Electricity Sales Fall Below 2007 Levels, Big Rate Hikes coming RSS Feed

Electricity Sales Fall Below 2007 Levels, Big Rate Hikes coming

Total electricity sales in 2015 fell below 2007 levels. The flattening of total electricity sales reflects an inability of the electric utility industry to continue its march to electrify the economy, despite an ever growing suite of technologies from electric cars to heat pumps that are ready for billion dollar scale. The utility industry is in a crisis. Their integrated resource plans assume electricity growth of 1% per year, not the declines of 1.1% we saw in 2015. Declining rates of electricity demand growth leads to a need for more revenue which mixed with basic maintenance will lead to electricity rate increases of 2-3 times that of inflation. This hurts people on a fixed income, the poor and the retired. Both have very strong advocates which means the utilities will have to blunt this impact on them by either raising rates for the rich through tiered rates or provide more accommodation of distributed generation and energy efficiency technologies.

Almost all of the energy efficiency has come from mandates, most notably the ban on incandescent light bulbs which has largely resulted in a shift to energy sipping LED light bulbs. This is instructive, after 40 years of market based rebates, energy efficiency data is showing that only mandates and standards are really working. The next big wave of energy efficiency is the zero energy mandate for residential homes in California that is expected to lead to major nationwide trend of solar on new energy efficient home construction.

With State Renewable Portfolio Standards in full swing, over 80% of all new electricity generation through 2025 is expect to come from zero emission sources. Without any real growth in electricity sales, these new power generators will decimate wholesale rates received by coal and natural gas generators, leading to a dramatic reduction in carbon emissions.

Residential. The solar power industry will reach 1,000,000 rooftops in the next few years. Over 4 million smart thermostats are being sold each year, giving utilities the tools and insight they need to finally control air conditioning loads which are the largest source of variability in residential grid loads.

Commercial. Innovation in commercial buildings has been slow mainly because of the focus by entrepreneurs on large chains and real estate investment trusts. But again, solar and LED lighting are driving conversations to small real estate portfolio, even one off buildings. The biggest opportunity here is in continuous commissioning/building automation. Big data is assumed to be able to reduce electricity use in this sector by 10% if fully deployed by 2020.

Industrial. Electricity sales to industry decreased at an annual average rate of 0.7% over 2000–2015, as the sector’s share of total retail electricity sales fell from 31.2% to 25.8%.

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