Oil and Electricity sectors will shape the course of the world economy

After the COVID-19 virus turned into a global pandemic, the process that started with individuals staying at home also significantly affected production and labor. From the epidemic where many sectors have come to a standstill; The oil, electricity and power generation sectors were most affected in the area of pricing.

After the COVID-19 outbreak was declared a pandemic by the World Health Organization, the steps taken to stop the spread of the virus also greatly affected the global economy. Deloitte's "Understanding the Sectoral Impacts of COVID-19" reports examined the electricity and power generation sectors.

Industry players focus on keeping their infrastructure up and running

In the "Understanding the Effects of COVID-19 on the Electricity, Energy Services and Renewable Energy Sector" report, it was pointed out that the sector is focused on keeping its infrastructures operational and providing safe electricity and natural gas.

As stated in the study that Deloitte has put forward based on the practices of many energy companies around the world; In the wake of the volatility created by COVID-19, industry players are on track to defer payments and suspend maintenance that will cause their assets to go offline.

Industrial demand decreased, residential customer need increased

The biggest impact of COVID-19 on the industry has been a reduction in industrial demand. Despite the decline in production centers and commercial houses, there is an increase in residential customer demand. With the decline in LNG and CO₂ prices, the downward movement in demand caused the prices in the electricity wholesale markets to decline. On the renewable energy side, despite the difficulties experienced due to supply chain disruptions over the past two months, the short-term negative impact is expected to decrease in a certain period of time with the recovery of activities in China.

Turkey's spare capacity is at a sufficient level

Stating that the impact of the pandemic on the global industry is also valid for Turkey, Deloitte Turkey Electricity Sector Leader Emrehan Demirel stated that there is no significant risk in energy supply thanks to the spare capacity and effective operational management in supply security, electricity generation and natural gas supply.

Demirel pointed out that the decrease in electricity demand is reflected in electricity prices in the wholesale market, "However, due to decreasing demand and falling electricity prices, companies' income expectations are falling. Since the energy sector in Turkey has left behind a major investment period, the income projections of the companies are extremely critical for the financial sustainability of the entire sector. In addition, it seems inevitable that the ongoing investments will be affected by the problems in the supply chain. Especially in this period when many renewable energy investments are accelerated in order to benefit from YEKDEM (Renewable Energy Sources Support Mechanism) incentives, supply chain issues pose a difficult situation for investors to manage."

Vaccine to crisis: automation and digital investments

Emrehan Demirel gave the following information about the steps that the leaders of the electricity, energy services and renewable energy sectors should take in order to manage the COVID-19 process correctly:

• In the event that employee movement is restricted, develop contingency plans to keep critical personnel on duty and be able to perform activities safely.
• Re-evaluate global supply chain dynamics and consider whether it is appropriate to supply more materials and equipment to operational areas.
• Conducting scenario studies and determining action plans to manage falling income expectations and cash flows. In this context, to review new investment plans.

Rethinking how and where work is done, accelerating the adoption of automation and digital capabilities, assessing whether the crisis can be used as a catalyst for the future of work.