covering one of the hardest-hit regions in the U.S. reported a demand 4-9% below what was expected. Midcontinent ISO topped the list, reporting reductions of 9-13% for late March and early April.

Several factors contributing to the change in how energy is used

According to the report, “primary drivers of incremental changes in electricity demand after the Great Lockdown will be due to changes in residential demand and shifts in usage among commercial customers.” These changes are anticipated to be a result of several factors:

  • work-from-home arrangements flattening load shapes
  • the shrinking of the retail sector
  • an increase in warehousing and logistics for e-retailers
  • increases of minimum workspace areas to allow for social distancing

A substantial portion of the change in demand is likely going to be due to the redistribution of load among commercial users. On average, retail locations use more than the proportional amount electricity for their size: although they only account for 13% of the total space, they use 17% of the total electricity. Likewise, warehouses and storage facilities use proportionately less: 15% of the square footage compared to 7% of the demand. As the pandemic creates an economic shift to e-retailers, there will be less fewer of the locations that have the highest demands.

Graphs showing a breakdown of how commercial spaces is used vs. the total electrical demand by category

Sources: Energy Information Administration, Commercial Buildings Energy Consumption Survey, May 2016, https://www.eia.gov/consumption/commercial/data/2012/bc/cfm/b23.php; Energy Information Administration, Commercial Buildings Energy Consumption Survey, May 2016, https://www.eia.gov/consumption/commercial/data/2012/c&e/cfm/pba4.php

Furthermore, of the retail locations that do remain, many are scaling down their footprints, and therefore, using less electricity. From April to December of 2019, general retail total square footage dropped by 2%. This came after a reduction of 4.7 percent over the previous nine years.

Office reconfigurations are also expected to impact energy demand as businesses try to increase the amount of space between employees. Some estimates indicate that in the early 2000s the average office space per employee was as much as 325 square feet. In 2010, it was down to 225; and by 2012, it had dropped to 176. In 2017, the average had further sunk to 150 square feet per worker. After this decline over at least two decades, social distancing needs are expected to add 20-40 square feet to each open-plan desk. With fewer employees in the office, these businesses will likely see a significant reduction in their electrical usage.

Potential impacts on overall usage

The authors of Columbia’s report developed two models to gauge the results of these changes, one that reflected assumptions involving a moderate impact on the electrical system, and another that reflected a high impact. These models show an increase of 3.4 – 7.9% (49.0 – 113.5 TWh) in residential loads, a decrease of 1.9 – 25% (3.6 – 110.6 TWh) in offices, and a decrease of 110.6 – 193.2 TWh in retail stores. In total, this would result in an overall load reduction of 65.2 – 159.8 TWh.

Geography will also play a significant role in determining the effects. Highly populated areas such as California (CAISO), New York (NYISO), and parts of PJM are expected to see more of a difference than Midcontinent ISO (MISO), and Southwestern Power Pool (SPP).

Recommendations to minimize consumer costs

“Experience from the global financial crisis suggests that load is unlikely to immediately revert to previous levels following the impact of COVID-19, and that load growth may be further dampened,” the report said. Since the effects are likely to be long-lasting, the authors warn that this reduction in usage could end up created increased expenses for end-users. If policy makers don’t adequately account for these projected changes, excess capacity in the system will result in costly inefficiencies. To combat this, the report recommends that:

  • ISOs should revise their demand outlooks as well as their capacity targets. In 2019, capacity alone cost $12.4 billion for customers in PJM and New England. Total capacity procurement is determined by peak load forecasts and target reserve margins. An accurate forecast that reduces capacity can, therefore, easily lead to lowered consumer costs.
  • The definitions of “peak” and “off-peak” hours should be recalculated. As people change their daily schedules, the times in which energy is being used also changes. Traditional approximations of high-usage times, therefore, are unlikely to reflect actual loads.
  • Procurement targets should be measured as percentages and not in MWh. With load growth being uncertain, procurement targets need to remain flexible. Creating hard targets for storage, offshore wind, and other directed procurements could lead to shortages or surpluses. By expressing these as a percentage of the total load, procurements can be adjusted as needed to maintain an efficient balance.
  • Cash grant programs, such as the 1603 program, should be used carefully, if at all, in any future stimulus package. The report warns, “Such programs, if not properly designed, may accelerate development of generation that is not immediately needed, increasing the overall cost to the economy of the program unless calibrated to focus on areas of least-cost carbon-emission reduction.”
  • Potential stimulus funding might best be used on investments in smart-grid components. “Focusing on grid situational awareness, greater transparency regarding distribution system congestion, better data collection and management, consideration of non-wires alternatives where appropriate, and continuing to assess the potential for transactive energy are all potential means of reducing the need for investment that runs the risk of being stranded.”