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How the pandemic impacts energy

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COVID-19 is still with us. From the perspective of energy buyers, the pandemic’s effects will continue to shape markets. However, the promise of a vaccinated population means that a “return to normal” is coming.

Consumption will take time to reach previous levels

Estimates suggest that 2021 will see reduced electricity consumption - by about 3-4 percent in the first half of the year and 1-2 percent in the second half - compared to pre-pandemic levels. 2020 saw greater reductions, but the gradual vaccine rollout and reopening of businesses mean that energy use will likely take the full year to steadily reach previous levels.

When it comes to natural gas consumption, the pandemic’s effects have been less pronounced because much of the early lockdown period came during the summer months when most businesses don’t heat their facilities. In addition, many large, gas-intensive businesses were among the least-affected by COVID-19. Given these factors, gas consumption is expected to be 1-2 percent below pre-pandemic baseline levels in 2021, with 2022 forecasted to bring a full recovery to the sector.

Organizations may need to consider different energy strategies

For business owners - large and small - their next energy purchase decision may look different. Rather than looking to past results for guidance on their next purchase, businesses should consider demand-based and consumption-based costs separately and make decisions that account for the variable pace of economic recovery. Energy purchases sometimes allow for layering. This protects a buyer from risk while also taking advantage of lower prices when the market dips.

While most businesses experienced a challenging 2020, the recovery from the COVID-19 crisis is an opportunity to reevaluate your energy strategy. With demand for electricity and natural gas poised to rebound in 2021, business owners might take this time to step back and weigh their business’s options to ensure a prosperous year to come.

Stay tuned for more about renewable energy and what to expect for power and natural gas in 2021.

Posted: January 27, 2021