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Evidence of a Decline in Electricity Use by U.S. Households

It has been slowing down for decades, but is electricity use by American households now going down?

Americans tend to use more and more of everything.  As incomes have risen, we buy more food, live in larger homes, travel more, spend more on health care, and, yes, use more energy. Between 1950 and 2010, U.S. residential electricity consumption per capita increased 10-fold, an annual increase of 4% per year.

But that electricity trend has changed recently. American households use less electricity than they did five years ago. The figure below plots U.S. residential electricity consumption per capita 1990-2015. Consumption dipped significantly in 2012 and has remained flat, even as the economy has improved considerably.

USelecSource: Constructed by Lucas Davis at UC Berkeley using residential electricity consumption from EIA, and population statistics from the U.S. Census Bureau.

Broad Decreases

The decrease has been experienced broadly, in virtually all U.S. states. The figure below shows that between 2010 and 2015, per capita residential electricity consumption declined in 48 out of 50 states. Only Rhode Island, Maine, and the District of Columbia experienced increases.

StatesSource: Constructed by Lucas Davis at UC Berkeley using residential electricity consumption from EIA, and population statistics from the U.S. Census Bureau.  Electricity use per capita is measured in megawatt hours.

This pattern stands in sharp contrast to previous decades. During the 1990s and 2000s, for example, residential electricity consumption per capita increased by 12% and 11%, respectively, with increases in almost all states. Previous decades experienced much larger increases.

Energy-Efficient Lighting

So what is different? Energy-efficient lighting. Over 450 million LEDs have been installed to date in the United States, up from less than half a million in 2009, and nearly 70% of Americans have purchased at least one LED bulb. Compact fluorescent lightbulbs (CFLs) are even more common, with 70%+ of households owning some CFLs.  All told, energy-efficient lighting now accounts for 80% of all U.S. lighting sales.

It is no surprise that LEDs have become so popular. LED prices have fallen 94% since 2008, and a 60-watt equivalent LED lightbulb can now be purchased for about $2. LEDs use 85% less electricity than incandescent bulbs, are much more durable, and work in a wide-range of indoor and outdoor settings.

peakSource: Energy.Gov, “Revolution…Now”, September 2016.

Is this really big enough to matter? Yes! Suppose that between LEDs and CFLs there are now one billion energy-efficient lightbulbs installed in U.S. homes. If operated 3 hours per day, this implies savings of 50 million megawatt hours per year, or 0.16 megawatt hours per capita, about the size of the decrease above. Thus, a simple back-of-the-envelope bottom-up calculation yields a similar decrease to the decline visible in aggregate data.

Alternative Hypotheses

No other household technology is as disruptive as lighting. Incandescent bulbs don’t last long, so the installed stock turns over quickly. Air conditioners, refrigerators, dishwashers, and other appliances, in contrast, all have 10+ year lifetimes. Thus, although these other technologies have also become more energy-efficient, this can’t explain the aggregate decrease. The turnover is too slow, and the gains in energy-efficiency for these other appliances have been too gradual for these changes to explain the aggregate pattern.

Traditional economic factors like income and prices also can’t explain the decrease in electricity use. Household incomes have increased during this period, so if anything, income effects would have led electricity use to go up. Moreover, between 2010 and 2015, the average U.S. residential electricity price was virtually unchanged in real terms, so the pattern does not seem to be the result of prices.

Another potential explanation is weather. The summer of 2010 was unusually hot, so this partly explains why electricity consumption was so high in that year. But the broader pattern in the figure above is clear even if one ignores 2010 completely. Moreover, I’ve looked at these data more closely and there is a negative trend in all four seasons of the year: Summer, Fall, Winter, and Spring.

Rebound Effect?

