EIA: U.S. summertime demand will drop due to coronavirus concerns, economic fall

The efforts to suppress COVID-19 and its resulting economic recession could push U.S. electricity demand this summer down to its lowest level in 11 years, according to the U.S. Energy Information Administration.

The EIA forecast that summertime demand could total 998 billion kWh (June through August). This would be the lowest demand since 2009 and five percent below last summer.

EIA expects electricity consumption to be lower this year largely as a result of efforts to reduce the spread of COVID-19. Most of the expected decline in retail electricity sales occurs in the commercial and industrial sectors, which EIA forecasts to be 12 and 9 percent less, respectively, than during summer 2019.

Residential electricity sales could grow by 3 percent this summer because more people are working from home and following social distancing practices.

Illustration courtesy of Centers for Disease Control.

Normally, weather is one of the primary factors in determining electricity demand in the residential and commercial sectors. This summer, however, economic and social factors are affecting electricity demand more than temperature. Although state and local governments are relaxing stay-at-home orders, social distancing guidelines will likely result in Americans spending more time at home than usual this summer. In addition, many people that had worked in offices are now working from home, shifting electricity demand from the commercial sector to the residential sector.

Macroeconomic indicators are primary drivers in EIA forecasts for electricity consumption in the commercial and industrial sectors. EIA’s short-term economic assumptions are based on the macroeconomic model from IHS Markit. This model projects non-farm employment will fall by 13 percent in 2020 and that the electricity-weighted industrial production index will contract by 12 percent in 2020.

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