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COVID-19 Pandemic Outbreak: Impact on global transmission sector [free access]

May 15, 2020

The global outbreak of the coronavirus disease—the COVID-19 pandemic—has caused severe economic and social crises across the globe. Countries have been hard hit in all respects, including the power sector.

 

Recently, Global Transmission got in touch with various power sector utilities across the globe to understand the impact of COVID-19 on grid operations and the preventive measures being taken to tackle the pandemic’s impact on the utilities’ day-to-day activities, ongoing transmission projects and future development plans. Power utilities around the world are experiencing similar challenges and they all have the common aim of providing uninterrupted and reliable power supply to their customers, and ensuring the smooth operation of their grid networks and the safety of their employees during this crisis.  

 

Key trends

Greater regional coordination

The pandemic has led to greater energy coordination among countries. Recently, the European Union (EU) Heads of State and the European Commission (EC) laid down a coordinated approach to the COVID-19 emergency measures, including the provision of medical equipment, promoting research and tackling socio-economic consequences. The EC has also emphasised that the region should prepare a comprehensive recovery plan revolving around integrating green energy transition and digital transformation to revive the economy after the COVID-19 pandemic is over. This also includes fast-tracking the uptake of e-mobility and storage.

 

Recently, the energy secretaries of the South Asian countries of Nepal, India, Bangladesh and Bhutan held an online meeting to discuss the impact of the pandemic on the energy strategies of their respective countries.

 

Impact on grid operations

Globally, all utilities have witnessed a decrease in power demand. While there has been an increase in residential power demand in some countries, there has been a significant decline in industrial/commercial power demand as the countries are currently implementing lockdowns and industries and offices are shut.

 

In Europe, in comparison to the week of March 2-8, 2020, consumption declined by 4 per cent during the week of March 9-15, 2020 (week 1); by 12 per cent during the week of March 16-22, 2020 (week 3) and by 15 per cent during March 23-29, 2020 (week 4). The decline was more pronounced for Italy, where consumption declined by 8 per cent in week 1 and by 28 per cent in week 4. In India, the lockdown has drastically reduced industrial and commercial activities, and these segments have seen a considerable decline in demand for electricity (over 25 per cent).

 

However, even during the pandemic, the European power systems continue to operate in normal mode, mainly due to the decentralised system design with shared responsibilities among European transmission system operators (TSOs). Even though most power utilities have not faced any grid failures because of the sudden change in power demand due to the lockdown, going forward, TSOs plan to focus on the use of emerging digital technologies to automate their gird infrastructures. Slovenia’s ELES is in the process of introducing a Cyber Security Operations Center (CSOC) to prevent cyberattacks on the grid, as the possibility of such attacks during such situations is much higher. Meanwhile, Ghana Grid Company Limited (GRIDCo) has already increased the use of technology and automation to minimise human intervention and is developing systems to further support staff workflow and external parties.

 

Impact on revenues and financial performance

The significant drop in electricity demand has impacted the revenue flows and financial liquidity of most power utilities. This in turn will impact the utilities’ ability to finance projects. Grid network developers and operators are arranging their short-term working capital requirements through loans and grants from financial institutions and commercial banks.

 

Reportedly, US power utilities—Duke Energy, American Electric Power (AEP), Xcel Energy, Edison International and Dominion Energy—are securing loans to fund ongoing operations and combat the impact of COVID-19 by increasing liquidity and maintaining employment levels.

 

Brazil’s energy regulator, Agência Nacional de Energia Elétrica (ANEEL), has authorised the Câmara de Comercialização de Energia Elétrica, or Chamber of Commerce for Electricity (CCEE), to use BRL2.02 billion to help companies mitigate losses resulting from the lower consumption caused by the COVID-19 pandemic.

 

In India, the reduction in power demand has had a significant impact on the liquidity of Indian power distribution companies, with losses estimated to be in the range of almost USD4 billion. To ensure liquidity, one of India’s state transmission utilities, Maharashtra State Electricity Transmission Company Limited (MAHATRANSCO), is deferring/curtailing certain expenditure and loan installments until June 2020 to restrict cash outlay. Further, it is seeking short-term loans from financial institutions and has approached various banks for working capital loans.

