Electricity

China Electricity Market Overview

• The national demand is expected to grow at approx. 2–3 percent CAGR through 2019–2024
• The electricity market in China is a regulated market with the government controlling the majority of the assets in generation, transmission, and distribution of electricity
• The market currently has begun in phases, the transition distribution from regulated government entities to exploration of deregulation tools, like the whole sale power market
• China is one of the largest generators of renewable energy, In 2019, the country has generated about 600 TWh of electricity from solar and wind power plants in 2019

Demand Trends

• China is a largely industrial economy, which depend on the global exports. The country has faces some significant demand shocks, due to plant closured in Q1 2020. However, since Q2 2020, the demand has recovered
• Also, with the new concession in power, prices for small and medium enterprises will support power demand significantly 
• The generation fuels, such as coal and natural gas, prices have significantly decreased during Q1 and Q2 period, when there were lockdowns in most of the countries that has affected consumption. However, the same has been recovering from Q2 and near pre-COVID levels in Q3 2020

Impact of COVID-19 on Electricity: China

• The electricity sector has recovered from a significant impact, as the industrial demand has recovered. Cost of generation also will recover, as the generation fuels, such as coal and natural gas, are expected to resume in exports
• The demand for electricity has recovered from mid Q2 in May–June as many industrial and export demand increased
• Prices are not hiked by the government as a measure to support and boost economic recovery
• Industrial power demand has crossed over an uncertain period, as the pandemic has been under control in China with low new infections

Brazil Electricity Market Overview

• The global power generation is expected to grow at approx. 2-2.5 percent CAGR through 2019-2024
• The APAC region, the largest consumers of electricity, would be the pivotal point for this growth amid covid induced pandemic
•  Brazil is the largest electricity market in South America. The country is expected to increase its power generation by 1–3 percent in the next couple of years

Demand Trends

• Electricity demand declined in Q2 2020, affecting revenue generation by suppliers. Cooling demand during summer season in Brazil could contribute to the rise in electricity consumption
• Latin America- Electricity demand declined withrestrictions amid the pandemic. Demand is recovering with relaxation in lockdowns

COVID-19 Impact – Electricity (Brazil) 

• About 65 percent of the electricity generation in Brazil comes from hydro sources, which is expected to have low impact from COVID-19 outbreak. Suppliers faced lower demand and decline in revenue. In the long term, investment in the sector could get affected with economic slow down.
• Government had to raise a bail out package of BR$ 14.8 billion to support electricity distributors for contract payment and usage of transmission network

Australia Electricity Market Overview

• As of August 2020, the electricity prices in Australia experienced a significant reduction compared to July 2020. Australia’s electricity price reduced by 14.59 percent and averaged at $43.22/MWh
• The key drivers of the low prices in Australia in 2020, especially in Q2 2020, was the significant increase in comparatively low-priced offers, along with a 2 percent reduction in operational demand
• Between Q2 2019 and Q2 2020, there was a progressive reduction in the price of marginal offers: in Q2 2020, 69 percent of marginal offers were priced below $45/MWh compared to just 33 percent of offers below $45/MWh in Q2 2019
• Overall, there was a 2,257 MW increase in low-priced offers (below $35/MWh) on average compared to Q2 2019, with increases occurring across every major fuel type

Demand Trends

• The large industrial load demand was broadly flat, also the commercial load was also significantly down (around 10–20 percent), however, the residential load increased owing to the lockdown, which almost offset the commercial load reductions, thereby indicating the lower prices from the Q3 2020.
• Market participants expect the prices to witness gradual upward variations, as the automobile companies have restarted their downstream activities. The gradual resumption in auto demand, continuing demand from medical sector.