U.S. Electricity Demand Peaked in 2007
April 13th, 2017Disclosure: I sell solar power systems in New Zealand.
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There are many likely small components of this, such as efficiency gains, small scale solar masking loads behind the meter (might explain 1% of demand decline), and high prices for electricity in some areas.
But…
Via: Bloomberg:
Part of the reason is that a grim new economic era dawned in 2000 or 2001 that has been characterized by slow growth, declining labor-force participation and general malaise — all of which tend to depress energy demand. But if you measure electricity use per dollar of real gross domestic product, the decline is just as pronounced, and it began much earlier than the fall in per-capita demand…
Efficiency gains may actually increase demand, since one can get more service (transportation for instance) for the same price, or use the difference to buy some other crap. This is called the “rebound effect”, but it seems to have been in part avoided in the UK between 2000 and 2008 :
http://ukerc.rl.ac.uk/UCAT/PUBLICATIONS/The_Macroeconomic_Rebound_Effect_and_the_UK_Economy.pdf
“The relatively small size of the total macroeconomic rebound effect found in our modelling supports the theoretical and empirical arguments that there is a qualitative difference between energy efficiency improvements stimulated by direct incentives and those that occur through the market as a result of technological progress and the normal economic imperatives to reduce costs of production and consumption (see Chapter 3). Policy-induced energy efficiency improvements focus on areas dominated by market failures/barriers, and so the implicit price falls arising from efficiency improvements have relatively little effect on energy-consuming activities. A high level of cost-effective energy efficiency improvements can be found and implemented when attention is focused on their potential by policy incentives.
Our modelling also suggests that a significant increase in the strength of energy efficiency policies would lead to further energy and CO2 savings, with the size of the total rebound effect being slightly reduced. The ‘Khazzoom-Brookes postulate’, which states that energy savings from all energy efficiency measures are likely to be offset by associated increases in demand, is based on an extrapolation of simplified theoretical models of the whole economy. Our more detailed macroeconomic model is able to take into account the size and focus of actual energy efficiency policies, relative to the whole national economy. Although we find appreciable macroeconomic rebound effects of the order of 20 to 30% for energy-intensive sectors, those for the other sectors are much smaller, 5 to 10%, because they are much less energy-intensive. Our findings support the view that the Khazzoom-Brookes argument is largely irrelevant to assessing the magnitude of the macroeconomic rebound effect arising from UK energy efficiency policies. Hence, this study supports the argument that improvements in energy efficiency by producers and consumers stimulated by government policy measures will lead to significant reductions in energy demand and hence in greenhouse gas emissions.”