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Energy Efficiency

Published on March 9th, 2015 | by John Farrell

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Is Energy Efficiency The More Persistent Threat To Utilities?

March 9th, 2015 by  


While local renewable energy and energy efficiency are both proving to be near-existential threats to electric utilities in the early 21st century, the trends aren’t the same. The rapid rise of renewable energy gets the headlines, and it’s big news. Total renewable energy capacity has grown 10-fold since 2003 and in certain parts of the country, wind and solar represent more than 20% of electricity on the grid.

us installed wind and solar power capacity ilsrBut while renewable energy leads in the news, energy efficiency may be the more persistent threat to electric utilities in the 21st century. The trend of falling electricity consumption is 50 years in the making. The following chart illustrates the shift toward lower electricity use per capita, driven by price shocks and the continued improvement in the energy efficiency of the economy.

flattening per capita electricity usa ILSR

Although growth in per capita energy use has declined each decade until now, the economy made a major shift in the year 2000, from growth of approximately 100 kilowatt-hours per year per person to complete stagnation. In the 2010s, the curve has bent down and may represent a permanent shift toward stagnant or lower per capita electricity consumption.

Alone this represents a substantial reversal in the utility business, but coupled with the rise in distributed renewable energy, it is a clarion call for a new kind of electricity system.

Photo Credit: Ashley Rose via Flickr (CC BY-NC-ND 2.0 license)

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Democratic Energy weekly update.






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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.



  • NRG4All

    When it comes to lessening our reliance on fossil fuels for energy. There is a new lightbulb out that will help that was presented in this forum. I’m a fan of Ed Begely Jr., the actor, has championed lowering our energy needs. As he says, we all don’t have to have solar panels or electric cars… just start by picking the low hanging fruit first. Instead of a 60W incandescent bulb, get one of these 9.5W bulbs that put out the same amount of light as the incandescent. That’s a savings of 50.5W. Based on three hours of use each night, if every building in the U.S. (~150 million) would just convert one bulb the savings would be 3,232 tons of coal per day! If you want, the math is below.
    1. 150,000,000 x 50.5 x 3 / 1,000 is the amount of Kilowatt (kWh) hours saved per day which equals 22,725,000 kWh.
    2. Electric resistance heating yields 3,413 BTU per kWh. (in essence, using incandescent bulbs is resistance heating) Thus, to convert that to a measure of heat, 22,725,000 kWh x 3,413 BTU equals 77,560,425,000 BTU.
    3. Burning coal produces on average 12,000 BTU/lb. So 77,560,000 BTUs requires 6,463,369 lbs. of coal (77,560,425/12,000).
    4. That in turn is 3,232 tons of coal PER DAY (6,463,369 / 2,000) that wouldn’t be needed for electrical generation. As you are probably aware, a lot of the U.S. electrical energy is generated by coal. Some plants are cleaner that others, but when coal is burned it in addition to CO2, it also releases whatever toxic metals are in the coal…mercury is one.

  • eveee

    Yes.

    Conservation reduces carbon more than any other factor in the US over the last decade or so.

    “Contrary to popular perception, 2012 data shows that the increased use of natural gas in the electric power sector is not the largest contributor of energy related CO2 reductions in the US over the past year. Nearly 75% of the CO2 savings are attributable to economy-wide demand reduction driven by energy efficiency, conservation and the mild winter of the first quarter of 2012.”

    http://co2scorecard.org/home/researchitem/27

  • Kyle Field

    True that efficiency will cut consumption…but as we switch our entire transportation model to electric over the next 20 years, base load will double or even triple (based on my actuals in the US). Our household base consumption went from 13.6kwh/day to roughly 7kwh/day. Adding one EV brought that up to ~20kwh/day. We expect to add another when the next gen EVs come out which would push us up to ~30kwh/day or so (second EV will get less miles and be more efficient). I dont see utilities at risk on the low side…but rather as unprepared for the huge surge in demand that’s coming in the next few decades.

    • Ronald Brakels

      I think only a bit over a third of US electricity consumption is residential. And also, you seem to be driving more than average. How many kilowatt-hours is your car using a day? I’m a little confused on that. In Australia with the average car driving about 40 kilometers a day that would come to roughly 7 kilowatt-hours. Mind you, there are plenty of households with more than one car.

