White Paper

Light at the End of the Tunnel

Will electricity demand ever emerge from the darkness of its current no-growth tunnel? That question has confounded utility executives since the 2008-2009 recession pushed electricity demand growth into negative territory—breaking a string of steady, if not spectacular, growth that began with the end of World War II. The Energy Information Administration thinks it sees some light at the end of this tunnel, projecting that electricity consumption will climb by roughly 1 percent annually through 2035—not great, but upward nonetheless.

However, that light may not be new growth at all. Rather, it may be an oncoming train bringing two technologies that could reshape the electric industry. Once these developing technologies—LED lighting on the demand side and rooftop photovoltaics (PV) on the supply side—arrive, and it won’t be long, even 1 percent annual growth may be a wildly optimistic forecast. Coupled with the long-term downward trend in electric demand growth recorded during the past 50 years (see EIA’s three-year rolling average in Figure 1) due to structural changes in the economy and significant efficiency improvements, utility executives in a number of areas could soon be facing a new and disquieting prospect: negative load growth.

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