The US electricity sector is in a period of unprecedented change and turmoil. Renewable energy prices are falling like crazy. Natural gas production continues its extraordinary surge. Coal, the golden child of the current administration, is headed down the tubes.
In all that bedlam, it’s easy to lose sight of an equally important (if less sexy) trend: Demand for electricity is stagnant.
Thanks to a combination of greater energy efficiency, outsourcing of heavy industry, and customers generating their own power on site, demand for utility power has been flat for 10 years, and most forecasts expect it to stay that way. The die was cast around 1998, when GDP growth and electricity demand growth became “decoupled”.
This historic shift has wreaked havoc in the utility industry in ways large and small, visible and obscure. Some of that havoc is high-profile and headline-making, as in the recent requests from utilities (and attempts by the Trump administration) to bail out large coal and nuclear plants.
...To be clear: For both economic and environmental reasons, it is good that US power demand has decoupled from GDP growth. As long as we’re getting the energy services we need, we want overall demand to decline. It saves money, reduces pollution, and avoids the need for expensive infrastructure.
But the way we’ve set up utilities, they must fight that trend. Every time they are forced to invest in energy efficiency or make some allowance for distributed generation (and they must always be forced), demand for their product declines, and with it their justification to make new investments.
Only when the utility model fundamentally changes — when utilities begin to see themselves primarily as architects and managers of high-efficiency, low-emissions, multidirectional electricity systems rather than just investors in infrastructure growth — can utilities turn in earnest to the kind planning they need to be doing.
In a climate-aligned world, utilities would view the decoupling of power demand from GDP growth as cause for celebration, a sign of success. They would throw themselves into accelerating the trend.
Instead, utilities find themselves constantly surprised, caught flat-footed again and again by a trend they desperately want to believe is temporary. Unless we can collectively reorient utilities to pursue rather than fear current trends in electricity, they are headed for a grim reckoning.
Friday, March 02, 2018
Electrical Consumption Begins Going Down
There are all kinds of reverberations here. My job basically-vanished because of these trends. Other jobs are at risk too. And maybe that's OK: