(The opinions expressed here are those of the author, a
columnist for Reuters.)
By John Kemp
LONDON May 14 U.S. electricity consumption has
remained flat for the last six years, the first such prolonged
pause in growth, as recession and improvements in efficiency
have bitten deeply into demand.
Homes, schools, offices and factories consumed a total of
3,831 billion kilowatt-hours of electricity in 2013, basically
unchanged from the 3,816 billion in 2006, and well down from the
record 3,890 billion in 2007, according to the Energy
Information Administration (EIA) (Chart 1).
Consumption growth has slowed every decade since the 1950s
as the rapid gains from electrification and the introduction of
modern appliances and airconditioning have given way to a more
mature industry (Chart 2).
Growth slowed from 9.9 percent per year in the 1950s and 7.4
percent in the 1960s to 4.7 percent in the 1970s, 2.9 percent in
the 1980s and 2.4 percent in the 1990s. Consumption grew less
than 0.7 percent in the 2000s and has slowed further over the
last ten years to just 0.5 percent.
Recession cut use around 170 billion kilowatt-hours (4
percent) between 2007 and 2009. But even as the economy has
recovered, consumption has remained flat.
Most of the reduction compared with the previous trend can
be traced to federal and state energy efficiency standards for
new buildings and appliances such as refrigerators and washing
machines, as well as the transition away from incandescent light
bulbs, which have made deep cuts in underlying demand.
"Although electricity demand fell in only three years
between 1950 and 2007, it declined in four of the five years
between 2008 and 2012," according to EIA.
The slowdown mirrors trends in other advanced industrial
economies like the United Kingdom. Britain's consumption peaked
in 2005 and has now fallen back to 1997 levels as a result of
better home insulation and appliance efficiency coupled with
behavioural changes stemming from higher electricity prices
("Digest of United Kingdom Energy Statistics" 2013).
(1) Electricity consumption: link.reuters.com/xur39v
(2) Annual demand growth: link.reuters.com/hes39v
(3) Energy flow: link.reuters.com/kes39v
EIA forecasts U.S. electricity consumption will start
growing again, as a rising population and an increasing range of
electronic devices, including electric vehicles, outweigh
continued gains in efficiency.
The agency projects growth of under 1 percent a year until
2040, which would increase generation around 29 percent and
require 351 gigawatts of new generating capacity to satisfy
demand ("Implications of low electricity demand growth" in
Annual Energy Outlook 2014).
But like all long-term projections, this one is surrounded
by a substantial amount of uncertainty. The EIA's reference
scenario is based on the efficiency standards that have already
been enacted; it makes no allowance for new ones that could cut
The uptake of electric vehicles, which could be another
major source of demand, remains difficult to forecast. EIA
assumes plug-in and all-electric vehicles make up 2 percent of
new cars and trucks sold by 2040.
But even if future demand remains highly uncertain, it seems
likely that demand will grow much more slowly than in the past.
Efficiency gains are making a vital contribution to reducing
greenhouse emissions because the electricity generation and
distribution system is relatively wasteful.
Just one-third of the energy used to generate electricity is
delivered to end users. In 2012, the electricity sector consumed
39 quadrillion British thermal units of energy but delivered
only 13 quadrillion to customers (Chart 3).
Efficiency is also hastening the demise of older, smaller
coal-fired power plants. Most were built before the 1980s and
lack the scale to compete effectively with new gas-fired power
plants using cheap shale gas.
Moreover, environmental regulations require them to retrofit
expensive scrubbers to clean up their mercury emissions.
In a growing market, some of these coal-fired units might
survive, but with electricity demand essentially flat, they
cannot hope to compete with cheaper and cleaner gas, as well as
subsidies and mandates for renewables, and generate the returns
needed to justify installing expensive new scrubbers.
U.S. power producers plan to retire 191 coal-fired
generators between 2014 and 2017 with a combined capacity of
27,300 megawatts. Coal-fired units account for more than half
the planned capacity shutdowns over the next four years,
according to EIA. Only 7 new coal-fired plants will be opened.
Coal's supporters blame tough new emissions regulations
established by the federal government for the shutdowns, but in
reality coal plants never stood much chance in a world of cheap
gas, renewables mandates and stagnant electricity demand.
(Editing by William Hardy)