This is not the first time in history that lighting has experienced a significant increase in energy-efficiency. In one of my all-time favorite papers, economist Bill Nordhaus examines the history of light from open fires, to candles, to petroleum lamps, to electric lighting. Early incandescent lightbulbs circa 1900 were terribly inefficient compared to modern incandescent bulbs, but marked a 10-fold increase in lumens per watt compared to petroleum lamps. However, as lighting has become cheaper, humans have increased their consumption massively, consuming thousands of times more lumens than they did in the past.

Economists refer to this price effect as the “rebound effect”.  As lighting becomes more energy-efficient, this reduces the “price” of lighting, leading to increased consumption.  An important unanswered question about LEDs is to what extent will these energy efficiency gains be offset by increased usage? Will households install more lighting now that the price per lumen has decreased? Will households leave their lights on more hours a day? Outdoor lighting, in particular, would seem particularly ripe for price-induced increases in consumption. These behavioral changes may take many years to manifest, as homeowners retrofit their outdoor areas to include additional lighting.

Conclusion

It is not clear yet whether U.S. household electricity use has indeed peaked or this is just a temporary reprieve. Probably the biggest unknown in the near future is electric vehicles. Currently only a small fraction of vehicles are EVs, but widespread adoption would significantly increase electricity demand. It is worth highlighting, though, that this would be substitution away from a different energy source (petroleum), so the implications are very different from most other energy services.

pexelsSource: Pexels.

Over a longer time horizon there will also be entirely new energy-using services that become available, including services that are not yet even imagined. The 10-fold increase in electricity consumption since 1950 reflects, to a large degree, that U.S. households now use electricity for many more things than they did in the past. The recent decrease is historic and significant, but over the long-run it would be a mistake to bet against our ability to consume more energy.

 

For more see Davis, Lucas W. “Evidence of a Decline in Electricity Use by U.S. Households,” Economics Bulletin, 2017, 37(2), 1098-1105.

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Lucas Davis is an Associate Professor of Economic Analysis and Policy at the Haas School of Business at the University of California, Berkeley. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.

80 thoughts on “Evidence of a Decline in Electricity Use by U.S. Households Leave a comment

  1. I am surprised and puzzled you don’t specifically take note of what has happened in California over the past several decades (since the early 1970’s) in terms of electricity consumption per capita – it has been essentially flat over that time period (dubbed the Rosenfeld effect or Rosenfeld curve). In fact, you wrote a post on this forum in 2013 on this topic: https://energyathaas.wordpress.com/2013/08/05/deconstructing-the-rosenfeld-curve/ where you discuss the residential sector. This effect has been discussed and analyzed fairly extensively and, at least from where I sit, it seems like its the result of a combination of things – policies and early technology adoption – key among others. Some have argued that demographics and ‘temperate climate’ are explanatory, but I think Bob Clear’s analysis at the end of your 2013 post argues that isn’t likely the case.

    Your concluding remarks in this post seem to entirely ignore the CA experience (which again is decades long – so plenty of time for new electricity uses and new electricity efficiencies to have an influence). I note that CA’s nearest neighbor in your second chart is NY with about the same per capita residential electricity consumption. I couldn’t find ‘quickly’ (meaning 30 minutes) any data on the trends in NY residential electricity consumption per capita (time series) – but both CA and NY have strong energy ‘commissions’ (e.g., CEC, NYSERDA) and fairly aggressive energy efficiency policies. That might make an interesting comparative analysis.

    In my search for NY data, I did find the following from EIA https://www.eia.gov/todayinenergy/detail.php?id=3590 which shows that TOTAL residential energy consumption per capita in the US has been flat since the early-1970’s (a trend I find a bit surprising in the aggregate). Again, it would seem a mixture of ‘off-setting’ trends – new, but more energy efficient end-uses and ‘fuel’ switching to account for increased electricity use in those states where the per capita trend hasn’t flattened. Looks to me like there’s a buncha PhD dissertations floating around in all this… if for no other reason that to cut down on data-free speculation.

