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Covid-19: Energy demand and prices rebounded in the third quarter

Richard Simmonds • October 21, 2020

New data released by the energy data analyst EnAppSys has shown that demand for energy and energy prices rebounded in the third quarter of 2020 after Covid-19 lockdown restrictions were eased.

Increasing Energy demand

The data from EnAppSys shows that demand for electricity rose to 60.6 TWh in the third quarter, a level that was almost back to the pre-Covid level and a huge rebound from the 53.2 TWh recorded in the second quarter.

The lockdown saw businesses shutter all across the country and many industries reduced their output in an attempt to reduce the spread of the virus. As a result, energy demand plummeted to the lowest quarterly level for 12 years.

Energy generation too saw a recovery with levels rising from 60.28TWh in the second quarter to 65.59 TWh in the third quarter.

As restrictions eased in July, demand, generation, and prices reverted to their normal levels. However, with fears growing that a new national lockdown could be imposed as virus cases rise these levels could once again fall. 

“During lockdown, the morning demand peak was lower as fewer people went into offices and factories, but as restrictions eased this peak returned beyond levels seen in the corresponding quarter in 2019. The reason for this could be an apparent overlap of business and domestic demand in Q3 2020, as some workers returned to the office and others remained at home. As demand rose as lockdown eased, there was less need for the system operator to accept bids to reduce wind output, with accepted wind bid volumes more than halving from 689GWh in Q2 to 318GWh in Q3. This then fed through into the increased wind generation seen in the third quarter versus the previous one,” said Paul Verrill, director of EnAppSys


Renewables broke more records during lockdown

Renewable energy further cemented its place in the UKs energy mix by breaking more records.


The energy mix for the third quarter of the year was comprised of; gas fired generation 40.5%, nuclear 16.1%, imports 3.9%, coal 0.4% and renewables 39%.


The record generation from renewables was helped by the record low demand as a result of the lockdown and the good weather that made wind turbines and solar panels more effective.


Coal power was not used for a record breaking 67 consecutive days, the longest run since the Industrial Revolution.


Also read: UK Energy Mix – The Types of energy production


Energy price rises

With the lockdown easing and demand rising prices naturally followed suit despite record low wholesale energy costs.


Low wholesale prices during the lockdown prompted Ofgem to lower the energy price cap to its lowest ever level but now with concerns over the strength of the economy and rising unemployment the current price cap has been extended until the end of 2021.


Several energy suppliers have hiked their prices over the last few months with the most noticeable being Bulb who has raised electricity prices twice in 2020. More suppliers are expected to follow suit ahead of the winter when demand rises.


Further Reading

Energy Price Cap Extended to the end of 2021 to support struggling consumers


Smart meter installations rise year on year for the first time since Covid-19 lockdown


Ofgem to introduce new rules to help customers struggling with energy bills- what does this mean for energy suppliers?


Dyball Associates are proud to help new supply businesses successfully launch in the UK market.

 

Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers get set up and start supplying.

 

For more information on how to start and manage an energy company, get in touch with Dyball Associates today.


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