How has Gas Usage Differed Between Each National Lockdown?

How has Gas Usage Differed Between Each National Lockdown

It may seem like the UK has been in a national lockdown forever at this point. Currently in the third lockdown, since the Coronavirus pandemic struck, it seems like it will never end. Coronavirus has stripped us all of the ability to do every-day normal things, and the effects are in-escapable no matter where in the UK you reside. The health effects are obvious and well documented. But what about the health of the UK economy – more specifically the energy sector? A side effect of shutting businesses and enforcing a ‘work from home’ culture has been added strain to many businesses in the industry. As the UK is stuck deep into its’ third lockdown, it is now possible to look back and anticipate some of the exogenous shocks the industry is likely to face.

Although there have been periods of flip-flopping between different local lockdowns and tier systems, the analysis on the UK as a whole shows universally downwards trends. This is due to more and more businesses being unable to trade throughout lockdowns, and more people spending increased time at home. Changing behaviour whilst at home has also played a part in this. The International Energy Agency has stated that Global lockdowns have caused a slump in electricity demand unparalleled since the Great Depression.

ktoeProductionImportsExportsDemand
Total Energy-9%-19%-9%-13%
Coal-39%-1%+108%-10%
Primary Oil-12%-21%-11%-20%
Oil Products-21%-38%-18%-25%
Gas-4%+10%+18%+3%
Electricity-13%-27%+54%-13%

Table showing energy trends in the UK from July to September – Gov.uk

Although energy consumption in the UK remains low – it has trended upwards since a record low in May. It is still much lower than the 2019 figures for the same quarter, however. Energy requirements for industrial use and services were both down 10% for the third quarter of last year from 2019 figures – but this pales in comparison to a fall of 30% for transport demand. This is due to more businesses closing, and various travel bans coming into effect.

Graph showing UK production annual growth rate – Gov.uk

The graph above was published in the same report and shows a staggering drop-off in growth for UK energy production. It is not unusual to have contractions or shrinking in production rate due to changes in seasonality or other variables, but the annual growth rate of UK quarterly production was -8.8% on the same quarter the year prior.

Reductions of electricity demand after implementing lockdown measures in selected region, corrected for weather – IEA

On a global level – the IEA gas released staggering analysis on energy trends as a result of lockdown. Coronavirus has resulted in a global pandemic and lockdown measures have been implemented in more countries than just the UK. The graph above shows the incredible drop in demand for electricity against number of days since lockdown began. Over half of the world’s population has experienced at least one lockdown – well over 4 billion people – so this is a world-wide problem. The UK experienced at least a 15% fall in energy consumption during the previous lockdowns so it is prudent to expect a similar fall in electricity consumption as a result of the current lockdown. During the height of its Coronavirus outbreak Italy saw demand for electricity fall by as much as 75% at times. It is worth remembering that Italy was one of the worst effected countries and suffered one of the strictest lockdowns. This has no doubt led to an exacerbation of this fall in electricity demand.

The change in human behaviour as a result of lockdown has also influenced the energy markets. With a lot of commercial demand having been shut-down, more people spent longer at home and as a result domestic demand for energy surged. This resulted in massively different energy profiles throughout the week. One of the countries that first implemented lockdown was Spain, which makes them a good case study to analyse. The IEA analysis describes a shift in electricity demand towards a “prolonged Sunday” throughout lockdown. This may seem confusing at first but by looking at the graph below it is clear to see a shifting trend from both weekdays and Saturdays towards the pattern observed for Sundays. This is a result of changed social behaviours, with more people’s workweeks resembling a lazy Sunday. Increasing numbers of people chose to stay up later than usual, sleep-in later in the mornings, spend a larger amount of time in the evening watching TV, and taking a mid-afternoon work break. Source This is not necessarily alarming – but it does represent the intense monotony of lockdown life, with the patterns of energy use throughout the week being blended together as a result of repetitiveness.

Hourly profile of electricity demand in Spain 2020 changing as a result of Coronavirus – IEA

So far commentary has been focussed on market trends – but the sources of energy used has also taken a sharp turn. Low-carbon energy recently overtook coal as a source of energy production in 2019 – which marked a landmark turning point in a global shift towards renewables. Global generation of energy from low-carbon sources has reached a staggering 40% as a result of the pandemic. You may be wondering how? One of the benefits of renewable energy production is that you cannot simply turn it off like you would with gas-fired power station. This is common practice for whenever demand falls for energy – or at least it is with traditional energy sources. It is incredibly difficult to ‘stop’ a wind farm or a solar farm when demand falls. This has resulted in more and more of global energy consumption being from renewable and low-carbon sources. According to the IEA not even a sudden unexpected recovery from this global pandemic would slow the rising use of renewables. It is quite incredible that global C02 emissions fell by more than 5% in the first quarter of 2020, and more expected to be reported for later in the year too.