Impact of COVID-19 on electricity demand in 2020 and countermeasures

Since December 2019, the COVID-19 outbreak has occurred nationwide. This is the most serious public health emergency in my country since the founding of the People's Republic of China, with the fastest spread, the widest infection range, and the greatest difficulty in prevention and control. The COVID-19 outbreak has had a significant impact on short-term economic and social development and people's lives, and the negative impact on electricity demand is also very obvious. 2020 is the year for my country to build a moderately prosperous society in all respects and the final year of the 13th Five-Year Plan. How much impact will the COVID-19 outbreak have on the economic operation and electricity demand throughout the year? How to take effective measures to ensure the smooth completion of this year's expected goals? These issues need to be closely followed. This article analyzes the overall situation of the COVID-19 outbreak. On the basis of judging its development trend, combined with the actual impact of the recent COVID-19 outbreak on the economy and electricity demand, it conducts a scenario-by-scenario analysis of the economy and electricity demand in 2020, and puts forward relevant suggestions.

Impact of COVID-19 on the economy and electricity demand during the Spring Festival

Electricity consumption failed to "bottom out" during the Spring Festival holiday. According to the rules of previous years, the daily electricity consumption before and after the Spring Festival showed a "V-shaped" trend, and rebounded to about 90% of the pre-holiday basic level on the 15th day of the first lunar month. Affected by the new crown epidemic, the daily electricity consumption failed to "bottom out" during the 2020 Spring Festival holiday (from the 30th day of the twelfth lunar month to the 9th day of the first lunar month). The national daily average power generation decreased by 0.1% year-on-year in the lunar calendar, reaching 70.6% of the pre-holiday basic level, slightly lower than the average level of 72.0% in the past three years.

After the Spring Festival holiday, daily electricity consumption remained low, and has shown a recovery trend since February 14. In the first week after the Spring Festival holiday (the 10th to 16th of the first lunar month, February 3-9 in the Gregorian calendar), the national average daily power generation decreased by 4.1% compared with the Spring Festival holiday, and was 67.6% of the pre-holiday basic level; in the second week after the holiday (the 17th to 23rd of the first lunar month, February 10-16 in the Gregorian calendar), the national average daily power generation decreased by 0.6% compared with the first week, and was 67.2% of the pre-holiday basic level; in the third week after the holiday (the 24th to 29th of the first lunar month, February 17-22 in the Gregorian calendar), the national average daily power generation increased by 6.2% compared with the second week, and was 71.4% of the pre-holiday basic level. From the daily sequence, the daily power generation began to show a recovery trend on February 14 (the 21st of the first lunar month), and reached 71.3% of the pre-holiday basic level on February 22 (the 29th of the first lunar month).

Referring to the average trajectory of daily electricity consumption after the Spring Festival from 2017 to 2019 (see figure), based on the forecast results of the total electricity consumption in 2020 at the beginning of the year (the potential scale of electricity consumption without the impact of the epidemic), and comparing with the actual electricity consumption, the daily electricity consumption reduced due to the epidemic was obtained. According to the calculation of the State Grid Power Supply and Demand Research Laboratory, as of February 22, the new crown epidemic caused a reduction of about 94 billion kWh in national electricity consumption.

Analysis of the impact of the COVID-19 pandemic on the economy and electricity demand throughout the year

Impact on economic operation

Recently, relevant state departments have successively introduced a series of policies such as interest rate subsidies and interest rate cuts, tax cuts and fee reductions to reduce corporate production costs, ease corporate production and operation pressures, and promote orderly resumption of work and production. After the COVID-19 pandemic is over, under the various national "six stability" policy measures, my country's economy is expected to quickly return to its potential growth level. The impact of the COVID-19 pandemic on economic operations mainly depends on the duration of epidemic prevention and control and the strength of policy hedging.

Based on the evolution trend of the COVID-19 epidemic, the intensity of epidemic prevention and control, the progress of enterprises' resumption of work and production, and counter-cyclical regulatory policies, with reference to the impact of the SARS epidemic in 2003 on economic operations, and comprehensive judgments of major domestic and foreign research institutions on the impact of the COVID-19 epidemic, the following three economic growth scenarios are set to measure the impact of the COVID-19 epidemic on economic operations.

