Turkey’s Association of Distribution System Operators (ELDER), Electricity Generators Association and McKinsey Turkey held a webinar focusing on “Effects on Turkey and Global Electricity Market and the ‘New Normal’ for the First Predictions about COVID-19”.
Serhat Cecen, Chairman of ELDER, made a speech in the webinar that the COVID-19 had deep impacts on the economy. He stated that the scenarios that are defined as 'normalization', which will be put forward in order to realize a common mind in the period before COVID-19, especially in times of high uncertainty, will give perspective and clues to the stakeholders of the electricity sector.
Cecen expressed that these paradigm changes will shape the future.
“External developments that can be accepted as secondary in terms of sector deserve to be evaluated in terms of their possible effects. This makes it compulsory to code the process we define as 'normalization' as New Normal,” Cecen said.
He said that there are many questions and has to be answered such as opportunities for the regionalization of the global supply chain in Turkey, How the Green Agreement in the EU will be affected by this process, digitalization, smart grid and technology investments, financing costs. He said that how investors' investment preferences will be transformed is another important issue.
Turkey Can Have a New Chance for Investments
Cem Asik, Head of Electricity Generators Association (EUD) said that due to the measures taken in the context of combating the coronavirus outbreak, slowing economic activity, the cash flow provided by some countries to the markets via central banks will create an abundance of cash in the world.
He said that, “Some of these money will move to different countries. At this point, we will have a new chance”
Community Priorities Should Be Prioritized
On the presentation the topics such as, “Macroeconomic Outlook and Scenarios, Impacts on Energy Sector, Post-COVID-19 Assessments for Electric Sector,“ New Normal” and Medium-Long Term Actions in Electricity Market” was discussed.
Cemal Ozturk Energy Consultant of Mckinsey Istanbul Office, gave information about “COVID-19's effects and the new normal”. He stated that supply and inventory management should be planned correctly.
The trade volume of Turkey's day-ahead spot electricity market increased 3.26% in April compared to the same month of 2019 despite the decline in electricity demand and production affected by the coronavirus (COVID-19) outbreak, according to data provided by Turkey's Energy Exchange Istanbul (EXIST) on Monday.
The trade volume in the day-ahead spot electricity market, which EXIST started to operate in 2015, registered at 2.2 billion Turkish liras in April compared to 2.1 billion liras in April 2019.
EXIST reported transactions in the day-ahead market in April of 12 million megawatt-hours.
The highest trade volume on a daily basis was recorded on April 28 at 125.6 million liras, while the lowest occurred on April 12 with 10.3 million liras.
In April, the average electricity rate for one-megawatt hour in the day-ahead spot market was calculated as 181.16 liras.
Turkey's energy exchange company, responsible for operating energy trade, including power and gas commodities, provides counter-party guarantees in its transactions while ensuring equal access to all market participants
Source: AA
The Covid-19 pandemic represents the biggest shock to the global energy system in more than seven decades, with the drop in demand this year set to dwarf the impact of the 2008 financial crisis and result in a record annual decline in carbon emissions of almost 8%.
A new report released today by the International Energy Agency provides an almost real-time view of the Covid-19 pandemic’s extraordinary impact across all major fuels. Based on an analysis of more than 100 days of real data so far this year, the IEA’s Global Energy Review includes estimates for how energy consumption and carbon dioxide (CO2) emissions trends are likely to evolve over the rest of 2020.
“This is a historic shock to the entire energy world. Amid today’s unparalleled health and economic crises, the plunge in demand for nearly all major fuels is staggering, especially for coal, oil and gas. Only renewables are holding up during the previously unheard-of slump in electricity use,” said Dr. Fatih Birol, the IEA Executive Director. “It is still too early to determine the longer-term impacts, but the energy industry that emerges from this crisis will be significantly different from the one that came before.”
