Did Energy Efficiency Break Utilities’ Business Model?
We have reached a tipping point in America’s power sector. An industry that has sustained itself on Americans’ growing power demands has suddenly seen demand drop. This is making it difficult for U.S. power utilities, under their current model, to turn a profit.
What’s more, this is not a new trend. Using a time-series filter, an analysis of forty years of monthly end-use electricity data exposes a twenty-five year trend during which energy efficiency has steadily chipped away at the total electricity use in the U.S. This would signal a pending contraction of the power generation sector, but seasonal, cyclical fluctuations are making it impossible for power providers to scale back. Increasingly warm summers in the U.S., combined with a demographic shift towards warmer states, have caused demand for electricity to actually increase during peak seasons.
