Largest drop in consumption in more than 50 years – E24

It appears in the first Electricity Market Report (“Electricity Market Report”) of the International Energy Agency (IEA).

The Paris-based agency is established by OECD countries and provides advice on energy use.

In the report, the IEA estimates that global electricity consumption will fall by around two percent this year, due to the crown crisis and slowing activity in the world economy.

This is a significantly larger drop than after the financial crisis. The world used 0.6 percent less electricity in 2009 than the previous year, the agency says.

At the same time, activity in the world economy is expected to fall 4.4% this year, compared to a drop of just 0.1% after the 2009 financial crisis.

Earlier this year, the IEA published several reports on the situation after the crown crisis. In April, for example, the IEA said the global energy industry was in its worst shock in 70 years.

The strongest price gap in the Nordic region

According to the IEA market index for electricity purchase prices, world electricity prices have fallen 28% on average this year, after falling 12% the previous year.

“After the shock in 2020, we expect a moderate increase in 2021,” the IEA writes.

According to the report, prices have fallen the most in the Nordic region, and especially in Norway.

“The most dramatic price drop occurred in the Nordic electricity market, due to a surplus of hydroelectric power,” writes the IEA.

Norwegian electricity producers have seen a solid explosion this year. According to figures from Nord Pool, the average price of energy in Norway so far this year is nine øre per kilowatt hour, excluding network rental and tariffs. Last year it was 40 øre per kilowatt hour.

Lots of water in the reservoirs

Part of the reason for the low prices in the Nordic region is the large Norwegian water reservoirs. According to the IEA, Norway produced 46 terawatt hours of hydroelectric power in April and May, 25 percent more than in the same period in 2019.

Combined with low demand in the country, this led to high exports via power lines to Sweden and cables to Denmark and the Netherlands.

According to the IEA, electricity prices for end users in Norway have fallen by around 77% this year for industry and 42% for households, due to low demand and exceptionally high production of hydroelectric and wind power .

“The highest effect was seen in Norwegian end-user prices,” the agency writes.

Only China is increasing consumption

Among large economies, only China will use more electricity in 2020 than the previous year, but growth is just two percent compared to 6.5 percent on average over the past five years, the IEA says.

China now accounts for 28 percent of global electricity consumption.

Countries like the United States, India and Korea and regions like Europe and Southeast Asia will use less electricity this year than last year, according to the IEA.

Continuous growth in green energy

But one part of the electricity industry continues to increase its capacity and it is renewable electricity. It is expected to increase by seven percent in 2020.

“Long-term power contracts, priority on the power grid, and continued development of new capacity contribute to strong growth in renewable energy production,” writes the IEA.

Growth in solar and wind power installation fell in early 2020, but is still expected to be a record in 2020. The IEA expects the world to increase installation by four percent to 198 gigawatts this year, and solar power represents 107 gigawatts of this.

The agency expects renewable energy, especially solar cells and wind power, to increase its share of global energy production from 28 percent in 2020 to 29 percent in 2021.

Hydropower remains the largest source of renewable electricity, accounting for 16 percent of total energy production, while solar and wind power account for about nine percent.

The IEA expects capacity within nuclear power to increase by 8 gigawatts, while gas power is expected to increase by 40 gigawatts.

Coal power capacity will remain unchanged this year at 2,125 gigawatts, the IEA believes. It could also potentially fall for the first time this century. The reason is delays in new development combined with the removal of old facilities, according to the IEA.

It affects coal, gas, and nuclear power.

The growth of renewable energy is having a severe impact on conventional energy production from coal, gas and nuclear energy. Coal power is expected to drop 5 percent in 2020, the biggest drop in history, according to the IEA.

Coal power has returned to the 2012 level. Nuclear power is expected to fall by four percent this year, due both to the pandemic and the fact that there is less capacity available, according to the IEA.

Gas power production is expected to drop two percent this year, a somewhat more moderate drop due to low gas prices that helped gas power take market share from coal, especially in the United States and Europe, according to the agency.

The explosion of fossil energy sources is also contributing to CO2 emissions from global electricity production falling by five percent this year, the IEA writes.

For next year, the agency expects a two percent increase in CO2 emissions from the global electricity industry.

Expected to increase in 2021

The Energy Agency predicts that the world will use three percent more electricity in 2021 compared to the previous year. This is a more moderate rebound than when the financial crisis eased. In 2010, world electricity consumption increased by 7.2 percent.

Coal power is expected to surge again next year, but the IEA still expects growth from renewables to be the main trend in the electricity market.

Rising gas prices will likely curb increases in gas energy use, the agency believes.

Electricity prices in Norway are the lowest

The IEA has also compared prices across OECD countries based on 2019 prices, which was a slightly more normal year than 2020.

According to the agency, Norwegian industrial companies have the lowest electricity prices in the OECD. Norwegian households pay around twice as much as industry, but are still among those who pay the least for electricity.

The figures are not necessarily completely comparable, as Norwegians consume much more electricity on average than people in most other countries. Other countries, for example, use energy sources other than electricity for heating and cooking.