      • Kyle Field

        We have had it for 4 months now and have put 3400 miles on it (~5500km). We also have the very inefficient MB B-Class ED which has averaged 2.9mi/kwh iirc. My wife drives to work 4 days per week with 3 days to “play”. I work from home so don’t have to drive (for work) but try to get out to keep myself from going stir crazy at home 🙂

        • Ronald Brakels

          So maybe 16,500 km a year. I would expect it to use perhaps 7.5 to 9 kilowatt-hours a day depending on the type of car and driving conditions. It would take about 2 kilowatts of rooftop solar generate that much electricity here in Australia. And with more than half our private vehicles parked at home for most of the day, there’s plenty of opportunity for charging them directly from home solar panels.

    • Bob_Wallace

      There’s the NREL study a few years back that found the grid could charge about 70% of all US cars were they electric at the time. There’s a lot of spare capacity during off peak hours.

      Since then we’ve added more wind, likely increasing late night supply.

      The only problem I’ve heard about is that some transformers may need to be replaced earlier as they were sized with the expectation that they would have an opportunity to cool off overnight. A large number of EVs in a neighborhood could mean stressing that transformer.

      • Kyle Field

        I’m curious what efficiency that was based on (mi/kwh). No need to look it up as I’m sure things have changed a lot since…but interesting just the same.

        Makes me think that as our grid gets smarter, with more solar and as more and more EVs hit the road, there will be more incentive for the govt to push workplaces to install chargers. It makes the most sense to store excess solar production into EVs vs waiting and having to use non-solar night time power to charge them. This will have to be a key component of smart grids as that would most effectively use the EVs to bridge past peak consumption which inconveniently hits right after solar goes to sleep for the night.

        • Bob_Wallace

          I think the incentives will be there for utilities to push workplace chargers. Grab the market share that has no place to charge at night. And create a large dispatchable load for grid smoothing.

          SoCal Edison has already started down that road. $350 million to help with installing 30,000 charge outlets in their territory. Aimed mostly at workplace parking lots and apartment buildings.

      • Ronald Brakels

        Put some rooftop solar in the area to cut the head off the summer peak. That will help keep things cool. Variable could also be used to keep demand within transformer capacity. And then there’s building a new transformer to help handle the load, but I really can’t recommend that as It didn’t work out so well here.

  • Ernie

    But where’s this energy efficiency coming from? I highly doubt you could get these kinds of numbers from CFL bulbs, LED flat panel TVs and going from desktops to laptops. I know that our power bill hasn’t gone down at all since these new devices were installed. In fact, I’ve noticed that the majority of our power consumption goes to heat – hot water, the clothes dryer, and actual baseboard heat. Our EV is a bit of an anomaly, but that consumes about as much as our dryer. Either way, nobody’s getting more efficient at converting electricity to heat, so I’m still perplexed about where this drop in power consumption is coming from.

    I suspect it has more to do with rooftop solar panels than any of that, since the curve for solar generation does indeed coincide with the drop in power consumption. So your argument that efficiency is “more of a threat to utilities” doesn’t seem to ring true. Sorry.

    • Offgridman

      Perhaps you just haven’t been around long enough to see the efficiencies that have happened.
      20-30 years ago the average room sized window air conditioner would pull 10-15 amps on a 110v line, the last one I got two years ago pulls 4.5.
      The small ceramic heaters that run 20-30$, only draw 3-4 amps, when the old electric coil ones used 8-10.
      Refrigerators used to average 8-10, and now are 4-6.
      Tube style TV’s used 250-400 watts, where similar sized flat screens only use 80-120.
      There have been all sorts of changes over the past couple of decades other than light bulbs, and quite a few due to stricter government regulations here in the US.
      Even in the cases you cited home heating and cooling, and laundry it is easier to get much more efficient devices than it used to be, and with the yellow tag system it is possible to do the comparison when you are out shopping without having to research every manufacturers owners manual.
      The way that rooftop solar is growing in the US is great, but it has very little to do with the reduced electricity usage of consumers.

      • Bob_Wallace

        About a year back my sister bought a 55″ flat-screen TV. She bought without paying attention to the draw. It pulls only 85 watts.