High scenario: Corresponding to the optimistic scenario of the evolution of the epidemic, the epidemic is basically over by the end of March, and work and production will be fully resumed in April. The impact of the epidemic on the economy is mainly concentrated in the first quarter. The government's targeted fiscal and taxation, financial support and other assistance policies for regions and industries severely affected by the epidemic have partially offset the negative impact of the epidemic in the first quarter; economic growth will recover rapidly in the second quarter, and the economic growth rate will accelerate in the second half of the year. It is expected that the GDP growth rate in 2020 will be 5.8%, with the four quarters being 5.0%, 5.8%, 6.0% and 6.0% respectively.

Medium scenario: In the baseline scenario corresponding to the evolution of the epidemic, full resumption of work and production will not be achieved until May. The economy will be negatively affected in the first and second quarters, but the impact will decrease marginally. In addition to targeted assistance policies, the government will also target the shortcomings of social governance, emergency management, information disclosure, medical technology, reserve system, and intelligent manufacturing exposed in the prevention and control of the epidemic, and form new economic growth points through more vigorous reforms and more precise investments, which will effectively promote a rapid recovery in economic growth in the second half of the year. It is expected that the GDP growth rate in 2020 will be 5.5%, with the four quarters being 4.5%, 5.4%, 6.0% and 6.1% respectively.

Low scenario: In response to the pessimistic scenario of the evolution of the epidemic, full resumption of work and production will not be achieved until the third quarter, which will have a great impact on the continued operation of small, medium and micro enterprises, thus affecting employment and corporate confidence, and dragging down the rapid recovery of economic growth. In order to boost confidence and stabilize growth, the intensity of countercyclical adjustment of macroeconomic policies will be further increased, monetary policy will be more relaxed, fiscal policy will be more proactive, and there will be greater policy inclinations for areas with severe epidemics, key industries and small, medium and micro enterprises. It is expected that the GDP growth rate in 2020 will be 5.2%, with the four quarters being 4.0%, 5.0%, 5.7% and 6.1% respectively.

Impact on electricity demand

Taking into account the impact of the COVID-19 pandemic on economic operations, the progress and effects of the resumption of work and production in the secondary and tertiary industries, the increase in residents' daily electricity consumption, and the country's macro-control policies and measures, it is estimated that the national electricity consumption will increase by 2.8% to 4.8% in 2020, which is about 1 percentage point lower than at the beginning of the year.

Medium scenario: The growth rate of electricity consumption in the whole society is about 4.0%, with a probability of 60% to 70%. In 2020, the national electricity consumption was 7.5 trillion kWh. At the end of the first quarter, the level of resumption of work was only the level of the fifteenth day of the first lunar month in normal years (90% of the basic level before the festival), and it was basically back to the normal average level at the end of April. After May, it quickly entered the stage of replenishing inventory and showed a marginal diminishing effect. It is expected that the electricity consumption in the four quarters will increase by -4.9%, 5.5%, 7.6% and 7.0% respectively.

By industry, the primary industry consumed 81.4 billion kWh of electricity, an increase of about 4.3%. The secondary industry consumed 5.1 trillion kWh of electricity, an increase of about 2.5%; in the first quarter, the growth rate of electricity consumption showed negative growth due to the impact of the COVID-19 pandemic, but in the second quarter and the second half of the year, the growth rate of electricity consumption continued to pick up due to the rebound in production capacity after resumption of work and the national policy of stabilizing growth. The tertiary industry consumed 1.3 trillion kWh of electricity, an increase of about 6.7%; due to the long-term impact of the COVID-19 pandemic, the growth rate of electricity consumption slowed down significantly in the first quarter, improved rapidly in the second quarter, and maintained a relatively fast growth level in the third and fourth quarters. Residential electricity consumption was 1.1 trillion kWh, an increase of about 8.3%; mainly boosted by epidemic prevention and control measures such as home isolation, the growth rate of electricity consumption in the first quarter and April was better than expected, and it was basically unaffected in May and beyond.