  2. It should be noted that studies of low-income energy efficiency program operations with installed meters indicate, at most, a 9% rebound (also called ‘takeback’) in energy use. This sector is expected to have the greatest rebound effect since self-rationing prior to program work creates a big driver. The installation of heat pump water heaters and mini-split heat pumps, as well as constant improvements in rooftop heatpump and air conditioner efficiencies is also a big driver, as are building codes for better insulation and higher-efficiency window products.

  3. Lucas,
    Thanks for writing on this important topic. My column from January provides data — present and future — confirming the importance of LED lighting. And its impact being much greater than rooftop solar. http://energy-counsel.com/docs/LED-Kills-the-Edison-Star-2017-01-24%20RTO-Insider-Individual-Column.pdf.
    BTW, I don’t see electric cars “riding” to the rescue of the utility industry. But that’s another topic…
    Best wishes,
    Steve Huntoon

    • Steve,
      Very nice. Thanks for this. Hope those LED numbers pan out.

      Looking forward to your comments on Electric cars. Will increased consumption from electric charging > decreased consumption from LED lighting?

      • Joe,
        Thanks. I too hope the LED forecasts pan out — LED really is a miracle in terms of consumer savings and reducing carbon emissions.
        Regarding electric cars, IMHO the value proposition isn’t here at current battery and oil prices. There is a niche market at the high end as Tesla has proved, but at the mass market level it will be a much tougher sell particularly with practical considerations like recharging time.
        If you’re interested in the value proposition, here’s an interesting study by University of Chicago and MIT professors, http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.30.1.11.
        Best wishes,
        Steve

        • Here’s the correct citation: https://www.aeaweb.org/articles?id=10.1257/jep.30.1.117

          I think the important point is “current.” A century and a half ago we could say the same things about coal vs. oil. Even into to the 1940s coal still held what seemed to be an insurmountable advantage in certain broad industries. The breakthrough in the diesel electric locomotive doomed the steam engine (and the combined cycle turbine doomed the steam generator). It’s hard to predict what will happen in the face of a dramatic technological innovation.

          • Coal was the dominant source of U.S. primary energy throughout WWII and was only overtaken by oil in 1950. Diesel-electric traction engines were an evolutionary development that began before 1920. The transition was slowed during WWII because liquid fuels, being more energy-dense and easily handled, were prioritized to the military, while coal was locked-in for the duration for domestic industrial and residential roles. The end of the war allowed the nation to catch up suddenly to the natural, pre-existing trend.

            Not sure what you mean by “the combined cycle turbine doomed the steam generator.”
            Today there are Brayton cycle combustion turbines in natural gas power plants that run by themselves to generate power in a single-cycle plant, and other Brayton cycle turbines whose hot exhaust is used to generate steam in a heat recovery steam generator which then powers an additional Rankine cycle steam turbine for additional generation output. Steam generators are alive and well in combined-cycle power plants and nuclear power plants. The turbines in these plants are each either dedicated to combustion or steam, not both.

          • “Steam generators” in electric utility parlance are direct-fired boilers with steam turbines. Combine cycle plants are not considered steam generators, although they use heat recovery steam generators to improve efficiency. It is this revolutionary configuration that ended the use of natural-gas fired steam generators, and are now pressuring coal-fired steam generators into early retirement. As for nuclear plants, they also are threatened with extinction in the U.S. with the closure of SONGS, the planned closure of Diablo Canyon in 2025 and the bankruptcy of Westinghouse due to nuclear plant cost overruns.

            (I’m not sure what you say about coal and diesel electric locomotives contradicts what I say, other than D-E was revolutionary compared to steam engines.)

          • I’m in the electric utility business. A steam generator is a specific component in a multi-cycle system where a heat exchanger transfers thermal energy from a primary loop to produce steam in a secondary loop. Nuclear power plants and combined-cycle Brayton-Rankin plants have them. The SG in HRSG is for steam generator as you pointed out. A boiler in a simple-cycle steam system is just a boiler.

            The link you provided on GDP had no evidence, just opinion. I find the opinion that the U.S. is better off because the rest of the world is in even worse straits to be of little comfort, and of no relevance to whether one GDP methodology is better than another. The author seems to be focused on hyperinflation, but the threat of debt-based economic collapse (U.S. or global) is not inflationary, but deflationary.

            I was curious to see how you would respond to the EIA load predictions. You make a good point about dubious government statistics. I am actually a fierce and outspoken critic of EIA predictions, as they have a horrible track record, as you point out. The underlying NEMS model is complex but apparently a giant GIGO machine run by folks who can’t learn from decades of mistakes. In contrast, and as another commenter pointed out, historical EIA data is judged by the energy community to be pretty solid. I believe that U.S. residential load is going to rebound in spite of the fact that EIA predictions agree with me. Maybe that explains the apparent irony.

            As one of my colleagues has said, “California was born on third base and claims it hit a home run.” Many people look at energy per capita and confuse that with energy efficiency. The simple fact that California residents generally enjoy the fewest heating and cooling degree days in the nation causes them to appear more energy efficient. California also being one of the few states that has a long-standing increasing block price for electricity is also a driver of exceptional consumer behavior. Both of these result in conservation (reduced demand for energy services), rather than energy efficiency (increased energy service per unit of energy). Poverty also drives conservation, not efficiency. One must have disposable income or subsidies to become more energy efficient by upgrading housing and appliances. This is another reason why EE and load reduction should be happening more in CA and less in the southeast, and why another mechanism is necessary to explain the reverse phenomenon.

            I appreciate you engaging in discussion. We should know by the end of 2018 if rebound is happening.

          • Being in the electric utility industry, you also know that “steam generator” is short hand for a simple cycle boiler steam turbine unit. (Many terms pull double duty.)

            I provided one of many critiques of ShadowStats that I came across. I can spend a lot of time and space here demonstrating the lack of credibility of that source, but I think you need to now provide more than assertions to back up your point.

            You offered the EIA forecasts as proof of your position. Now you’ve fallen back to an unsubstantiated “feeling” about future residential growth. (And I agree that government empirical data is pretty solid, which is why I find ShadowStats unreliable. I can’t understand your cherry picking of data.)

            I agree in general with your points about California–much more of the energy use reductions are price driven than the EE advocates would like to acknowledge. However that doesn’t mean that the EE technologies that California has develop in response to rising prices don’t spread to other states that lag in adoption. Penetration of rooftop solar PV is but one example where a technology that was too costly is now affordable in many other places in part because California was on the leading edge of adoption.

            As for an electricity use rebound, it’s likely to be temporary, just as it was after 2001.

  4. Interesting analysis. One thing that strikes me about a potential LED “rebound effect” is that we may see lighting used for different purposes than in the past. We have two examples of this already in the Bay Area: public art installations on the Bay Bridge and the new Salesforce Tower. Both use LEDs to create public art that would not have been feasible with other lighting technologies.

    I doubt we’re going to see a massive upswing in LED art installations that offsets the reduction you’ve identified, but these two examples are interesting cases of the expansion of the “utility” of LED lighting.

  5. Prof. Davis indicated that income effect would have led to increase in electricity consumption. Income effect probably led to the purchase of more efficient appliances which reduced electricity consumption much more than the consumption levels associated with the period before the increases in income. Could this be indirect or cross income effect as the increase in income increased the consumption of efficient appliances that led to the fall in price of the substantive good (electricity)?
    Also Profs questions whether households will leave their outside lights on for longer periods. The increased lumens come with other behavior controlling technology such as motion and light sensors, thermostats and timers that make the increased lumens not stay on for longer periods than necessary. So could the “rebound effect” could be reduced or eliminated by technology?
    Finally, could an increase in EVs and alternative uses like domestic electric stove or even electric heating to replace petroleum, natural gas and other GHG emitting fuel sources will be addressing the fears of environmentalists and if driven by excellent technology could negate anticipated prices increases as the LED has done?

