It’s been six months since the World Health Organization declared COVID-19 a global health emergency, and in that time the pandemic has plunged the U.S. economy into the worst contraction on record. At Innowatts, we’ve watched the crisis unfold in real time, with our meter-driven analytics offering a unique window into the way lockdowns changed the way businesses operate, and transformed the way we live, work, and play.
Now, with parts of the economy reopening but areas of the United States still struggling with outbreaks, we want to provide an update. The U.S. economy has rebounded from the worst of the downturn. By looking at commercial and residential energy usage, we can see exactly which parts of the economy are doing well, and which are still struggling.
Commercial demand is looking up
The big takeaway from our latest data is that commercial demand is now roughly back to pre-pandemic levels, at least in some business segments. That could still change as the virus ebbs and flows, of course, but for now energy usage data offers grounds for cautious optimism that we’re heading for a U-shaped recovery.
Consumption is trending up for some segments including:
- Social services, likely because the recession is driving demand for their services
- Convenience stores and gas stations, due to increased travel and a preference for road trips over traveling by air
- Grocery stores, where people are shopping more as they eat out less.
But it’s not all good news. Power consumption remains below average for some business segments, including:
- Business associations, likely because of remote working
- Banks, because of remote working and lower demand for commercial banking
- Restaurants, likely due to capacity restrictions and decreased demand
- Pizza parlors, which are facing increased takeout competition as restaurants adapt
- Furniture stores, perhaps because they’re seen as an unnecessary expense
- Fitness centers, some of which remain closed or have capacity restrictions
The bottom line: energy usage data suggests that businesses are doing well overall, but that there’s a great deal of variance from one sector to the next. Some businesses are performing extraordinarily well, but others are still suffering
Sleeping in and staying home
When the pandemic first struck, the slump in commercial demand was offset by a spike in residential demand, with families staying home instead of heading to schools or offices. But the resurgence of commercial demand in recent weeks hasn’t led to a corresponding downturn in residential demand. In fact, we’re still seeing a 7% increase in residential load between 9am and 8pm.
Our theory is that residential demand remains high for three main reasons:
- Lack of summer activities. Children who would ordinarily be at camp, taking classes, or engaging in other organized activities are staying home instead. That means residential demand remains high even if their parents are at work.
- Remote working. Many white-collar workers are still working from home, even as businesses open.
- Lowered headcount. Businesses may have reopened, but that doesn’t mean they’ve rehired all the people they had before, or that hourly workers are getting as many shifts as they used to.
Residential data provides an important counterpoint to the more rosy picture presented by commercial energy usage. Businesses may be reopening, but it will take time for them to get up to full speed — and that means it’ll take time for the economic benefits to trickle down to employees, especially low-income hourly workers whose jobs can be easily turned on and off as business needs change.
What comes next?
Our data shows that residential and commercial usage isn’t a zero sum game. Looking ahead, it’s possible that commercial usage will resurge while residential usage also remains high, forcing providers to adjust to a “new normal” of higher overall energy production.
There are two key issues that will shape the energy landscape in coming months. The first is the education system: if schools open for in-person classes, and stay open during the whole school year, it will shift a significant amount of energy use from homes to educational facilities. If schools go virtual, or are forced to close midway through the year, however, it will drive a continued increased level of residential demand.
The second key question is whether businesses stay open, and whether industries such as hospitality and entertainment are able to resume operating at their former capacities. We currently expect to see commercial consumption trend closer to normal levels as the economy reopens — but if the current surge of COVID-19 cases continues, or if a new wave hits as we enter the fall, new lockdowns could drive a sharp dip in commercial demand.
Of course, even if schools reopen and we avoid further COVID-19 outbreaks, there is likely to be a lingering increase in residential consumption. Many businesses will probably allow some or all of their workers to continue operating remotely, and some nervous parents may opt for homeschooling even if schools are open.
Whatever happens, the “new normal” won’t simply be a reversion to pre-pandemic demand patterns — so it’s important to plan ahead, and to stay attuned to how the pandemic is impacting families and businesses. Leveraging real-time usage data remains the key to accurately predicting and preparing for shifts in commercial and residential energy consumption.