by Bob Shively, Enerdynamics President and Lead Instructor
The electric utility business model historically has been tied to electric load growth. As loads grow, utilities invest in new facilities to serve the new loads. As long as load growth can be served at a reasonable cost, rates remain stable while utility profits grow.
But, as we pointed out in a recent blog post here on Energy Currents, the U.S. gross domestic product (GDP) has increased 9% since 2008, yet electricity use has not increased at all.
Here you can see the change in U.S. electric usage each year since 1950:
Historically, electric use rose almost every year except for the first year in a recession. But for the latest economic downturn beginning in 2008, things look different. We have seen multiple years of reduced usage even though the economy has slowly recovered. So what is causing such stagnation and what might a lack of recent load growth mean for the future of the utility as we know it?
Some key factors that can drive load growth up include:
- growth in electric appliances and EVs
- increase in square footage of homes and businesses
- growth in industrial output
- hotter summers and colder winters
And some factors that drive it down are:
- increasing efficiency of homes
- increasing efficiency of business/manufacturing
- shift from manufacturing to knowledge business
- growth in distributed generation behind the meter
- cooler summers and warmer winters
Looking at these factors, it appears likely that zero load growth may be a lasting situation. The primary factor is strongly increasing energy efficiency. Next week’s post will continue this discussion by looking at how energy efficiency programs and policies are driving low load growth and what a no-load growth future may mean for the utility industry.
Pingback: How Energy Efficiency Programs and Policies Are Driving Low Load Growth | Enerdynamics