  6. Another hypothesis: Depending on where you are getting your information, I’d note that the EIA data has mainly counted (or have until recently counted, as they may have recently changed) the solar electricity generated by rooftop systems on homes and businesses (officially, all systems less than 1 MW not connected to utility systems) as reduced electric demand rather than as electric power generated by solar PV systems. Until the recent change, this had led to solar being seen as less important than it has been while at the same time making homes seem more energy efficient.

    • Indeed there has been a 10-fold increase in rooftop solar PV during this period, and these data (from EIA) are measured net of any on-site generation. So you are correct that this can help explain the decrease. However, U.S. solar installations are overwhelmingly concentrated in California, Hawaii, and a small handful of other states. What surprises me about the recent decrease is how uniform it has been across virtually all states, and rooftop solar cannot explain this.

      • Only two states with significant rooftop penetration are Hawaii and CA – in that order – and HI is much higher.

        These are both states which are the lowest users of electricity on your chart. CA was 2.34 and HI 2.19 in 2010. Much harder to show significant improvement when low-hanging fruit is probably already gone.

        That said, it does appear that Hawaii has been affected by rooftop as it dropped to 1.85 in 2015. Pretty substantial. CA dropped to 2.29 in 2015.

        By the way 2016 data is available – https://www.eia.gov/electricity/monthly/current_year/february2017.pdf

        Using this data – we see a continued drop for both. HI to 1.83 and CA to 2.25.

  7. Is there an impact from switching to natural gas. Did replacing electric hot water heaters and stove top cooking with gas impact the totals?

    • I checked the 2009 and 2015 RECS. In 2009, 41.5% and 62.7% of Americans used electricity for water heating and cooking, respectively. In 2015, the numbers are 45.8% and 63.2%, respectively. So, according to RECS, *more* households are using electricity for these end uses than 6 years ago. I suspect this is due more to differential household growth in parts of the country where electricity is more commonly used for these end uses, rather than explicit substitution. But, bottom line, looks like this switching does not help explain the decline; if anything it should have pushed electricity consumption up.

      • Do you have any estimates for what LEDs are doing in terms of aggregate annual load reduction. My very rough estimate for 2016 was 40 TWh. Do you have a number that’s more polished?

      • P.S. Do you know of any data on demand for lighting by time of day that could be used to strengthen the case for LEDs driving the bus? I’ve found some interesting models of residential lighting demand but I’ve never found an hourly lighting profile that captured global (RC&I) usage.

        • One of the other commenters had a link that leads to this document:

          https://energy.gov/sites/prod/files/2016/09/f33/energysavingsforecast16_2.pdf

          There’s a graph of energy use from 2015 to 2035 with and w/o LEDs… The with graph shows an LED driven drop in primary energy consumption of .192 Quads last year – that’s 18 TWh of electricity. The adoption rate is forecast to speed up with LEDs delivering around 25 TWh of savings in 2017. PV added ~15 GW last year… It’s hard to pro-rata out how much electricity was generated last year but in a full year you could expect 25ish TWh. Current PV forecasts have something like 13 GW getting installed in the US this year so it seems we have something of a horse race in front of us.

    • Karen, according to your own link via the “data” tab, the worst scenario area along the equator would yield a rise in temps of 2-4 degrees Celsius. Most of the world’s population lives in the green/yellow areas where the author speculates a 1.5 degree rise as early as 2060, not 2040. In both cases it is very far from the 10 degree annual cycles we see from January to August. (Coldest season to hottest). To imply that our winter will soon be what “summer was” is alarmist.

      • The analysis says that yearly temperatures where the majority of people live will be hotter by the late 2040s than their hottest year as of 2005. This does not mean that winter temperatures will be hotter than summer temperatures once were. Winter temperatures are rising faster than summer temperatures, but not that fast.

        According to the link, most people living in latitudes between north of New York City and south of Santiago will see what the authors describe as Climate Departure by the late 2040s.

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