INTERACTIVE: European power demand hit eases in first week of April

Additional reporting by Roy Manuell

LONDON (ICIS)–Power consumption continued to soften across key European demand centres through March and the first week of April, while less stringent measures and colder weather has sheltered other parts of Europe.

While previous ICIS analysis suggested that the coronavirus-related demand drop is showing signs of tapering off in countries with the strictest lockdown measures, such as Italy, other countries could still be playing catch-up.

Aggregate data from TSOs and ENTSO-E indicated that demand from the power sector in Italy has dropped on average 15% since the 9 March lockdown compared with the five-year monthly average.

In France and Spain, the Italian-style demand drop accelerated with each week in March though has remained relatively stable – or less dramatic – in week 14.

In the UK, one of the biggest observable changes, besides the drop in overall consumption, is the shift in daily load profiles, as more people work from home.

This may be impacting the speed of the demand fall, especially during week 14 where temperatures were colder than seasonal.

Spot prices and intraday balancing prices were also pushed negative in some countries as renewable generation supply outstripped demand.

FLATTER UK PROFILES
Unlike Italy and France, which are showing signs of recovery, or Germany which have more relaxed measures in place, the UK is seeing demand continuing to drop, albeit at slower rates.

Average UK power demand in March dropped 8% from its five-year average, while so far in April, demand has been 10% below expected levels.
The biggest shift has been in the morning peaks, which have almost disappeared entirely as people change their working, and consequently consumption habits.

Demand forecast for 6 April indicated a peak difference of 26% in the morning compared with an average Monday in April.

The biggest drop in overall consumption has been from the industrial and commercial offtakers, with traders suggesting that drops in profiles 5-8, which account for maximum peak demand, may be “maxed out”.

RELAXED MEASURES
The less significant demand impact in Germany, the centraleast European and southeast European regions may be due to more limited industrial and commercial closures relative to France, Italy, Spain and the UK.

While consumption in Germany remains steady, market sentiment for the long-term macroeconomic impact points to a potential decline in manufacturing output and subsequently demand.

In countries such as Bulgaria, for example, where demand rose last week compared with the five-year April average, many factories and farms remained open.

Furthermore, the data did not account for colder-than-average weather which occurred across much of the region during week 14.

A recent analysis assessed the demand impact of the coronavirus measures on demand across Europe using an ICIS model that controls for temperature.