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Have we reached peak electricity usage?

Seven charts that will change your understanding of the future of power

Thomas Frey //August 13, 2017//

Have we reached peak electricity usage?

Seven charts that will change your understanding of the future of power

Thomas Frey //August 13, 2017//

It happened in 2007. Ten years ago the trajectory for electrical use in America peaked and started on a different course, declining for reasons we don’t fully understand yet. No, this wasn’t a one-time drop but a clear shift, moving in a new downward direction that continues to this day.

There should have been celebrations and parades, even dancing in the streets, but no one even noticed.

Our emerging electric car and trucking industries coupled with plummeting battery prices, solar roofs, internet of things (IoT) devices, artificial intelligence, home battery packs, and energy efficient everything are just a few of the interrelated issues that will turn virtually every prediction about our future electrical needs into a low probability forecast before it’s even mentioned.

Have we reached peak electrical use in the U.S.?

In 1989, Amory Lovins, founder of the Rocky Mountain Institute, spotted a typo – "negawatt" instead of "megawatt" – in a Colorado Public Utilities Commission report and decided to start using “negawatt” as a theoretical unit of conserving power, representing the amount of electrical power saved.

While the term never really caught on, Lovins’ goal of finding more efficient ways to use electricity had begun many years earlier. Art Rosenfeld, a senior staff member at Lawrence Berkeley National Laboratory known as the "godfather of energy efficiency,” launched a far-reaching campaign promoting energy conservation.

In one of his final interviews before he died, Rosenfeld shared, “I’ve often said that the price of liberty is eternal vigilance but the price of energy efficiency is eternal nagging.”

As it turns out, the “nagging era” may have come to an end. We may have turned the corner when it comes to nagging at people to turn lights off.

Per-capita electricity use has now fallen for six years in a row. We're back to the levels of the mid-1990s, and it would appear we are headed even lower.

Seven charts that will change your understanding of the future of power

For a quick overview of the shifting landscape for electricity, here are seven important charts.

1.) The Electricity Plateau – The initial drop in electricity use in 2008 and 2009 could be attributed partly to the economic downturn. But the economy grew again in 2010, and every year since. Electricity use in the U.S., meanwhile, is still below its 2007 level, and seems to be flat-lining.

The change is even more dramatic if you measure on a per-capita basis:

2.) Past the Peak and Falling – Per-capita electricity use has fallen for six years in a row. We're now back to the levels of the mid-1990s, and seemingly headed lower.

3.) The Economy Decouples from Electricity  Our digital economy is rapidly decoupling from the electric demands of the industrial era.

Researchers Jonathan Koomey and Richard Hirsh offered five hypotheses for why electricity demand had decoupled from economic growth:

  • State and federal efficiency standards have enabled us to get by with less electricity.
  • Increased use of information and communications technologies have also allowed people to conduct business and communicate more efficiently.
  • Higher prices for electricity in some areas have depressed its use.
  • Structural changes in the economy have reduced demand.
  • Electricity use is being underestimated because of the lack of reliable data on how much energy is being produced by rooftop solar panels.

4.) Who’s Using the Juice?

We’re experiencing some significant structural changes to our economy.

A good indicator is our shift to cloud computing. From 2000 to 2005, electricity use by data centers in the U.S. increased 90 percent. From 2005 to 2010, the gain was 24 percent. As of 2014, data centers accounted for 1.8 percent of U.S. electricity use, according to a 2016 Lawrence Berkeley study, but their electricity demand growth had slowed to a crawl. 

5.) Overtaking Lane – According to Bloomberg researchers, in just eight years electric cars will be cheaper than gasoline vehicles, growing quickly to 530 million electric vehicles globally by 2040.

In this scenario, electricity demand for electric vehicles (EVs) will grow to 1,800 terawatt-hours in 2040, or 5 percent of global power demand, from 6 terawatt-hours in 2016

Today there's around 90 gigawatt hours of EV lithium-ion battery manufacturing capacity, and this will grow to 270 gigawatt hours by 2021.

Charging infrastructure may also prove to be a significant bottleneck, potentially slowing growth in key Chinese, U.S. and European markets.

6.) More Bang for Your Buck – Lithium-ion cell costs have already fallen by 73 percent since 2010 and Bloomberg New Energy Finance predicts battery innovation will accelerate and lead to an ongoing decline in prices over the next two decades. 

7.) A Diminishing OPEC – The global shift toward electric vehicles will create an upheaval in the auto and oil industries, ranging from reduced gasoline demand for large oil companies to collapsing demand for manufacturers of spark plugs and fuel injectors whose products aren’t needed for plug-in cars.

While many traditional car suppliers will be hurt by EV growth, some commodities will get a boost.

  • Graphite demand will soar to 852,000 tons a year in 2030 from just 13,000 tons in 2015
  • Nickel and aluminum demand will both see demand from EVs rise to about 327,000 tons a year from just 5,000 tons in 2015
  • Production of lithium, cobalt and manganese will each increase more than 100-fold.