Pi Attitude Zone: Flexibility

Powering Down

Something peculiar has been happening to electricity consumption patterns.  They have been going down when logic would suggest they ought to be going  up... as they have almost every year for half a century.

Short-term downward trends in power consumption have happened before, particularly in the immediate aftermath of abrupt downturns in the economy.  But the new reduction in consumption across the USA has been sustained for long enough to qualify as a whole new trend, which looks like it may continue. 

There are a number of things that could account for reduced power consumption, most of them connected to shifts in consumer perceptions and attitudes.  But first, let’s enumerate the reasons why consumption levels, at least in theory, ought to be continuing to rise, not fall.

First, the USA’s gradual economic recovery means increases in industrial production, which usually means keeping more lights on and running more power-consuming machinery.  There’s a resurgence in the housing market, and people are buying bigger dwellings, which in theory take more electricity to run.  Americans are buying more and more electronic gadgets, which have to run on something.  A blind guess would be that, as it did after the recessions of 1971, 1982 and 2001, a knee-jerk dip in power consumption would quickly succumb to a “return to normal”.

This has not happened in the wake of the 2009 recession, and that fact tells us that consumers’ perceptions and feelings may be shifting to a “new normal”. After a  minor rise in 2010, electricity sales in America have declined for three straight years, defying market convention. Possible reasons:

  1. Factories and offices becoming more fuel-efficient
  2. Householders reacting to squeezed budgets by switching things off around the house
  3. Consumers deciding after all not to reject low-consumption light bulbs, as their design improves
  4. The spread of gadgets that consume less power
  5. Green-minded people putting solar panels on the roof and generating part of their own electricity supply

As a result of a trend they can no longer ignore, electric utility companies are abandoning their old assumptions about profits based on perpetual sales growth.  In a world where they may be stuck with diminishing demand for power, some electric suppliers have raised their prices – making the downward consumption spiral even worse.  Others have tried to levy surcharges on households that install solar panels, generating considerable consumer fury – or so-called “solar flares”.

Electricity suppliers’ fallback position seems to be a radical change to their business model, persuading state legislatures to reward them for promoting efficiency and selling less electricity.  Over sixty utility companies scattered across half of all US states have signed up for these “less is more” schemes already. 

Pi says: in the “new normal”,  the big switch-off looks set to continue.

Zone: Flexibility Country: USA / North America Product – Services