Utilities Haven't Been Hit Too Hard by COVID, But Energy Transition Looms

THE DROP IN ENERGY CONSUMPTION NEVER EXCEEDED 30%, ACCORDING TO ANDREA GILARDONI. THE CRITICAL FACTOR IS INVESTMENT

The onset of the pandemic has had different impacts on the various economic sectors. "Utilities were perhaps less affected than other industries, but its critical issues must be watched particularly closely in view of the essential services that companies in this sector provide", comments Andrea Gilardoni, who teaches Management of Public Utilities. For this reason, in early March, the Bocconi faculty member had already started an "Instant Research" for the COVID Crisis Lab interviewing top executives of 40 large utilities, representing more than 50% of the market. The emerging picture is that of a sector which has reacted promptly and in synergy with government institutions, also by virtue of the public stakes that distinguish many of these corporate actors, focusing their efforts where the national territory required them.
 
“The industry has suffered a drop in energy consumption, which however never exceeded 30%. Demand did not collapse; on the contrary, for example water consumption has increased in certain areas, and for the whole sector the expectation is that within 24 months there will be a return to pre-Covid levels", says Gilardoni. “There also exists a critical factor linked to the non-payment of utility bills by hard-pressed users, to which companies have responded by according delays in payments and providing credit".
 
However, the most interesting aspect that emerged was about investment. "Investment projects in progress have been maintained; construction sites are behind schedule but none have been canceled," continues Gilardoni. “The situation for the future is different. Despite the generally positive sentiment, all the players are waiting for a clear intention on the part of the government to confirm the priority of the utility industry for national development and, more generally, for achieving the energy transition and implementing the European Green Deal. The constraints affecting the sector have not changed with Covid; they have stayed the same for a number of years now. Just consider that Italy has an investment target for renewable energy equivalent to installing 5 GW/year and we are currently barely above 1. The hope is that this emergency will be experienced as an opportunity to overcome impediments to green energy by promoting simplification and unlocking investment."

by Emanuele Elli
Translated by Alex Foti