The Global Energy Review’s projections of energy demand and energy-related emissions for 2020 are based on assumptions that the lockdowns implemented around the world in response to the pandemic are progressively eased in most countries in the coming months, accompanied by a gradual economic recovery.
The report projects that energy demand will fall 6% in 2020 – seven times the decline after the 2008 global financial crisis. In absolute terms, the decline is unprecedented – the equivalent of losing the entire energy demand of India, the world’s third largest energy consumer. Advanced economies are expected to see the biggest declines, with demand set to fall by 9% in the United States and by 11% in the European Union. The impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures to curb the spread of the virus. For instance, the IEA found that each month of worldwide lockdown at the levels seen in early April reduces annual global energy demand by about 1.5%.
Changes to electricity use during lockdowns have resulted in significant declines in overall electricity demand, with consumption levels and patterns on weekdays looking like those of a pre-crisis Sunday. Full lockdowns have pushed down electricity demand by 20% or more, with lesser impacts from partial lockdowns. Electricity demand is set to decline by 5% in 2020, the largest drop since the Great Depression in the 1930s.
At the same time, lockdown measures are driving a major shift towards low-carbon sources of electricity including wind, solar PV, hydropower and nuclear. After overtaking coal for the first time ever in 2019, low-carbon sources are set to extend their lead this year to reach 40% of global electricity generation – 6 percentage points ahead of coal. Electricity generation from wind and solar PV continues to increase in 2020, lifted by new projects that were completed in 2019 and early 2020.
This trend is affecting demand for electricity from coal and natural gas, which are finding themselves increasingly squeezed between low overall power demand and increasing output from renewables. As a result, the combined share of gas and coal in the global power mix is set to drop by 3 percentage points in 2020 to a level not seen since 2001.
Coal is particularly hard hit, with global demand projected to fall by 8% in 2020, the largest decline since the Second World War. Following its 2018 peak, coal-fired power generation is set to fall by more than 10% this year.
After 10 years of uninterrupted growth, natural gas demand is on track to decline 5% in 2020. This would be the largest recorded year-on-year drop in consumption since natural gas demand developed at scale during the second half of the 20th century. The massive impact of the crisis on oil demand has already been covered in detail in our April Oil Market Report.
Renewables are set to be the only energy source that will grow in 2020, with their share of global electricity generation projected to jump thanks to their priority access to grids and low operating costs. Despite supply chain disruptions that have paused or delayed deployment in several key regions this year, solar PV and wind are on track to help lift renewable electricity generation by 5% in 2020, aided by higher output from hydropower.
“This crisis has underlined the deep reliance of modern societies on reliable electricity supplies for supporting healthcare systems, businesses and the basic amenities of daily life,” said Dr. Birol. “But nobody should take any of this for granted – greater investments and smarter policies are needed to keep electricity supplies secure.”
Despite the resilience of renewables in electricity generation in 2020, their growth is set to be lower than in previous years. Nuclear power, another major source of low-carbon electricity, is on track to drop by 3% this year from the all-time high it reached in 2019. And renewables outside the power sector are faring less well. Global demand for biofuels is set to fall substantially in 2020 as restrictions on transport and travel reduce road transport fuel demand, including for blended fuels.
As a result of these trends – mainly the declines in coal and oil use – global energy-related CO2 emissions are set to fall by almost 8% in 2020, reaching their lowest level since 2010. This would be the largest decrease in emissions ever recorded – nearly six times larger than the previous record drop of 400 million tonnes in 2009 that resulted from the global financial crisis.
“Resulting from premature deaths and economic trauma around the world, the historic decline in global emissions is absolutely nothing to cheer,” said Dr. Birol. “And if the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve. But governments can learn from that experience by putting clean energy technologies – renewables, efficiency, batteries, hydrogen and carbon capture – at the heart of their plans for economic recovery. Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future.”
Source: International Energy Agency
Total smart meter shipments from 2019-2025 could fall by as much as 28% due to COVID-19 (worst-case scenario). At the same time, however, COVID-19 could drive more spend than ever before on ‘beyond-the-meter’ software and services over the next ten years, according to Omdia.