 

Jordan’s state-owned National Electric Power Company (NEPCO) has announced that it will receive financial aid worth USD100 million in the form of an emergency loan from the European Bank for Reconstruction and Development (EBRD). The loan is to preserve the stability of the country’s electrical system and also manage liquidity constraints resulting from the measures being taken to tackle the ongoing COVID-19 crisis.

 

Ghana’s GRIDCO is exploring other options for sourcing financing, mainly from less severely hit countries, as a contingency plan. Further, it is negotiating with project sponsors to secure currency and interest rate hedges. Similar solutions and routes are also being explored by South Africa’s power utility Eskom and Ugandan grid companies.

 

Impact on supply chain and projects

In general, the pandemic has adversely disrupted the supply chain and brought project development activities to a standstill, mainly due to restrictions on movement of equipment and labour. Utilities are also faced with the challenge of potential project cost overruns.

 

Europe, in particular, is very dependent on foreign companies to meet their supply chain requirements. The European distribution system operators (E.DSO) are now emphasisng that the recovery plan should focus on increasing the independence of the existing supply chains by locating strategic parts of the value chain in the EU.

 

The majority of utilities have put construction works on hold in order to follow social distancing protocols. Denmark’s TSO Energinet is continuing with project construction works but with various precautions to ensure reduced risk of infection. Similarly, Canada’s Hydro Quebec has secured its supply chain by identifying the products and services that are essential to their activities. For instance, to help support Québec’s economy, the utility has reduced the terms of payment for its suppliers from 30 to 15 days.

 

Brazil’s Ministro de Minas e Energia (MME), or Ministry of Mines and Energy, issued an ordinance in April 2020 postponing the bidding of transmission and generation projects indefinitely. During the same month, Chile’s national energy commission, Comisión Nacional de Energía (CNE), extended the deadline to submit transmission network expansion project proposals by 30 days till May 27, 2020, considering the state of ‘constitutional exception of catastrophes’ due to the COVID-19 pandemic.

 

Power grid companies in Asia and Africa have declared force majeure for projects under construction. India’s MAHATRANSCO plans to take up future projects on a need basis, mainly those needed to relieve transmission congestion and improve system reliability, and only after securing the required capital expenditure (capex). Also, due to the shutdown of equipment repair workshops, the availability of spare parts is becoming a challenge.

 

Ghana’s GRIDCO is liaising with suppliers on current or expected production declines that may cause delays in fulfilment of critical infrastructure supplies such as transformer parts and other restoration materials. In Uganda, power grid companies are deferring non-emergency maintenance- and reliability-related activities. Further, connection activities for new customers have been suspended. Power utilities in Uganda are experiencing increased vandalism, illegal hooking and meter tampering.

 

Development works on large-scale grid projects are facing delays. Recently, Egyptian Electricity Transmission Company (EETC) delayed the bidding process for the 500 kV Egypt–Saudi Arabia Grid Interconnection Project for up to 40 days.

 

Long-term impact

In the long-term, due to the ongoing lockdown in many countries, the development plans of transmission utilities are expected to be delayed. Further, project costs of stalled projects are likely to increase. Also, as it will take time to restore the supply chain, projects will take longer to complete. Due to both the time and cost overruns of projects, capex and subsequent capitalisation will be delayed, severely impacting utilities’ financial performances. However, with respect to transmission system planning, most utilities feel that it is still too early to accurately assess the impact of COVID-19.

 

Hydro-Québec, Canada

What has been the impact of the COVID-19 crisis on electricity demand in your area of operations/region?

During March 13-April 27, 2020, due to coronavirus there was a 1.42 per cent increase in consumption among residential customers; a 12.83 per cent decrease in consumption among business customers; and a 6.77 per cent decrease in consumption among industrial customers. In total, electricity consumption decreased by 5.48 per cent for all customers during this period.

 

What measures have been put in place to ensure the supply of electricity and the smooth operation of the grid?

Managers have been asked to determine the minimum resources required to operate and contingency plans have been developed.

 

How has technology enabled the utility to ensure continued supply and operations?

