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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.

Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.

Suggested citation: Davis, Lucas. “Evidence of a Decline in Electricity Use by U.S. Households” Energy Institute Blog, UC Berkeley, May 8, 2017,
https://energyathaas.wordpress.com/2017/05/08/evidence-of-a-decline-in-electricity-use-by-u-s-households/

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

Lucas Davis View All

Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is Faculty Director of the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Faculty Research Fellow at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. Prior to joining Haas in 2009, he was an assistant professor of Economics at the University of Michigan. 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.

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

  1. I carpooled to work seven miles away for some years, bicycled for 14, gave that p when a motorist hit my front wheel after running a red light for six lanes, and finally used Metro. I wonder how mud pollution could be saved in particular by car pooling.

  2. According to EIA, household energy consumption indicates an average annual drop of 1% per year for the period 1980 – 2009 or a reduction in residential end use energy intensity of 37% over the same period.
    While this major drop in energy intensity is due to a host of factors including weather, energy pricing and population geographical shift, it is primarily due to the introduction of energy efficient technologies and policies as well as standards, building codes, incentives, and labeling. The reduction in energy intensity have occurred despite significant increase over this period in US population and number of households, increase in home size and significant increase in the use of lighting and electronics.
    According to the EIA, homes built during the period 2000 – 2009 in comparison to homes built before 2000 consume roughly 2% more energy on average despite the fact that homes built after 2000 are 30% larger on average. This low increase in new homes energy consumption is explained by improved housing structure thermal integrity, significant end use energy efficiency improvement, despite significant increase in end use energy consumption of particularly air conditioning as well as electronics and lighting as the following graph shows.
    What inferences can be drawn with regard to household energy consumption in the future? Lower energy intensity translates into lower marginal cost of heating as well as cooling in both the short and long run. Weatherization improvements alone have the potential to reduce the heating and cooling loads required by a typical home by 30% or better for homes built after 2000. Conventional space heating particularly natural gas fired have an efficiency rating exceeding 90% while air conditioning being installed today has an EER of 12 as compared to an EER of 6 or less in the 1990’s translating into requiring half the electricity to deliver the same cooling load. All in all, these major savings have been captured to a degree to date. US homes have the potential to significantly exceed the energy savings sustained to date.
    Several key factors have the potential to help this negative electricity demand growth trend to continue and accelerate: 1) continued weatherization programs of public housing and rental properties particularly housing structures of 1980 and earlier, 2) electricity price and its share of disposable income, and 3) penetration of solar PV. If we are to consider, in addition, further penetration of the technologies of the past decade such as heat pump, geothermal, LED, etc., the potential is there for even greater savings.

  3. It’s odd to omit the cumulative effects—more gradual than LED uptake, to be sure, but improving over many years—of rising home-appliance efficiency standards and, in about half the states, significantly more stringent building-efficiency standards. Of course, electrical savings are also widespread in the commercial and industrial sectors. The collective all-sectors effect is discussed in a recent blog with interesting references hyperlinked:

    “Why Are We Saving Electricity Only Half As Fast As Fuels?,” Forbes blog, 25 Apr 2017, https://www.forbes.com/sites/amorylovins/2017/04/25/why-are-we-saving-electricity-only-half-as-fast-as-fuels/

    — Amory B. Lovins, Chief Scientist, Rocky Mountain Institute

    • I agree with both Prof. Lucas and Amory on this point. According to the available data, the rate of replacement of incandescent lighting by either LEDs or CFLs has been extremely fast when compared to other residential technologies. However, similar if slower trends can be observed across the spectrum of home appliances with significant impacts on electricity consumption. Televisions, refrigerators, clothes washers, and air conditioners have all become significantly more energy efficient over the study period, driven by energy efficiency standards. It’s worth noting that these product categories had all reached close to full residential penetration by 1990, meaning that increasing the efficiency of new models would tend to reduce the total consumption of the installed base. Similarly, consumers are steadily switching from desktop computers to laptop computers for non-regulatory reasons, and shedding kilowatthours as they do so.

      Large potential for continued efficiency improvements remain, also in lighting. The Dept of Energy almost finished a rule-making for general service lighting prior to the last presidential election that would have established a minimum standard of over 90 lumens per watt (lpw), would have covered most light bulbs, and would have come into effect in 2020. For comparison, a halogen bulb today is around 20 lpw and CFLs and current LEDs are in the 60-80 lpw range. That standard is unlikely to be completed in the near future, but it only reflects where the market is already heading. My organization put out a report last year that reviews analyses of this remaining potential. https://appliance-standards.org/document/next-generation-standards-how-national-energy-efficiency-program-can-continue-drive-energy.

      Chris Granda, Sr. Researcher/Advocate – Appliance Standards Awareness Project

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