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How the COVID-19 Economic Crisis is Impacting Energy Consumers

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The ongoing COVID-19 pandemic and economic fallout has had a dramatic impact on all types of consumers and businesses. The energy industry has been no exception.

Here are four early lessons for businesses as we continue to unpack the energy impacts of COVID-19.   


A strong, reliable energy supplier can be a helpful partner during trying economic times

With such far-reaching economic consequences, no business or industry is immune to COVID-19. PricewaterhouseCoopers (PwC) recently surveyed finance leaders across North America, which found two top concerns for businesses related to COVID-19: 

  • 71 percent of respondents were concerned with liquidity and capital resources
  • 64 percent expressed worry over the potential of a global recession 

The survey’s findings underscored a major concern among all businesses: cash flow. Given cash flow concerns and the fact that energy spending makes up a significant portion of most budgets, it is more important than ever that businesses work with a creditworthy supplier that prudently manages its cash flow, while upholding contractual obligations. 

We are making every effort to ensure that any consumption changes that could impact costs are addressed as soon as possible. We have also remained agile in working toward a mutually beneficial resolution to customer cash flow issues during this difficult economic situation.

It’s a great time to reevaluate your procurement strategy

In this ever-changing economic environment, it is important to reconsider conventional energy buying wisdom and reevaluate your energy procurement options. 


Because according to recent research conducted by the International Energy Agency (IEA), energy demand will never be the same. Based on 100 days of research, the IEA found that global energy demand has plummeted six percent during the COVID-19 pandemic, which is five times larger than the decline during the 2008 financial crisis. Looking ahead, the IEA forecasts that U.S. energy demand will drop by 9 percent in 2020. 

Traditionally, and somewhat intuitively, a fixed price solution might be the logical choice for navigating this economic storm. Fixed price solutions that are easy to understand and plan a budget around have often been popular. However, while fixed price options present price certainty to customers, the impacts of COVID-19 combined with some other market developments have undercut that conventional wisdom. 

Under current market conditions, a central issue with fixed price solutions is that they determine a rate based on usage from the previous year. Since these costs are often unitized and based on past forecasts, customers in some markets may be locked into paying more than their fair share of system costs. Given all the uncertainty in customers’ usage right now, it is likely the rate is incorrect and subject to adjustments down the road. 

With COVID-19 and other market developments, future load is also more unknown. A fixed rate includes capacity and transmission that are based on customers’ demand. If usage is significantly down, you could be overpaying these charges over the term of the agreement and not see the benefit of any reduction to your bill. 

Energy providers are tackling these past usage and demand issues from different angles. Some have dropped all fixed price solutions. Others are only offering index-based or hybrid solutions. We recognize that there is no “one-size-fits-all” energy strategy and that flexibility is paramount during the current crisis. That’s why we’re committed to working directly with you to find the right solution for your business, whether it is a fixed rate option, market-based rate or a strategic combination of both.  

Renewable energy will continue pushing forward thanks to its long-term value proposition

In 2019, U.S. consumption of renewable energy surpassed coal for the first time in more than 130 years. That is a stunning achievement for clean energy and a dramatic decline for coal-fired power generation. 

But what does renewable energy development look like amid the current COVID-19 economic backdrop? 

This is an especially important question as the IEA recently projected that global energy investment will drop 20 percent in 2020. In the short term, we project that the market for renewable energy will slow as customers and developers work to secure financing for new projects. However, given the clear long-term value proposition of sustainable power, the future for renewable energy continues to shine bright. 

Furthermore, recent months have underscored the need for more renewable energy resources to sufficiently mitigate the negative consequences of climate change. Scientists found that overall atmospheric CO2 levels actually increased despite COVID-19 lockdowns and that May was the warmest ever on record

If your business is in a position to leverage this current crisis to become more sustainable, there are a number of renewable energy solutions that can help save your business money every day, ranging from Renewable Energy Credits (RECs) to on-site solar power generation.

Businesses will meet this challenge by forging closer relationships with their customers  

While most businesses and industries did not see the COVID-19 pandemic and economic crisis coming, it has presented some early lessons and silver linings. Chief among these lessons has been the renewed importance of building strong relationships with customers. 

At Direct Energy Business, we know the best way to respond to this challenge is by pulling together – as a company and with our customers. Since the pandemic began, we have seamlessly migrated our operations – including billing, pricing, contracting scheduling, load forecasting, call centers and others – to serve our customers remotely. We also enhanced our systems and digital functionality to allow customers to access and complete most business activities related to their account management on their own.

Our lights have always been on for you, with call centers, sales representatives, inboxes and live chat all open and available to address any questions or concerns. Direct Energy Business stands ready to help you work through the complex problems and challenges ahead, so you can focus on running your business.

Learn how Direct Energy Business can help your organization today.  


Posted: July 22, 2020