Employees began working from home, which has enabled us to remain efficient in spite of the pandemic. Naturally, our contingency plans take into consideration that certain employees, such as line workers, cannot work from home.

 

How is the current crisis likely to impact the utility's future operations and network plans?

With regard to operations, the utility will adapt ways of working in compliance with social distancing guidelines. As for transmission system planning, it is too early to assess the impacts.

 

What are the implications of disruptions such as COVID-19, if any, on projects under construction?

The Québec government has temporarily suspended the province’s large jobsites due to the pandemic. The construction of transmission infrastructure has therefore been put on hold.

 

What impact is it likely to have on supply chain and financial performance?

Hydro-Québec has secured its supply chain by identifying the products and services that are essential to our core mission. With regard to the financial performance, it is difficult to assess the long-term impact of the pandemic. Between March 13 and April 27, 2020 (inclusively), electricity consumption fell by 5.48 per cent, which represents decreased electricity sales in Québec of approximately CAD79 million.

 

Are you considering the use of any new technological solutions and measures to prepare the grid for such disruptions in the future?

Although the pandemic is having an impact on many levels, the utility has full control of the functioning of the system. Also, service reliability has not been compromised. Nevertheless, the utility will continue to work to develop integrated system control solutions, from generation to distribution; automate infrastructure;

develop real-time situational awareness throughout the system in order to carry out repairs remotely; and optimise operating and maintenance processes and practices. It is important to note that these steps were already underway prior to the pandemic.

 

What are some of the short-term to medium-term challenges in operating and maintaining the grid?

In the short- and medium-term, the power company will continue to adapt operations in order to comply with social distancing requirements. Currently, planned service interruptions have been suspended and jobsites have been temporarily shut down.

 

What lessons and practices would the utility want to carry forward, once the crisis is over?

The power utility has learned a lot with regard to our ability to work remotely. Over half of our 19,477 employees are working from home and have also deployed various applications so that the teams can work remotely while remaining efficient. Finally, Hydro-Québec has learned to quickly realign certain activities based on need, such as the shortage of disinfectants.  

 

ELES, Slovenia

What has been the impact of the COVID-19 crisis on electricity demand in your area of operations/region?

On comparing data from March 16–April 10, 2019 to data for the same time period this year, consumption by consumers connected to the transmission network did not change, consumption by households increased on average by 3 to 4 per cent (temperature change effects have been taken into consideration and excluded); consumption by non-households decreased by 14 to 16 per cent.

 

What measures have been put in place to ensure the supply of electricity and the smooth operation of the grid?

ELES established a crisis centre on February 24, 2020 to ensure safety and to control the influence of COVID-19 on the operation of the company. With the goal being to prevent the spread of the epidemic, ELES allowed employees to work from home, while approximately 15 per cent of the employees work on locations, a bit more than a third are on leave or using up their annual vacation. ELES introduced special measures for those employed in the Republican Control Center, which oversees the operation of the electricity transmission system. Due to infection concerns, the company put together two teams of six dispatchers and set up two-week shifts; one team works in the completely isolated Republican Center, while the other is back home under quarantine. Before beginning their shift, the dispatchers are tested for COVID-19.

 

How has technology enabled the utility to ensure continued supply and operations?

ELES has installed the most modern equipment for the operation of the transmission network. The COVID-19 measures do not affect the workings of the transmission network, and we have detected no need for any additional equipment to increase the quality of the operation and ensure supply safety.

 

How is the current crisis likely to impact the utility's future operations and network plans?

Developmental course and investment plans remain unchanged and have introduced a change in the dynamics (future periods) by setting priorities when it comes to investment dynamics.

 

What are the implications of disruptions such as COVID-19, if any, on projects under construction?

Mostly it is the equipment procurement that has been disrupted as well as the physical execution of services by companies that do not have offices Slovenia. Most projects are under way and special security measures were introduced to prevent the possibility of infection.

 

What impact is it likely to have on supply chain and financial performance?

