IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i6p1639-d517341.html
   My bibliography  Save this article

Covid-19’s Impact on European Power Sectors: An Econometric Analysis

Author

Listed:
  • Philipp Hauser

    (Chair of Energy Economics, Technische Universität Dresden, Münchner Platz 3, 01069 Dresden, Germany)

  • David Schönheit

    (Chair of Energy Economics, Technische Universität Dresden, Münchner Platz 3, 01069 Dresden, Germany)

  • Hendrik Scharf

    (Chair of Energy Economics, Technische Universität Dresden, Münchner Platz 3, 01069 Dresden, Germany)

  • Carl-Philipp Anke

    (Chair of Energy Economics, Technische Universität Dresden, Münchner Platz 3, 01069 Dresden, Germany)

  • Dominik Möst

    (Chair of Energy Economics, Technische Universität Dresden, Münchner Platz 3, 01069 Dresden, Germany)

Abstract

Covid-19 affects the personal lives of millions and led to an economic crisis. Changed behavioral patterns and a reduction of industrial activity result in a reduction in power demand, and thus Covid-19 impacts the power systems around the world. Bottom-up mapping of the effect of Covid-19 on the energy demand is challenging, if not impossible. In order to analyze the impact of the pandemic on power demand, we instead propose a simplified approach based on an econometric analysis that quantifies the country-wide load reduction of Covid-19, using the number of active cases as well as the specific lockdown period as proxies. The time span covered is from 1 January 2016 to 31 August 2020. This long time span allows us to investigate the effect of Covid-19 on the power demand. We find that in Germany (DE) and Great Britain (GB) the power demand is reduced by about 1–1.7 MW per case, while in France the demand increased by 1 MW per case during times outside of the lockdown. On the other hand, in France the lockdown itself has a much higher load reduction effect in France than in GB and DE. Based on the elasticity of power demand regarding Covid-19 cases, we calculate the impact of Covid-19 on the power prices through reduced loads. We find that Covid-19 reduced power prices by 3 to 6 EUR per MWh. The effect of Covid-19 on carbon emissions in the power sector is likely to be small. In Germany, the country with the highest absolute level, emissions in the power sector were reduced by approximately 2% (4 Mio. t CO 2 ).