In the short-term the number of infections within a country is the largest factor in halting any rollouts, but the pace of recovery is strongly connected to the original drivers behind any smart meter rollout – enforced legislation or organic investment opportunity. Depending on the length of lockdowns, two potential scenarios could impact the top-level shipments forecast in different ways. Yet, despite slowdowns in hardware markets, the pandemic might actually accelerate the adoption of software and services in the future.
In general, all utility rollouts are likely to encounter at least some degree of delay. However, utilities with legal obligations to install smart meters (as in many European countries for electricity and gas) face penalties/fines for delays and will therefore recover faster. On the other hand, utilities who invest in AMI based primarily on an organic business case aren’t legally obligated to invest in AMI. These utilities will therefore not resume operations until it becomes financially suitable to do so.
In the best-case scenario, total cumulative meter shipments (electricity, gas and water) from 2019-2025 will decline by 3.2%. In general, stockpiling practices would mitigate the disruption to vendor supply chains, and countries with mandated installation deadlines would maintain utility demand. However, total declines could reach up to 9 times that percentage in the worst-case scenario. Notably, extended disturbances in vendor supply chains will likely take years to recover (if at all) in the pessimistic scenario. Additionally, all enforced demand would see longer delays, especially for ‘developing’ sub-regions (which are deeply tied to the economy), but also for Europe. Based on the current situation and short-term outlook (i.e. the gradual lifting of restrictions in some markets), Omdia considers the ‘true’ forecast to be much closer to the optimistic scenario rather than the pessimistic scenario. However, the balance will continue to be pushed towards the pessimistic case if lockdowns and severe restrictions remain in place for key markets into/beyond Q3 of 2020. A full analysis of the numbers/situation is included within the Omdia Smart Utility Meter Intelligence Service.
Nevertheless, COVID-19 is perhaps highlighting the need for automation faster than utilities would like or even realised.
In 2012, it took almost three weeks to restore power to 8.7 million end-users after Hurricane Sandy destroyed the Mid-Atlantic and New England regions of the United States. Shortly after, Investor-owned Utility spend on disaster management solutions skyrocketed. Often, utilities don’t realize the magnitude of their own challenges until a major event forces a confrontation with them; and COVID-19 is highlighting more than a few.
Even before the current crisis, utility operating models and margins have become increasingly challenged. For decades, utilities have primarily generated revenue by selling as much energy as possible; put another way, the more energy customers consume, the more money utilities make. However, utilities are increasingly facing pressure to conserve more energy by reducing average residential and industrial consumer’s demand and more customers are starting to generate their own power with residential solar. Both trends have therefore meant less revenue; and utilities must increasingly find ways to create new revenue streams and/or improve profit margins (by reducing operational costs) if they want to avoid the ‘death spiral’.
Unsurprisingly, COVID-19 is amplifying these concerns around top-line revenue and bottom-line costs more than ever. For example, countries with lockdowns are seeing major decreases in energy consumption; though residential energy use has generally increased, commercial and industrial has plummeted (which accounts for more than 60% of energy consumption in the United States).
Though it seems counterintuitive, AMI software and services can provide solutions with existing technology utilities already have; and that could potentially lead to better financial situations for utilities on an accelerated timeline.
Source: Smart Energy International
Moody's Investors Service has lowered its outlook for global green bond issuance in 2020 to as much as USD 225 billion (EUR 208.3bn) after activity was hit by the disruption caused by the COVID-19 crisis.
The credit rating agency now expects the overall volume of green bonds that will be placed this year to range between USD 175 billion and USD 225 billion, as compared to an earlier forecast of USD 300 billion.
The downward revision was triggered by the drop in issuance during the first quarter of the year in the wake of the coronavirus outbreak and its effects on the economy.
