IEA (2020), Global Energy Review 2020, IEA, Paris https://www.iea.org/reports/global-energy-review-2020
Lockdown measures have significantly reduced electricity demand, affecting in turn the power mix. Increases in residential demand were far outweighed by reductions in commercial and industrial operations. Daily data collected for more than 30 countries, representing over one-third of global electricity demand, show that the extent of demand declines depends on the duration and stringency of lockdowns. On average we find that every month of full lockdown reduced demand by 20% on average, or over 1.5% on an annual basis.
Demand reductions have lifted the share of renewables in electricity supply, as their output is largely unaffected by demand. Demand fell for all other sources of electricity, including coal, gas and nuclear power. In our projection for 2020, global electricity demand would fall 5%, with 10% reductions in some regions. Low-carbon energy sources would far outstrip coal-fired generation globally, extending the lead established in 2019. A faster, V-shaped economic recovery would cut the impact on electricity demand by half, leading to smaller year-on-year falls for coal, gas and nuclear power. But longer lockdowns, slower economic recovery, and wide diffusion of Covid‑19 in developing countries could cut demand even further.
Global electricity demand decreased by 2.5% in Q1 2020, though lockdown measures were in place for less than a month in most countries. China was the first to implement containment measures, in mid-January, and experienced the world’s largest demand reduction in Q1 2020, of 6.5%. Impacts were more limited in other parts of the world, where restrictions began in March and were introduced progressively. Electricity demand fell by 2.5% to 4.5% in Europe, Japan, Korea and the United States in Q1 2020 relative to Q1 2019, not only because of Covid‑19 but also because weather in January and February was milder than in 2019.
Full lockdown measures pushed down electricity demand by 20% or more, with smaller effects for partial lockdowns. After correcting for weather effects, full lockdowns have reduced daily electricity demand by at least 15% in France, India, Italy, Spain, the United Kingdom and the US northwest. The largest impacts have been felt in economies that implemented strict measures and those where services make up a larger part of the economy. Both of these criteria apply to Italy, where electricity demand fell by over 25%. Periods of partial lockdown measures had lesser impacts on electricity demand, up to 10% at most, during initial containment phases in Europe and the United States and ongoing measures in Japan.
Changes to how and when electricity is used during lockdowns have transformed the shape of electricity demand over the course of the day in some regions, with the pattern on weekdays now resembling the pattern usually seen only on Sundays. Hourly electricity demand data for Spain demonstrate these marked changes in weekday patterns, reflecting stringent lockdown measures that have sharply reduced commercial and industrial activities. Weekend patterns are relatively consistent, driven mainly by residential demand.
The services sector has been hit hardest by lockdown measures, as retail, office, hospitality, education and tourism activities were almost completely shut down in many major economies. Across the most affected economies of the European Union, average weekday electricity demand for services declined considerably as March progressed. In Italy, the hardest-hit country in Europe, declines reached 75% relative to the same period in 2019.
The impact on demand was less significant for the industry sector on average. Many factories have been able to continue operations by applying precautionary measures to protect workers. In China the industry sector demand dropped the most. Demand in the construction and manufacturing industry (which made up 68% of total demand in 2019) decreased by 12%
Residential electricity demand has increased in most economies as a result of lockdown measures. Most people are spending more time at home and undertaking additional activities at home, such as teleworking. In the last week of March and first week of April, residential demand during the week was up to 40% higher across certain European economies than in the same weeks in 2019.
We expect global electricity demand to fall by 5% in 2020. This would be the largest decline since the Great Depression and would be eight times the reduction in 2009 due to the global financial crisis. In 2009, continued growth in China and India was able to largely offset reductions elsewhere. However, China and India are not in a similar position in 2020. Their electricity demand growth was already slowing and they are both suffering significantly from the Covid‑19 crisis. A faster recovery would reduce electricity demand by 2% in 2020, as all areas of economic activity resume. But wider spread of Covid‑19 in Africa, Latin America and other areas of the developing world, and a second wave in autumn in advanced economies, could lead to a decline of greater than 5%.