        I also noticed a friend of mine had put his rather large plasma TV in a back room where it will probably never be turned on again. He replaced with a huge flat-screen. I’m sure he paid no attention to power use.

        Good examples of non-intentional efficiency.

        • Offgridman

          Well with your sister that just goes to show that the power draw of TV’s has gone down even more in the past few years since we got our flat screens to replace the old Trinitrons, because I was referring to 32&36″ models.
          I think that you are right about most people just not being aware of the efficiency gains they have been getting. A lot of the reason for my tracking the power usage of various appliances was my job, the lower the power usage at various hotel and apartment properties, the higher the bonuses, and then because of being offgrid wanting to keep power usage lower than production.
          For most people though due to inflation and increasing fuel costs, they just see their utility bills getting bigger and aren’t aware that they are using less electricity overall.

          • Ernie

            Well I’m glad you looked into this, because I was about to say that nobody actually buys 32″ TV’s anymore, and in 1995 a 55″ widescreen CRT was a daft fantasy that nobody entertained. I seem to recall that projection screens at the time didn’t even get that big.

            As for heaters, well you’re referring to small space heaters, rather than big baseboard heaters. And I assure you that first, there haven’t been any new advances in efficiency there, and second, it’s hard to beat near 100% efficiency except with a heat pump, which don’t really work below – 10 C. Nor are they efficient below that temperature.

            On the other hand, half of America uses more AC than heat anyway. It’s just my experience that’s skewed.

          • Offgridman

            Are you talking about electric resistance baseboards, or hot water or steam fed ones? Because in the case of the first they are some of the most inefficient ways of heating, although about the cheapest to install.
            In the case of the hot water ones there have been improvements to those, but you might already have these. Back in the late seventies the utilities were even giving rebates for implementing them in NY and some of the other New England States. Everything from zoning valves and individual room thermostats, to better radiators with blower fans, and if you wanted to spend the money much more efficient boilers, pumps, and storage tanks to take advantage of TOU power. And by the way a heatpump can even improve on this in minus 10° weather, but it would require a big investment in the in ground type that can take advantage of the constant temperature 6-10 feet under the surface.
            But your must already have these, so as I said you just aren’t aware of the improvements that have happened over the decades.
            Finally this is just a personal opinion, but the idea of needing a 55″ TV seems ridiculous to me. Unless you have severe vision problems that make it necessary, or your living room is 30-40 feet wide (something just as ridiculous) and you need to be able to see it from the other side. Why does anyone need to go that extreme, it is just part of the conspicuous consumption and want for the biggest of everything that has gotten the US into the sinking boat we are riding on.

          • Philip W

            I just looked up how much my 46″ TV draws. 62W.
            And that Model is already 3 years old. A similar model from the same brand that is available right now draws 53W. Amazing.

    • Wayne Williamson

      Ernie, living in Florida I rarely use the heat(1 or two weeks a year), and air conditioning runs pretty much every day. Over the last 5 years or so, I’ve cut my energy usage in half. First was replace the 30 year old central heat and air with an energy star one, replace the duct work, and blow in lots of attic insulation. I’ve also replace the water heater, both fridges and the washer and dryer…all energy star. Most lighting is cfl but we’re migrating to the led ones as any of the old ones die. Cost per month is roughly half of what it used to be. Summer time was 400 dollars a month, now 200 dollars a month, and winter has gone from 300 to 150 or less. Payback time is maybe 8 years….probably less.

  • JamesWimberley

    Lower electricity use is not only driven by very real efficiency gains but by the dematerialisation of growth (link to old post of mine, with sources). The weight of German, British and Japanese GDP has actually fallen since 1970. We buy more services and less stuff. An $800 iPhone weighs under 5 ounces.

  • Tarje

    I would say that ‘energy efficiency’ should be taken with a grain of salt. The charts looks impressive, and sure some energy efficiency is happening. My guess is however that the decline in per capita energy usage comes from the fact that energy-intensive businesses (such as ship-building, steel- and alloy-production) have been outsourced to low-income countries as China. This outsourcing happened just as the curve flattens. In return, this is the main driver of the skyrocketing energy usage in China, which is now the largest carbon-dioxide emitter.

