Corona Effect: Consumption Models Updated

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Editorial
March 24, 2020Dr. Tim Becker

We continuously update our consumption models due to the impact of the coronavirus.

Country-specific updates

The pandemic of the coronavirus is heavily affecting Europe’s economies and with it the power markets. In this very uncertain situation, reliable forecasts are more valuable than ever and require country-specific updates to the consumption model.

We at Wattsight take most recent changes due to the spread of the coronavirus into account to maintain the high quality of our predictions. Our country-specific consumption models depend on numerous model inputs like historical actual electricity demand, holidays, weekends and bridging days, sun radiation, temperature to consider heating and cooling and consumption UMMs. Momentarily, these inputs do not suffice. The impact on consumption levels of individual countries can vary significantly from the normal situation due to factors such as governmental measures, the current spread of the virus and countries’ economy. While the electricity demand in some countries shifted dramatically, others experienced only minor changes. Therefore, our analysis team is making additional adjustments on a country-by-country basis. We monitor all markets and consider the most recent newsfeeds from governments, economic players and media. Our assumptions are also based on what we observed in China and experiences from earlier market shocks. However, we do emphasize that the situation is highly uncertain. Updates to the models are made contentiously and iteratively as new information is available.

Due to implemented Kalman filters our models are adjusting according to actual consumption data. Additional estimates on how the medium-term electricity demand will develop are summarized in the following tables.


Southern Europe and UK

adjustments of consumption models 4


Central European countries

adjustments of consumption models 2


Nordic countries:

adjustments of consumption models 1


Eastern Europe and Baltic

adjustments of consumption models 3


How will the situation evolve?

Our current belief for the short time horizon is that the decreasing trend in electricity demand will continue.

We assume that full lock downs will be effective until after Easter, which will force some business to close and further reduce electricity demand with time. After Easter, lock downs will be gradually lifted. According to our current estimate it will take at least until June before lock downs are completely abolished. From that moment, electricity demand is expected to progressively increase.

Currently, we believe that the situation will be back to normal not before September 2020. During this period several countries might experience changes in consumption in the range of TWh.

Italy as an example

The figure below shows the daily average normal and actual consumption in Italy compared to our forecasts made on the 14 of March and on the 18 of March which includes our most recent modifications to the model.

Adjustment of Italian consumption model due to coronavirus

Do you have questions about our consumption or price models? Click here and get in touch with our analysts.

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