The impact of COVID-19 is starting to be reported by listed energy companies. Centrica, Iberdrola, E.ON Group, Drax Group and ENGIE Group have all commented on the impact of COVID-19, including the costs of selling back overhedged volumes caused by the pandemic. These suppliers collectively are important competitors in the British energy markets, supplying around a third of business and domestic electricity by volume (Cornwall Insight Market Share). In this Chart of the Week we look at a selection of Group H120 financial results and the reported impacts of the COVID-19 pandemic. Figure 1 highlights a selection of companies that have outlined the financial impacts of COVID-19 in their H120 trading updates. Drax Group calculated a £44mn negative impact, caused by “reduced demand, a mark to market loss on pre-purchased power and increase in bad debt, principally in SME business”. The supplier recorded an estimated 10% reduction in gas and electricity sold on 2019 levels, with costs to exit previously hedged positions standing at approximately £15mn. Iberdrola cited the fall in demand and late payments as the main impacts of the pandemic on the Group’s business, noting a combined impact of €228mn at EBIT level. Across its UK generation and supply businesses, it saw a €29mn negative impact of COVID-19 due to demand reductions alongside an €18mn increase in bad debt. It noted similar reductions in demand to Drax Group, seeing 8.4% and 10.9% falls in gas and electricity demand respectively in H120. The sell ...
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COVID-19 costs energy suppliers over £1bn
Sam Holland
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