U.S. Electricity Demand to Fall 5-15% by 2020

Electrical Meter

Economists Doug Mitarotonda and Ahmad Faruqui of The Brattle Group recently teamed up with economists at Global Energy Partners to study and forecast American energy consumption. Their surprising conclusion is that the United States will be consuming 5-15% less electricity by 2020.

In a white paper describing their research, the economists term the upcoming era of energy efficiency one of “integrated demand-side management (iDSM)”. iDSM posits that utility companies will make use of tiered pricing and other monetary incentives in order to coax customers into using less electricity. iDSM also takes into account the growing number of energy-efficient appliances hitting the market as well as the trend of greater consumer awareness of personal energy usage. The scientists predict these factors will result in lower American energy consumption across the board.

There is no doubt that appliances are becoming more efficient and that demand-control mechanisms like tiered pricing can incentivize consumers to curtail their electricity usage. The upcoming white paper cites results from a survey of 50 energy experts to back its prediction. But skepticism is understandable. American demand for energy has always consistently grown.

The U.S. Energy Information Administration’s International Energy Outlook 2011 predicts around a 20% rise in global energy demand by 2020. Non-OECD nations will be responsible for most of this growth, but OECD nations are still forecasted to contribute to—not counteract—increased demand.

Additionally, the investment in and proliferation of energy-saving appliances—which have higher initial costs to consumers—may remain sluggish in the absence of strong economic growth.

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