    • Ronald Brakels

      That’s not the case with Australia’s 8%+ total decline in grid electricity use. Or at least only a portion of it. While there have been changes such as decreases in aluminium production, there have been increases elsewhere such as about one gigawatt of electricity is or will soon be used to compress natural gas for export. (And I’ll mention that our reduction in aluminium production was not off shoring, it was reducing Australia’s aluminium exports. We make a lot of aluminium with our cheap cheap electricity prices. Cheap cheap electricity prices that normal people don’t get.) Most of the decrease in electricity use was due to Australian homes and businesses improving efficiency. Mind you, those of us paying 25 US cents a kilowatt for grid electricity had plenty of incentive to be efficient, but I will note that the US has just gone through 6 or more years of a having weak dollar with rising domestic manufacturing, while Australia’s dollar was soaring high all that time and has only recently come a cropper, so I would definitely expect the opposite of outshoring to have been going on in the US over this time.

    • Jan Veselý

      20 years ago you needed 1 kg of coal to produce 1 kg of primary steel. Now, it is about 0.5 kg and steel plants are still wasting energy in BIG.
      And this happens also in other industries.

    • JamesWimberley

      This perception is out of date. Blog posts of mine (with sources) tell the story of China’s surprising coal peak: here, here, here. The confirmation keeps coming: China’s imports, which are heavily weighed to raw materials, fell a remarkable 19% in January from the previous year (link). One statistic is a clue, many are proof.

      • Bob_Wallace

        Let’s paint a picture to back up James’ comment. And add one about China’s CO2 emissions.

        China began cutting coal use and CO2 emission growth a few years back but few people seemed to pay attention.

  • Michael G

    As the article states, the increasing cost of energy makes it worth the effort to find a more efficient way to do things. People here think of the energy uses they are most familiar with, but most energy use is in non-residential use. Without seeing the figures I can’t tell for sure, but I would bet most of the improved efficiency is in industry and commerce.

  • Steven F

    No mater how efficient you make something there is always a limit as to how low you can go. AC, TV, PCs, and refrigerators are all old electronic devices that have been on the market for some time. Over the years we have made them more efficient. We can do even more but it will not be easy and future savings may be small.

    However if you look away from old electrical products and instead look at new ones such as electric cars, heat pumps (for heating / cooling / water heating a very different picture appears. As fossil fuels get depleted and and cost increase people will increasing turn to electrical replacements. Switching from a gas car to an electric car can easily double or triple your electricity consumption. replacing a gas water heater and or furnace to electric Will also add to your electricity consumption.

    Efficiency will have a limited impact, home solar however will have a very big impact. In the long run utilities will not be able to prevent people from installing it. The same for electricity storage. So in the end utilities cannot stop the loss of customers.

    • Bob_Wallace

      (Electric) utilities will lose market to efficiency but gain market back via EVs. Their NG business will largely turn into electricity business, a sideways move.

      I’m not sure end-user solar will ever exceed 25% of customers. Between the numbers who don’t own roofs and just won’t get around to it I think utilities will come out fine.

      Remember, they have access to wind, hydro and cheaper storage.

      • Will E

        Bob, where do you live.
        In Germany utilities go bust for not adapting to renewables, thats going to happen everywhere.
        and BTW, you have lean mean squirrels in your backyard,
        Yesterday I had a lone Wolf in my backyard, first one in 120 year in the Netherlands, google Wolf in Kropswolde, that is where I live

        • Bob_Wallace

          In the US.

          Some utilities will likely be slow to adapt and will get themselves in financial trouble. Some may even go bankrupt. But the “institution” will survive, someone will run the reorganized company after the bankruptcy process.

          What we may see is some providers go out of business. A company that is heavily loaded up with coal and less efficient nuclear plants could be in big trouble, but most of those plants are likely paid off.

    • Ronald Brakels

      Oddly enough, I get the impression that Australia is much further along in energy efficiency that the US despite that country’s weak, puny, and laughable current that is so pathetic that it may not even kill you if you look at it the wrong way. (Hmmm… Maybe it does have some advantages.) But here in Australia we still have a long way to go as far as improving energy efficiency goes. As just one example you can see an Australian review of a thermomix here, which has the potential to greatly reduce energy use in the kitchen:

      http://www.gizmodo.com.au/2015/02/this-is-the-only-review-of-a-thermomix-you-ever-need-to-see/

      We have declining home natural gas use due to it simply becoming too expensive for most households, but we have not seen an uptick in electricity use as a result. It seems that the switch from gas to electric is made up for by efficiencies elsewhere. Note though that natural gas use per gassy house averages much less than in the United States due our having lovely weather whenever it’s not actively killing us. Switching to electric cars has the potential to greatly increase our household electricity use, but for Australia that lies in the future.

