Tuesday, December 4, 2012

Game Changing Fact: Deloitte Finds That Declining or Stagnant Electricity Demand Possible Through 2020!

A key trend in US energy markets are booms on both the supply and demand side of many markets.

Oil consumption is declining, as domestic production jumps.  The rate of growth in electricity consumption has fallen significantly, but it has still been growing.  But will it keep doing so?

Recently, Deloitte in its report, "The Math Does Not Lie," states the potential exists for electricity sales to be "slow, stagnant, or even declining..." Stagnant or declining would be game changing.

It has been an unchallenged assumption that the US will us more electricity year after year and that the growth rate would be above 1% and around 2%.  Times have changed.

Deloitte notes that the EIA is projecting a slow growth rate of electricity sales from 2012 to 2020 of 0.73% and is projecting that 2012 sales will not quite reach the 2007 level.

The most interesting part of the Deloitte study is at pages 7 to 8, where Deloitte consumer survey data is discussed. Deloitte walks through electricity consumption behavior changes among residential, business, and government consumers.  For example, 90% of US business have set goals to reduce electricity consumption and the average goal is a 23% reduction.  Or 83% of electricity consumers said they have taken steps to reduce electricity consumption, a significant increase over the 68% in 2011.

Another factor already impacting electric utility distribution sales is on-site, distributed generation like solar, fuel cells, microturbines, and combined heat power systems.  Adding distributed generation to rising energy efficiency may end the business world, where sales running through electric meters rose like clockwork.

Are there other factors that could raise electric sales? Yes. Electric vehicles could take off and become a major new market for power generators.  National GDP growth rates that have been around 2% could increase to 3%.

Yet, the Deloitte paper lays out why the electricity industry may face stagnant or even declining sales in the coming years and why that forces smart electricity companies to consider now business model changes.

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