In economies that rely more heavily on industry, lockdown measures have less effect on electricity demand. In China, industry accounted for more than 60% of electricity consumption in 2019, compared with 10% for services, part of the reason that it would experience a smaller impact on overall electricity demand. In the United States, industry only accounts for 20% of electricity demand, while the services sector accounts for almost 40%, leading to more pronounced impacts on total electricity demand as non-essential services have been hit the hardest by lockdown measures. Europe is set to feel the largest impact as hard hit services sectors play a central role in its economy.
Renewables have claimed a greater share of electricity generation as a result of lockdown measures and depressed electricity demand. Global electricity generation was 2.6% lower in Q1 2020 than in Q1 2019. Renewables-based generation increased by 3%, mainly because of a double-digit percentage increase for wind power and a jump in solar photovoltaic (PV) output from new projects over the past year. The share of renewables in electricity supply neared 28% in Q1 2020, up from 26% in Q1 2019.
Aside from renewables, which are largely unaffected by electricity demand, most other sources of electricity declined in the first quarter of 2020. Nuclear power generation fell by 3% in response to lower demand and because fewer reactors were operational in some regions. Low-carbon generation increased in total, however, reducing the need for electricity produced from fossil fuels by close to 3%. Gas-fired generation increased by 4%, buoyed by low prices for natural gas in markets around the world. In some markets, coal-to-gas switching opportunities based on fuel costs arose for the first time. Coal-fired power generation was squeezed from all sides, and output fell by 8% in Q1 2020 relative to Q1 2019.
In all regions that implemented lockdown measures, the electricity supply underwent a notable shift towards low-carbon energy sources in Q1 2020. China had the largest reduction for coal-fired power generation, about 100 TWh, driving the global decline as China is by far the largest producer of electricity from coal. Reductions were pronounced in both February and March in China, where significant lockdowns spanned both months. In the European Union, the share of renewables in electricity generation picked up in weeks following the onset of lockdown measures, in part due to lower demand, driving coal and gas out of the power mix. In the United States, the decline of coal-fired generation accelerated in the weeks after lockdown measures were initiated. Gas-fired generation fell slightly, while generation from renewables rose. Overall, US coal-fired generation in Q1 2020 was down by one-third on Q1 2019, squeezed by lower demand, cheap gas and 20% increases in wind and solar PV output. In India, which implemented nationwide measures with immediate effect, coal-fired generation and its share in the power mix fell sharply from Q1 2019 to Q1 2020, bringing the shares of renewables and coal in electricity generation as close as they have ever been.
A U-shaped recovery would push low-carbon sources of electricity well ahead of coal-fired generation globally in 2020. The low-carbon share of generation is expected to surge to 40% in 2020, the highest level on record, partly because total generation would fall by almost 5%. Low-carbon sources would be six percentage points ahead of coal, after having taken the lead in 2019. Renewables would reach the highest level in terms of output and share, with new projects more than compensating for lower nuclear power output. Wind and solar power are set to increase in any case because of new projects that have been built over the past year, lifting their share of generation to nearly 9% in 2020, twice as high as in 2015. Coal-fired generation would be squeezed the most over the year, falling 10% in 2020. Gas-fired generation would also be hit hard, sinking by about 7% for the year, the largest declines on record.
A faster recovery would boost electricity demand, raising demand for all sources of electricity. Coal- and gas-fired generation would still fall but by only about half as much, though low-carbon sources would still outpace coal-fired generation. Renewables would undergo additional growth, as more projects would be completed, particularly solar PV projects that can be constructed quickly. Nuclear power would rebound to nearly match 2019 output over the course of 2020.
A slower recovery, on the other hand, would put further downward pressure on coal, gas and nuclear power, leading a greater shift to renewable energy sources in the overall power mix as long as their output is fully integrated.