C&I energy intensity has declined for a decade
Is residential next?
Demand for electricity fell precipitously in the late 1970s, driven in a large part by petroleum scarcity and rising energy prices. This shock to the US economy began a multidecadal shift toward less energy intensive activity and dramatic declines in energy consumption rates across the C&I sector. During the same period, residential sector consumption buoyed US average annual load growth figures, creating a seemingly stable assumption of 1-3% growth in perpetuity.
Has the Great Recession of the mid-2000s “shocked” the residential sector as well? A closer look at residential energy intensity reveals a similar trajectory as the C&I sector’s response to the crises of the 1970s. As a result, US average load growth has flatlined to near zero – and sometimes below zero – since 2010.
Macro trends of urbanization and saturation of energy-intensive appliances (e.g. air conditioning) have surely played a role in this shift, as have energy efficiency standards and commercialization of technologies that reduce usage (e.g. LEDs) or shift toward local production (e.g. PV Rooftop).
Have we reached a “new normal” for load growth? If in the past “growth covered many sins”, what are the implications for utilities? What new opportunities does this create for utilities and other market participants? Will growth in data centers, structured materials, cryptocurrency, and “indoor horticulture” bring energy intensive businesses back to the US?