[MW Weekend] Cold spell in Singapore – which business is really hit badly?

The temperature of Singapore has dropped to 21.4 this morning, although it has not broken any record, the cool weather has lasted indeed for a while.

For those who come from elsewhere, you might dismiss this as exaggeration – but if you are used to the warmth day in day out, your body indeed can’t adjust to a prolonged chill (however benign that is) easily.

There are reports that restaurants and retail businesses are affected, as people choose to stay home rather than go out. Well that is more because of the rain, not the temperature.

Usually, sectors such as ecommerce and food delivery should experience a boom precisely as people opt to stay at home.

So which business (or businesses) is affected negatively by the chill?

Electricity!

Ask around you would find that almost nobody switches their air conditioning at home on now, and many have not been using the air-conditioning for weeks.

How much impact there really is?

In 2016, when the latest comprehensive statistics are available, Singapore’s household consumed a monthly average of 632GWh of electricity. With an average price of S$0.189/kWh, the average collective electricity bill of all household would be S$119.4m.

According to a study by Singapore’s National Environmental Agency, air-conditioning accounted for 36.7% of household energy consumption.

This means on average in 2016, household paid collectively S$119.4m*36.7% = S$43.8m for air-conditioning.

A 30% drop in aircon usage would mean the collective electricity bill is reduced by S$13.1m (US$10m).

A more drastic 80% drop (which is quite possible) would mean a reduction of S$35m (US$26.4m).

Two months of ‘cold spell’ (which might be an extreme case) would mean US$52.8m lost revenue for the power generation/transmission/services sector.

Now you can use the following table to dissect the data and figure out which part of the value chain is hit the most:

Or, if you are in Singapore, sit back, get a cup of tea, and relax during the cool weekend – this does not happen very often.