Natural gas is the largest source of electricity in most advanced economies but also used to be one of the most expensive options to generate peakload power. Hence, higher output from hydro or nuclear used to mainly reduce the amount of dispatched gas-fired generation.
In 2019, coal was still the largest source of electricity at 36%, IEA figures show, followed by natural gas at 23%. However, analysts stressed both gas- and coal-fired generation are set to fall in 2020, largely due to a sharp reducing in global electricity demand due to lockdowns in April, May and parts of June to contain the outbreak of the coronavirus.
Lockdowns slash NYC’s energy use
In New York, one of the cities most affected by the virus, the lockdowns slashed daily electricity demand on weekdays between 11% and 14% in March and April, according to government figures. Downtown New York, the NYISO Zone J, was hardest hit with demand up to 16% lower than temperature-comparable historical demand.
Downtown New York, the NYISO Zone J, normally consumes about one-third of total NYISO supply but business closures curtailed daily weekday electricity demand by 16%, compared to normal levels.
The NYISO grid operator said “the reduction in electric demand from commercial customers is a leading driver of overall reduced electricity consumption.” More than half of New York State’s electricity sales go to commercial end-users, a percentage only exceeded by the District of Columbia (72%) which includes Washington DC.
Coal power feels the pinch in India
In India, nationwide lockdowns have rendered coal-fired power plants uncompetitive compared with gas or renewables. In the first 33 days of the 2020/21 fiscal year, coal-fired generation was down just shy of 30 Terawatt-hours (TWh).
Coal-fired generation has borne the brunt of the Covid-19 power demand loss, running at half the capacity rate assumed in the Indian Central Electricity Authority’s modelling guidelines used to evaluate the financial and operating performance of new coal-fired power plants.
Fuel pricing trends for new power projects clearly favour renewable energy over coal, particularly when it comes to expensive non-mine mouth or import coal-fired power proposals. Investors, including India’s domestic banks, are increasingly reluctant to provide financing for coal power projects, given the very cost-competitive low-carbon alternatives.
A landmark 2GW solar tender awarded by NHPC in April 2020 priced at a near record low of Rs2.55/kWh, fixed flat for 25 years.