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Keeping the Lights On: Resilience from Utilities during Pandemics

The impact of coronavirus COVID-19 is now undoubtedly a global tragedy. The first 100,000 cases of the virus emerged over a two-month period, focused primarily in a single country. The second 100,000 cases took 11 days to spread across the world, and the following 100,000 infections took just four days to spread.

Malaysia is facing its own battle against this deadly virus

Malaysia is facing its own battle against this deadly virus. The national lockdown has most recently been extended until April 14, mandating social distancing as a way to slow the spread of COVID-19. This seems a small sacrifice compared to those brave individuals at the frontline of healthcare, who are directly treating and supporting the victims of this virus.

In the face of the pandemic’s accelerating impact, governments, businesses, and citizens have been forced into a remarkable transition in how they live and work. In a landscape of increasing uncertainty, ensuring the continuity of key critical infrastructure is vital to provide reassurance and stability to a nation.

Keeping the lights on

From a utility’s standpoint, the simple act of ‘keeping the lights on’ has never been more important. It is estimated that one-third of the global population is currently in lockdown. Keeping the lights on in this context represents an imperative global necessity, as entire economies shift to remote working practice. That’s not simply a case of economic opportunity, but potentially a question of livelihoods for billions of global citizens.

Stable electricity supply is not only important for powering remote workers, or meeting the surge in demand for home energy usage. That same electricity illuminates our hospitals, powers our healthcare equipment, and ensures that even in the face of medical uncertainty, healthcare workers can be confident in receiving the power they need. In Spain, utility giant Iberdrola has launched a dedicated service for hospitals to ensure continuous power for facilities combating COVID-19.

The role of utilities like TNB is especially crucial during this pandemic

Reliable electricity supplies are essential to tackling this global challenge. Electricity keeps our food chilled and safe to consume. It powers the lights in our supermarkets, and drives essential manufacturing. That includes Malaysian companies responsible for manufacturing an estimated 60% of the world’s disposable glove supply, key protective equipment in the fight against COVID-19.

The role of utilities like Malaysia’s TNB is especially crucial in this environment. Where some countries operate open markets with multiple suppliers, the residents of Peninsular Malaysia rely on continuity of power from a single essential utility company. That makes a commitment to powering our communities more vital than ever.

Unprecedented challenges, high civil responsibility

The duty to ensure continuous electricity supply comes at a time when energy companies are themselves facing unprecedented industry pressures. While residential electricity consumption has increased, demand from major commercial and industrial consumers has drastically dropped. As lockdown measures come into force, shops, factories, and businesses everywhere are increasingly being forced to shut down.

As lockdown come into force, shops, factories, and businesses everywhere are being forced to shut down

Electricity demand in China fell 7.8% year-on-year in January and February, a sharper fall than even the 2008 Financial Crisis. The industrial sector saw a fall of 12%, driven by textile and machinery manufacturing, while residential demand increased by 2.4.%. These remarkable figures hide millions of workers anxiously awaiting a return to normality, and a reliable income.

This global crisis is accompanied by a stark financial cost too. A record 3.3 million Americans filed claims for unemployment in the week ending 27 March, as COVID-19 undermined the health of the world’s largest economy. America is not alone in feeling this pain. With the slowdown in global economic activity, workers across the world are likely to lose their only source of income. That possibility will likely result in bills deferrals, as consumers struggle to meet the cost for even their basic electricity demands.

Utility companies by their nature have robust strategic plans for disruption. While these capabilities are more often deployed in cases of natural disaster, the same resilience is at the heart of how utility companies must respond today.

Maintaining sound and effective business operations has never been more crucial

Oil price volatility offers a perfect example of the sharp edges of this crisis which utility companies must face. Global oil prices have plummeted from US$65 per barrel at the start of the year to lows of US$23 during the COVID-19 crisis. This drop in commodity prices understandably triggers consumers’ expectations for tariffs to fall during a time when they need it most.

Yet utility companies are invariably tied into long-term contracts and power purchase agreements that focus on stability over the long term, rather than an ability to respond to short-term price shocks. Meeting the payment obligations of existing agreements can mean the difference in thousands of workers across the energy supply chain receiving a vital salary at an uncertain time. Maintaining sound and effective business operations has never been more crucial.

The electricity supply industry is a crucial driver of a nation’s economy, much like its healthcare or agriculture or education industries. They form the foundations of a nation’s ability to survive and thrive. Yet they also face the on-going costs of maintaining infrastructure, at a time when they face critical resourcing challenges. As key workers become infected, and rotate off work schedules for recovery, utilities are faced with the same infrastructure challenges but a reduced workforce to meet them.

Utility companies will play a vital role in jump-starting economic growth

As the safety and well-being of workers is a primary consideration for any responsible business, utilities are handed the tough role of balancing a nation’s need, and the safety of their own front-liners in charge of maintaining and operating the grid.

Building a path forward

COVID-19 is first and foremost a human tragedy. It is also one which human compassion and perseverance can steer us through. Yet that human tragedy will extend far beyond the impact of the health crisis itself if we are unable to restart economies and financially safeguard our citizens.

In Malaysia, national utility TNB committed to invest approximately RM13 billion of capital expenditure under the country’s stimulus package to spur the economy. Similarly, state-owned utilities in Vietnam and China have allowed for electricity charge exemptions or reductions to ease the burdens of businesses while ensuring social security. These reliefs will be a welcome move by both businesses and individuals who are looking to kickstart their respective lives again.

While the full impact of the MCO and the economy is yet to be determined, the role that utilities play in reviving a nation’s economy is one that is significant and crucial. The creation of new sectors, provision of job roles, and continuity of essential infrastructure are just some of the areas these industrial players must contribute to moving forward. With their unique positions as critical pillars of global and national economies, utility companies will play a vital role in jump-starting economic growth. Until that moment comes, governments, citizens, and utility companies must remain united in a battle to safeguard our precious communities.

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