Is COVID-19 pandemic a “Black Swan” event? The impact of the pandemic on the Energy Market

ABSTRACT

The recent coronavirus disease (COVID-19) pandemic outbreak affected our society greatly, offering a chance to rebuild and rethink our way of living. Energy, as a driving factor of everyday life faced an unprecedented shock. How big was this shock for both the economic and political levels? No consolidated study exists where both aspects are considered. To rethink our way of living, we should reconsider the energy policies strategies for the upcoming years. To date, such an impact has not yet been quantified using price forecasting mathematical models. We have therefore developed a methodology, to quantify the impact of COVID-19 pandemic on European energy market. This paper is addressing the following question “Is the COVID-19 pandemic a Black Swan event?”Evidently COVID-19 had significant consequences on the European energy market. Stocks suffered historical minimum prices duringthis year, with a greater impact on coal technologies than renewable ones. Moreover, stock prices return is showing unexpected fluctuations, hence resulting in incorrectly predicted price forecasts. Despite the initial shock, the energy market is returning to pre-crisis levels, with the renewable technologies leading the comeback. Based on our findings and methods, we conclude that COVID-19 pandemic was not a Black Swan event. We foresee to extend our methodology beyond European energy market and the short-term effects of the pandemic with possible application on the impact of policy makers on energy models. © ECOS 2021 - 34th International Conference on Efficency, Cost, Optimization, Simulation and Environmental Impact of Energy Systems.