According to Moody’s latest report, published on Tuesday, first-quarter green bond volumes fell by 49% on a sequential basis to USD 33.9 billion.
Moody’s reiterated its USD-100-billion forecast for social and sustainability bonds, given an increased market focus on coronavirus response efforts.
The higher demand for the issuance of such financial instruments is mainly led by multilateral development banks to tackle the COVID-19 consequences.
"Greater emphasis on social finance and sustainable development will likely be one of the lasting outcomes of the coronavirus crisis," said Matthew Kuchtyak, AVP-Analyst at Moody's.
Source: Renewables Now
As China tries to recover from the impact of the coronavirus, making sure its plans for electric vehicles stay on track is one priority.
Soon after signs that the outbreak in China was under control, the central authority and local governments announced stimulus policies aimed at automobiles, particularly new energy vehicles.
In the last few weeks, NEV subsidies and tax break policies set to expire this year were extended by two years to 2022. Battery charging infrastructure – frequently cited as a reason for not buying an electric car – got an injection of 2.7 billion yuan. That would allow for a ten-fold increase in scale versus last year, according to state media.
Such efforts play into national ambitions, and supports the economic contributions of the overall automobile industry. The auto sector accounts for about 10% of China’s retail sales, and one-sixth of jobs, according to official figures for 2018 compiled by the Ministry of Commerce.
As China battled Covid-19 in the first three months of the year, production of new energy vehicles fell 60.2% from a year ago to 105,000, while sales dropped 56.4% to 114,000 vehicles, the Ministry of Industry and Information Technology disclosed at a press conference on April 23.
Overall auto sales declined 42.4% to 3.672 million vehicles, the ministry said.
“In terms of consumer response (to) the virus, the health emergency is being replaced in China to a certain extent with economic uncertainty,” Rupert Mitchell, chief strategy officer at Chinese electric car company WM Motor said in an April 15 interview. The company was founded in 2015 by a former Volvo and Geely executive.
“As people feel concerned about their incomes, their businesses, major discretionary purchases like buying a new car will no doubt be impacted. But it’s very tough right now to gauge that degree of impact.”
Chinese authorities extended a Lunar New Year holiday for more than a week in an effort to control the spread of Covid-19, which emerged late last year in the Chinese city of Wuhan. China’s economy contracted 6.8% in the first quarter and the official unemployment rate hit a record high of 6.2% in February. While the outbreak has stalled domestically, the coronavirus has since turned into a global pandemic that’s infected well over 3 million people and killed at least 247,000 worldwide, according to Johns Hopkins University.
While consumer confidence may take time to recover, government and commercial purchases are expected to drive the electric vehicle market in China this year as well.
“We believe the demand from the institutional buyers will be strong,” Fitch’s Yang said, pointing to data for 2019 that showed the share of individual purchases fell to 46% from 58.9% a year prior.
She expects car sales in China to decline 10% this year, but said electric vehicle sales may at least not fall as much.
Meanwhile, China’s electric vehicle start-ups have pressed ahead with getting production back online and launching new products. Some have also reported growing sales.
“We see daily improvements in terms of our daily sales, and that’s very encouraging,” WM Motors’ Mitchell said. “We need that trend to carry into the positive direction several more weeks, more months.”
Mitchell said the company could soon have 190 stores open in 110 cities in China, up from 120 stores currently. The company could also benefit from potential government fleet purchases, and commercial car businesses, he added.
For now, WM Motor has “raised some pretty substantial liquidity over the Christmas, New Year period,” he said. “Our liquidity position is currently very strong.”
Source: CNBC
Global Energy Review 2020
The uncertainty surrounding public health, the economy and hence energy over the rest of 2020 is unprecedented. This analysis therefore not only charts a possible path for energy use and CO2 emissions in 2020 but also highlights the many factors that could lead to differing outcomes. We draw key lessons on how to navigate this once-in-a-century crisis.
Please click here to read the full report.
