Much higher electricity bill during COVID-19?

No worries. You are not the only one.

Upon lockdown, shops are closed and employers are promoting employees to work from home. While closure of physical stores is temporary, working-from-home policies could be permanent. Having COVID-19 as the major driving force, companies like IBM, Standard Chartered, Twitter and Facebook have announced their attempt to move employees attending office to working from home.

The work-from-home move is “sticky”, in economic term, which means that this attempt poses a long-lasting change that takes some time to reverse the decision. If companies decide to promote the work-from-home policy, they would have less needs on physical offices and thus rent less spaces. While finding a new office location and renovation could take a lot of time, companies’ move to work from home is a bold attempt.

From the employees’ point of view, the impact of work-from-home is two-folded. You may have benefited from

1. More flexible time arrangement,
2. Reduced travel time for work,
3. Reduced outside spending, e.g. for meals or social drinks, etc.,

while you may have harmed by

1. Lower productivity at home,
2. Lower level of social interactions with others,
3. Prolonged working hours.

Now, you may have one more harm that go unnoticed —

Your electricity bill will be 10%, up to 15%, higher than usual.

A latest working paper NBER (Working Paper 27937) finds that in the US, the residential electricity use during the COVID-19 pandemic has elevated to a higher level that compensated the drop in the commercial electricity use, amounting to a US $6 billion more on at-home power consumption from 4-month period from April to July in 2020. A similar trend must be inevitable for other developed economies with similar lockdown measures.

Despite a big V-shaped rebound in commercial electricity use right on July 2020, with the stickiness of work-from-home policy, it is expected that it would not bounce back to the original level exactly. The same applies to the residential electricity use.

So, be prepared for electricity bill and watch up for investment opportunities relating to residential electricity consumption!