People are using more electricity in their homes than ever before as COVID-19 restrictions in the U.S. keep people inside. Still, with businesses usually consuming the bulk of electricity in the country, overall consumption has fallen off a cliff – and so have prices.
In data from Nodal Exchange collected by the Wall Street Journal, areas in the U.S. hit hardest by COVID-19 have seen over 100 percent drops in wholesale power prices per megawatt hour. The five-year average for the New York City region, for instance, is around $36 per MWh, but has dropped to under $17 for 2020. Similar patterns are found with other Northeast power providers, while those in the middle and eastern portions of the country have seen more modest declines.
Electricity is sold on a market similar to oil and other commodities, and like oil, a sharp decline in demand has forced power-plant owners to drastically cut prices. While it’s true that more electricity is being consumed in private households, that figure is still far less than what would be consumed in businesses and organizations across the country.
As COVID-19 restrictions continue to keep businesses closed, the price of electricity could follow the path of oil and fall to record lows. Currently, the International Energy Agency forecasts electricity price drops that rival those during the Great Depression.
