The energy view on falling business activity

Key findings

As of 20th April, business energy consumption has fallen by an average of more than 38% since the impacts of COVID-19 began to affect work and life patterns.

Hardest hit sectors – based on energy consumption data – are the hotel and hospitality industries, arts and leisure venues and the real estate sector.

The pattern of consumption has also changed markedly from previous weeks as many businesses have been forced to close or to limit operations and ensure staff either worked from home throughout the day or were put on furlough leave.

Behind the data

The measures to limit the spread of COVID-19 are unparalleled – as is the ensuing impact on British business, a fact highlighted by the effect on energy demand across specific industries.

Just a few weeks into this crisis, there are a number of industries where consumption is less than half pre-COVID numbers, least surprisingly in those sectors taking the strongest hit in terms of closing their doors with no alternative or remote ways of maintaining operations.

That means hotels and restaurants, arts and entertainment venues, real estate and the motor trades. Unsurprisingly with school closures, education also shows evidence of the shuttering going on across the public and the private sector.

Other sectors, including finance, construction and manufacturing, fare little better, with reductions in energy demand ranging between a quarter and a half. Even in those sectors that might be thought of as less effected – agriculture, IT, water and sewage, they are still reporting around a 20% reduction in energy consumption caused by a downturn in activities.

On average, business energy consumption is down around 38% in the last seven weeks. A steady, single-digit week-on-week decline at the beginning of the pandemic was followed by an immediate and sharp reduction in electricity demand almost overnight on Monday 23rd March off the back of Prime Minister Boris Johnson’s lockdown announcement.

The energy industry is not the only barometer of such a collapse in demand: there has already been an enormous reduction in flights, public transport and road traffic, with that trend expected to continue or even extend as the pandemic lockdown continues.

With many businesses either closed completely, or operating with skeleton staff or remote workers, we expect the electricity demand to remain this way for some time to come.

It will bring little comfort to those affected directly by this pandemic, but perhaps the only upside to this situation is an associated drop in emissions related to industrial energy demand, both in the generation side and also those emissions related to production processes. Alongside that we now have emissions data and photographic examples of cleaner air in our cities.

That news is of little comfort to employers and employees right now, especially those in the industries most affected.

Where we can help now though, is through timely, practical and appropriate support for our business customers. It is also worth looking at the government’s package of support measures. If you think you may struggle to pay your bills on time, or are worried about building up debt during the pandemic, there are ways we can help. This might include discussing payment arrangements which take into account your individual circumstances.  

For customers unable to renew their fixed contract with us, resulting in a move on to a potentially more expensive non-contract rate, let us reassure you that we will agree a new contract and backdate these prices once your business is operational again. These are unprecedented times; for the country, for us and for our customers, but we are working hard now to make sure we are all in the strongest position possible when life and business returns to normal.

Written by Iain Walker

Iain Walker is Director of Business Energy Sales at E.ON UK, responsible for energy sales and management offerings for cities and business customers, from microbusiness and SME customers to large industrial and corporate clients.

Iain was instrumental in creating the TPI Code of Practice, a set of standards that helps to protect business customers by making sure third party intermediaries are fair, honest and transparent when they sell energy.

 

 

Posted April 2020