Suggested Citation

  • Philipp Hauser & David Schönheit & Hendrik Scharf & Carl-Philipp Anke & Dominik Möst, 2021. "Covid-19’s Impact on European Power Sectors: An Econometric Analysis," Energies, MDPI, vol. 14(6), pages 1-17, March.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:6:p:1639-:d:517341
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/6/1639/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/14/6/1639/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. López Prol, Javier & O, Sungmin, 2020. "Impact of COVID-19 measures on electricity consumption," MPRA Paper 101649, University Library of Munich, Germany.
    2. Florian Dorn & Sahamoddin Khailaie & Marc Stöckli & Sebastian Binder & Berit Lange & Patrizio Vanella & Timo Wollmershäuser & Andreas Peichl & Clemens Fuest & Michael Meyer-Hermann, 2020. "Das gemeinsame Interesse von Gesundheit und Wirtschaft: Eine Szenarienrechnung zur Eindämmung der Corona- Pandemie," ifo Schnelldienst Digital, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(06), pages 01-09, May.
    3. Hirth, Lion & Mühlenpfordt, Jonathan & Bulkeley, Marisa, 2018. "The ENTSO-E Transparency Platform – A review of Europe’s most ambitious electricity data platform," Applied Energy, Elsevier, vol. 225(C), pages 1054-1067.
    4. Graf, Christoph & Quaglia, Federico & Wolak, Frank A., 2021. "(Machine) learning from the COVID-19 lockdown about electricity market performance with a large share of renewables," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    5. Florian Dorn & Sahamoddin Khailaie & Marc Stöckli & Sebastian Binder & Berit Lange & Patrizio Vanella & Timo Wollmershäuser & Andreas Peichl & Clemens Fuest & Michael Meyer-Hermann, 2020. "Das gemeinsame Interesse von Gesundheit und Wirtschaft: Eine Szenarienrechnung zur Eindämmung der Corona- Pandemie," ifo Schnelldienst Digital, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(06), May.
    6. Prol, Javier López & O, Sungmin, 2020. "Impact of COVID-19 Measures on Short-Term Electricity Consumption in the Most Affected EU Countries and USA States," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(10).
    7. Steve Cicala, 2020. "Powering Work from Home," NBER Working Papers 27937, National Bureau of Economic Research, Inc.
    8. Weigt, Hannes, 2009. "Germany's wind energy: The potential for fossil capacity replacement and cost saving," Applied Energy, Elsevier, vol. 86(10), pages 1857-1863, October.
    9. Leonidas Mantzos & Tobias Wiesenthal & Frederik Neuwahl & Mate Rozsai, 2019. "The POTEnCIA Central scenario: An EU energy outlook to 2050," JRC Research Reports JRC118353, Joint Research Centre.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marian Woźniak & Aleksandra Badora & Krzysztof Kud, 2023. "Expectations of the Inhabitants of South-Eastern Poland Regarding the Energy Market, in the Context of the COVID-19 Crisis," Energies, MDPI, vol. 16(14), pages 1-25, July.
    2. Tadeusz Kufel & Paweł Kufel & Marcin Błażejowski, 2022. "Do COVID-19 Lock-Downs Affect Business Cycle? Analysis Using Energy Consumption Cycle Clock for Selected European Countries," Energies, MDPI, vol. 15(1), pages 1-27, January.
    3. Karolina Puławska, 2021. "Financial Stability of European Insurance Companies during the COVID-19 Pandemic," JRFM, MDPI, vol. 14(6), pages 1-16, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Edyta Rutkowska-Tomaszewska & Aleksandra Łakomiak & Marta Stanisławska, 2021. "The Economic Effect of the Pandemic in the Energy Sector on the Example of Listed Energy Companies," Energies, MDPI, vol. 15(1), pages 1-28, December.
    2. Collen Zalengera & Maxon L. Chitawo & Isaac Chitedze & Long Seng To & Vincent Mwale & Kondwani T. Gondwe & Timeyo Maroyi, 2021. "Unbending the Winding Path of a Low-Income Country’s Energy Sector amid the COVID-19 Pandemic: Perspectives from Malawi," Energies, MDPI, vol. 14(21), pages 1-15, November.
    3. Micheli, Leonardo & Solas, Álvaro F. & Soria-Moya, Alberto & Almonacid, Florencia & Fernandez, Eduardo F., 2021. "Short-Term Impact of the COVID-19 Lockdown on the Energy and Economic Performance of Photovoltaics in the Spanish Electricity Sector," MPRA Paper 107969, University Library of Munich, Germany.
    4. Serra Garcia, Marta & Szech, Nora, 2020. "Understanding demand for COVID-19 antibody testing," Working Paper Series in Economics 140, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    5. Tomasz Cieślik & Piotr Narloch & Adam Szurlej & Krzysztof Kogut, 2022. "Indirect Impact of the COVID-19 Pandemic on Natural Gas Consumption by Commercial Consumers in a Selected City in Poland," Energies, MDPI, vol. 15(4), pages 1-18, February.
    6. Kevin Kloiber & Manuel Menkhoff & Sascha Möhrle & Andreas Peichl, 2021. "Städte sind stärker von den wirtschaftlichen Folgen der Coronakrise betroffen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(05), pages 53-58, May.
    7. Georgeta Soava & Anca Mehedintu & Mihaela Sterpu & Eugenia Grecu, 2021. "The Impact of the COVID-19 Pandemic on Electricity Consumption and Economic Growth in Romania," Energies, MDPI, vol. 14(9), pages 1-25, April.
    8. Aneta Włodarczyk & Agata Mesjasz-Lech, 2021. "Ecological and Economic Context of Managing Enterprises That Are Particularly Harmful to the Environment and the Well-Being of Society," Energies, MDPI, vol. 14(10), pages 1-24, May.
    9. Ali K k & Erg n Y kseltan & Mustafa Hekimo lu & Esra Agca Aktunc & Ahmet Y cekaya & Ay e Bilge, 2022. "Forecasting Hourly Electricity Demand Under COVID-19 Restrictions," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 73-85.
    10. Kolb, Sebastian & Dillig, Marius & Plankenbühler, Thomas & Karl, Jürgen, 2020. "The impact of renewables on electricity prices in Germany - An update for the years 2014–2018," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    11. Fezzi, Carlo & Fanghella, Valeria, 2021. "Tracking GDP in real-time using electricity market data: Insights from the first wave of COVID-19 across Europe," European Economic Review, Elsevier, vol. 139(C).
    12. Ollech, Daniel, 2021. "Economic analysis using higher frequency time series: Challenges for seasonal adjustment," Discussion Papers 53/2021, Deutsche Bundesbank.
    13. Gaspar Manzanera-Benito & Iñigo Capellán-Pérez, 2021. "Mapping the Energy Flows and GHG Emissions of a Medium-Size City: The Case of Valladolid (Spain)," Sustainability, MDPI, vol. 13(23), pages 1-29, November.
    14. Halbrügge, Stephanie & Buhl, Hans Ulrich & Fridgen, Gilbert & Schott, Paul & Weibelzahl, Martin & Weissflog, Jan, 2022. "How Germany achieved a record share of renewables during the COVID-19 pandemic while relying on the European interconnected power network," Energy, Elsevier, vol. 246(C).
    15. McConnell, Dylan & Hearps, Patrick & Eales, Dominic & Sandiford, Mike & Dunn, Rebecca & Wright, Matthew & Bateman, Lachlan, 2013. "Retrospective modeling of the merit-order effect on wholesale electricity prices from distributed photovoltaic generation in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 58(C), pages 17-27.
    16. Koo, Jamin & Park, Kyungtae & Shin, Dongil & Yoon, En Sup, 2011. "Economic evaluation of renewable energy systems under varying scenarios and its implications to Korea's renewable energy plan," Applied Energy, Elsevier, vol. 88(6), pages 2254-2260, June.
    17. Omoyele, Olalekan & Hoffmann, Maximilian & Koivisto, Matti & Larrañeta, Miguel & Weinand, Jann Michael & Linßen, Jochen & Stolten, Detlef, 2024. "Increasing the resolution of solar and wind time series for energy system modeling: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 189(PB).
    18. Thao Pham & Killian Lemoine, 2020. "Impacts of subsidized renewable electricity generation on spot market prices in Germany : Evidence from a GARCH model with panel data," Working Papers hal-02568268, HAL.
    19. Vassilis M. Charitopoulos & Mathilde Fajardy & Chi Kong Chyong & David M. Reiner, 2022. "The case of 100% electrification of domestic heat in Great Britain," Working Papers EPRG2206, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    20. Würzburg, Klaas & Labandeira, Xavier & Linares, Pedro, 2013. "Renewable generation and electricity prices: Taking stock and new evidence for Germany and Austria," Energy Economics, Elsevier, vol. 40(S1), pages 159-171.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:6:p:1639-:d:517341. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.