The equipment import delay will result in later completion of investment projects. ELES estimates that this year the loss will be between 15-25 per cent of the planned influx due to decreased electricity consumption and lower revenue from cross-border transfer capacities. The business result in connection with regulatory methodology by the Energy Agency will be lower by a good 30 per cent or EUR5 million. This loss of revenue will be substituted in combination with certain rationalisations, changed dynamics, the scope of investments and by taking bridging loans. Looking at the ELES ratings, liquidity is not endangered.

 

Are you considering the use of any new technological solutions and measures to prepare the grid for such disruptions in the future?

ELES has not considered any additional equipment due to Covid-19 effects. However, we are in the process of introducing a CSOC as the possibility of cybernetic attacks during such situations is much higher.

 

What are some of the short-term to medium-term challenges in operating and maintaining the grid?

Completing all investments already undertaken and the investments planned till the end of 2022. This means over EUR400 million worth of investments. With the execution of these investments, Slovenia’s electric power transmission system will be ready for the challenges of the transition to dispersed production sources on OVE and introducing e-mobility, in short, for the so-called green transformation.

 

What lessons and practices would the utility want to carry forward, once the crisis is over?

The transition to 100 per cent electronic commerce. Use of video conferences as a rule when communicating with business partners and employees from various ELES locations.

 

CEPS, Czech Republic

What has been the impact of the COVID-19 crisis on electricity demand in your area of operations/region?

Electricity consumption in the Czech Republic is down by about 15 per cent on working days compared to the corresponding period (mid-April) in the last two years. In absolute terms, the decrease in load is about 1,200 MW during business hours, whereas the decrease in load in non-business hours has reached 700 MW.

 

What measures have been put in place to ensure the supply of electricity and the smooth operation of the grid?

All ČEPS employees, whose profession is strategically important to ensure the smooth operation of the Czech transmission system, are subject to special regimen measures. These have been defined to mitigate the risk of infection to the greatest possible extent. From the TSO’s viewpoint, the present situation does not require any special operational measures. Standard dispatch control tools are used to ensure power balance.

 

How has technology enabled the utility to ensure continued supply and operations?

Those ČEPS employees whose jobs can be performed outside their workplace make use of the possibility to work from home. In addition to common tools, communication also takes place by means of online platforms without coming into physical contact with operational staff.

 

How is the current crisis likely to impact the utility's future operations and network plans?

In light of ongoing implementation of the regulation on risk preparedness (EU) 2019/941, ČEPS has proposed several regional electricity crisis scenarios including a pandemic. ČEPS believes that the current COVID-19 situation shall be reflected in foreseen regional electricity crisis scenarios. We expect that other TSOs will apply a similar approach.

 

What are the implications of disruptions such as COVID-19, if any, on projects under construction?

Due to the situation connected with COVID-19, some investment projects have been partially suspended. This is particularly due to the fact that foreign specialists are unable to travel to the Czech Republic.

 

What impact is it likely to have on supply chain and financial performance?

The pandemic has no impact on the security of the power supply or transmission system operations. The supply of electricity is assured, and the transmission system is controlled using standard dispatch control tools. It is currently difficult to estimate the financial impact on ČEPS, as everything will depend on the duration and extent of pandemic-related measures. 

 

Are you considering the use of any new technological solutions and measures to prepare the grid for such disruptions in the future?

Technical solutions will be applied according to the proposed measures with a focus on future use of emerging digital technologies in the enhanced control system functions, e-learning and AI forecasting including intelligent support dispatch control functions. Future design of asset management will see the innovative application of remotely-controlled technologies such as drones. 

 

What are some of the short-term to medium-term challenges in operating and maintaining the grid?

The maintenance staff have been requested to work from home whenever possible, and unnecessary business trips have been restricted. However, all scheduled work on the transmission system, mainly maintenance work, diagnostic tasks and planned commissioning and testing of equipment, will continue.

 

What lessons and practices would the utility want to carry forward, once the crisis is over?

In the future, ČEPS will use the lessons learned and experience gained from the utilisation of online communication platforms. The company will continue the process of digitising and automating its system operations.

 

Going forward

The utilities are making every effort to minimise the impact of the COVID-19 pandemic on their daily operations and provide regular power supply to their customers. Although power utilities across the globe are taking steps to keep the lights on, the actual impact of the COVID-19 outbreak on the power sector remains to be seen.