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Are there any early impacts of COVID-19 on the large business energy market?
Whilst the impacts of the pandemic on the Australian energy market are not yet fully realised, we know many of our large business customers are reassessing their operations and priorities.
Operational demand declines but still in line with seasonal changes
Operational demand (demand for "grid" or large-scale generation) in the NEM, fell in March with notable reductions in South Australia and Victoria:
- SA experienced a reduction of 6.7% overall commercial and industrial demand, a record low for the state.
- Smart meter data from Jemena revealed Victorian commercial demand fell 7%.
It’s important to note that whilst demand in the NEM typically declines around this time of year as most states transition into cooler months, the above analysis of Victorian demand derives from Jemena smart meter data recorded the week before lockdown (1–7 March) and the week after lockdown (22–28 March) to provide insight into COVID-19 specific impacts.6
National response mechanisms and tax assistance
On 12 March, the Commissioner of Taxation announced support services for large businesses impacted by COVID-19. Tailored support arrangements can include payment deferral, GST adjustments and PAYG variations.
The COAG Energy Council met on 20 March to discuss the need for a national approach to the impacts of the pandemic. Australian Energy Regulator (AER), AEMC (Australian Energy Market Commission) and Australian Energy Market Operator (AEMO) are currently working with industry to ensure the ongoing delivery and security of energy supply. The newly formed "Energy Coordination Mechanism" will also ensure the maximum possible protection for all critical operations.
Major retailers, including Origin, and network operators have activated pandemic-response plans to ensure the protection of staff, assets and energy supply.7
Renewable investment delays
According to the PWC report; "Covid-19 and the solar industry", 63% of all solar modules required by solar projects worldwide are supplied by China. The impact of the reduction of manufacture with the additional uncertainty of the length of the shutdown period, has meant delays for Australian solar projects as well as short-term price increases.
The energy research agency; Rystad Energy reports that approximately 1.5 GW of approved renewable projects scheduled for 2022 are at risk of delay. The report adds that the fall of the value of the Australian dollar to a 17-year low has had an impact on further renewable development. Bloomberg figures reflect the overall decline of investment on large-scale solar and wind projects worldwide with clean energy project numbers the lowest in six years.8