The COVID-19 pandemic and accompanying recession will significantly reduce electricity demand in California through 2023 and slow consumption until the end of the decade, the state’s Energy Commission predicted in a workshop Wednesday to update its long-term forecast.

“All of us know that massive changes have happened with COVID, with the economic contraction and all the trauma that our society is living through right now,” said Commissioner Andrew McAllister, who is leading the forecast update.

Statewide electricity consumption will decline by 4 to 5% in the next two years, Cary Garcia, with the CEC’s Demand Analysis Office, told the commissioners. Demand was already down 2% in 2019 — falling to about 278 TWh — compared with last year’s forecast, he said. Energy consumption will decline at least another 2% through 2023, he said.

The commission uses data on economic performance, population growth and other factors to predict electricity demand in its 10-year forecasts. The current forecast runs through 2030. It adjusts its forecasts annually, but the changes usually aren’t as significant as this year’s updates, Garcia said. “Nobody was predicting 2020 to turn out this way.”

Population growth has slowed. This year’s update projects 1.2 million fewer residents in 2030 than the 2019 forecast, he said. Household formation and income are also expected to decline, he said.

The biggest downturn will be in commercial employment and “floorspace,” a measure of retail and business activity. Projected growth in commercial floorspace dropped 60% this year compared with last year’s estimate, Garcia said. The pandemic has wreaked havoc on brick-and-mortar retailers and kept residents away from offices.

Manufacturing employment has been declining for decades in California and will continue falling through 2030, the CEC said last year. The update shows it dropping more steeply through 2023 and a larger long-term decline than previously anticipated.

“The big dip seems to be in the commercial and industrial sectors,” Garcia said. “That’s just [a] huge decline. There’s nothing to really get away from massive amounts of people not working.”

Dropping Demand

Taken together, the economic indicators suggest statewide electricity demand will be approximately 15 TWh lower in 2020/21 than the CEC predicted in its pre-pandemic forecast. Consumption will remain at lower levels for years to come, the commission estimated in its preliminary analysis.

A caveat, Garcia said, is the analysis doesn’t account for changes in demand driven by sales of electric vehicles. The commission still is working on those figures, he said.

In addition, he said, the course of the pandemic and an economic recovery remain in question. Will vaccines and therapies trigger a swift return to work, restaurants and movie theaters? Or will medical help be slow in coming and lockdowns continue indefinitely?

To deal with those variables, the CEC forecasted low-, medium- and high-demand scenarios. The mid-case scenario shows a U-shaped dip in demand through 2023. It assumes the pandemic will ease and the economy will recover at a gradual but steady clip.

“In the COVID context … we have a recovery in the economy that is very similar to a natural disaster rather than a full recession,” Garcia said. “In comparison to the Great Recession, you have a much quicker recovery. There’s a rebound that occurs and then a slight lag and sort of a return to normal growth.”

McAllister said the forecast update is intended to consider discrete factors, including the effects of the pandemic and EV adoption. The larger question of demand and resource adequacy, given the decision by CAISO to order rolling blackouts during shortfalls on Aug. 14-15, is not part of the agenda, he said. (See CAISO Provides More Details on Blackouts.)

“Obviously, they’re very important … but those are not conversations that are happening today,” he said on Wednesday. “Today, we’re talking about specific elements of the 2020 forecast update.”