    • Will E

      I need less electricity, and produce more with rooftop Solar. so it is not how low you can go but how much you can produce extra.
      Energy plus house and energy plus EV with rooftop and garage Solar.
      Solar investment 5000 dollar for 5000 kwh a year, payback 1000 dollar a year at 20 cents a kwh, price here, the Netherlands.

      • Ulenspiegel

        Please, work with correct numbers:

        1 kW(p) in the Netherlands generate 900 kWh electrcity per year. Therefore, you need 5.5 kW(p) to generate 5000 kWh per year.

        1 kW(p) as roof-top installation costs 1300 EUR minimum, good quality 1500 EUR, therefore, your investment is at least 7000 EUR.

        Now the interesting questions:

        1) How much (of the 5000 kWh) can you consume without storage in a normal houshold. My bet: less than 2000 kWh.

        2)What do you get for the rest?

        Your economic model for small scale roof-top solar is nonsense IMHO.

    • In terms of heating and cooling, there are substantial gains to be made via the building code. Dwellings could be built with much better insulation, and heat pumps and heat / cold storage could lower HVAC energy use.

      A smart system that made the best of its environment could be efficient. Here in Canada, there are several months of the year when refrigeration could be achieved by circulating outdoor air through one’s freezer or refrigerator, using a smart controller to vary the mix of outdoor air vs. cooling coils. Rooftop solar thermal could also make a big contribution.

    • Ernie

      Sorry, but our EV only uses about as much power as our electric clothes dryer. That’s hardly a tripling of our power consumption.

      Mind you, we’ve also had electric hot water and heat for as long as we’ve owned property, so it’s a little harder to tell what that transition can do.

  • Charlotte Omoto

    Doesn’t the per capita energy use reflect both energy efficiency and distributed energy production?

    • Ronald Brakels

      Yes, it also reflects distributed energy, which would almost entirely be point of use solar. But in Australia, despite deciding not to have a recession after the Global Financial Crisis, and despite having a gradually growing population, absolute grid electricity use has fallen by about 8% or more from its peak and is about 17% or more below where it was projected to be at this time. Our rooftop solar only accounts for only around 2% or now perhaps a little more of the decrease in grid electricity use. With its much lower penetration in the US, distributed solar will currently be having a much smaller effect there.

      • Will E

        Australia economy is on the slide.
        australians better build more coal plants to use their own coal.
        China and India go Wind and Solar,
        and need no more australian coal.
        follow the news.

        • Ronald Brakels

          Since solar power is cheaper in Australia than new coal power even before externalities are included, that would be really stupid. But you can’t fool me. Stop impersonating Will E, Abbott! And go put on that Halloween costume I sent you. The one that makes you look like a knife rack. Your Cabinet members will love it.

        • Larry

          Trroll Which “Nightmare on Elm Street” movie did you escape from?

          • Bob_Wallace

            Avoid the name-calling please.

      • Charlotte Omoto

        Thank you for the info! I wonder if US has higher use of natural gas for heating, cooking, clothes drying that would also tend to decrease per capita electricity use.

        • Ronald Brakels

          Oh yes, the US uses much more gas than we do in Australia. Here it’s common for houses to be completely electric, our more powerful standard current makes that a bit easier, and we do a lot less heating because of the warmer climate. I even just checked online to see if there are such things as natural gas clothes dryers in Australia, used by people who are on the electricity grid. There are, but they’re definitely not common. But then not owning a clothes dryer is also common. Nice weather and lots of clothes lines.

  • ivan

    I would guess this aligns with cfl light bulbs?

    • Jan Veselý

      I would guess that in the past all new “must have” device were rising electricity consumption (refrigerator, AC, TV, PC, …). New fashion devices are in fact demand destructing few Watt smartphones and tablets are replacing bigger computers.

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