Electricity end uses, energy efficiency, and distributed energy resources baseline

A newly released study from a task force of federal agencies, led by U.S. Department of Energy, provides a roadmap for federal energy policy objectives, legislative proposals to Congress, Executive actions, and potential research and development, financing and incentive programs. The second installment of the Quadrennial Energy Review (QER) focuses on the modernization of the electricity system toward accomplishing three national goals: improving the economy, protecting the environment and increasing national security.

Berkeley Lab contributed a foundational analysis underlying the QER—a detailed analysis of electricity consumption by market sector, including cost, technology, and other trends. It looked at energy efficiency and distributed energy resources, like rooftop solar, and their impact on electricity supply and demand. The report, Electricity End Uses, Energy Efficiency, and Distributed Energy Resources Baseline, also describes the benefits of these resources as well as barriers to their adoption by examining a number of policies and programs. An appendix to the report reviews innovations in evaluation, measurement and verification to assess their impact.

The U.S. Department of Energy’s Office of Energy Policy and Systems Analysis funded the Berkeley Lab report. Argonne National Lab contributed a chapter on transportation electrification.

Among the key findings in the report:

Cross-sector

• Growth in demand for electricity has gradually slowed each decade since the 1950’s due to slowing population growth, market saturation and efficiency improvements for major electricity-using appliances, and a shift in the economy toward a larger share of consumption in less energy-intensive industries. Looking toward 2040, electricity use is projected to grow slowly, and its share of total delivered U.S. energy consumption is expected to increase slightly.
• Energy efficiency policies—such as building energy codes, appliance and equipment standards and labeling, and targeted incentives—have played a significant role in slowing the growth of electricity consumption. States with supportive policies and programs have seen the greatest growth in energy efficiency, as well as distributed energy resources.
• One key driver of the slow, but steady increase in total U.S. electricity consumption is internal population migration, especially from the Northeast to the South and West. The Southeast, for example, has a larger cooling load, more electric space heating, and more manufactured homes than the Northeast, resulting in higher per-capita consumption.
• Efforts at the federal, state and local level are resulting in large energy savings in government and institutional buildings.
• Electrification of end uses and technologies is continuing to occur gradually across all sectors, further increasing the need for continued improvements in electric efficiency.

Electricity-consuming equipment and buildings

• Miscellaneous Electric Loads, including computers, televisions, pool heaters and pumps, security systems and more, account for an increasing share of total electricity demand. Between 2014 and 2040, their share of electricity demand is expected to grow from 32 percent to 43 percent of residential use and from 37 percent to 51 percent for commercial use. Because these loads are not as effectively addressed by existing efficiency programs and policies, new strategies are needed.
• Appliance and equipment efficiency improvements will continue to be a key driver in lowering electricity demand in the residential, commercial and industrial sectors. Electricity demand for lighting in the commercial sector, for example, fell by almost half between 2003 and 2014. Ongoing efficiency gains in these products will have broad impacts between now and 2040.
• New energy management technologies are decreasing in cost and improving in functionality. While market penetration is still relatively low, these new technologies and systems, and the broader “Internet of Things,” have a large potential to affect electric demand.
• The efficiency of new buildings is rapidly increasing across all sectors with advances in building design and modeling, construction techniques, key building components and energy rating programs. While considerable progress has been made retrofitting existing buildings, significant energy-saving opportunities remain. Access to financing and high transaction costs are two critical barriers.
• Low-income households spend a greater share of their total income on electricity than other households, and renters on average spend more (per square foot) compared to homeowners.

Industry

• Strategic energy management approaches, such as ENERGY STAR for Industry, ISO 50001 and Superior Energy Performance,® help industry identify operational efficiency opportunities. Potential improvements include using information technologies for “smart manufacturing,” supply-chain efficiencies and process intensification.
• Machine drives offer the largest opportunities for electricity efficiency, particularly in the industrial sector. Variable speed drives, combined with better system design and state-of-the-art motor controls, can result in substantial gains.
• Combined heat and power (CHP) systems and recovery of waste heat represent significant opportunities to improve energy efficiency in the industrial sector. About half of total delivered energy to the U.S. manufacturing sector is wasted as efficiency losses, making a huge amount of heat available for use.

Electric transportation

• The market for electric vehicles is evolving rapidly, making it difficult to isolate the impacts of specific factors and policies, such as rebates and tax credits, price reductions for vehicles and charging equipment, range improvements, growing new model availability and fluctuating gasoline prices. EV adoption seems to be greatest when multiple actions are taken in parallel, such as improving consumer awareness, providing direct subsidies and making infrastructure investments.
• Changing consumer behaviors are resulting in less driving, due in part to young professionals moving to cities and relying more on ride- and car-sharing services. Predicting the future growth of transportation electricity use is difficult. Some models show that conventional vehicles will still account for 70 percent of sales in 2040, whereas others predict they will fall to about 20 percent as electric vehicles and other alternative-fuel vehicles increase their market share.
• Public charging is a critical component for encouraging consumer adoption of electric vehicles. Vehicle-to-grid communication and time-of-use pricing will be vital when adoption is widespread.

Distributed energy resources

• Distributed generation has experienced significant growth in recent years due to lower technology costs and supportive policies. Future growth will continue to be highly dependent on local and state policies and thus vary geographically. Higher penetration of wind and solar resources on the distribution system will require greater grid flexibility. Demand-responsive loads and distributed energy storage systems will aid integration.
• Declining costs for distributed storage technology, as a result of greater production of batteries for electric vehicles and state-level storage mandates, will drive greater adoption. The cost of lithium-ion battery packs, for example, fell almost 60 percent between 2007 and 2014. Distributed storage can provide multiple benefits simultaneously, such as improving power quality and reducing peak system demand, as well as cutting demand charges for utility customers.
• Demand response is evolving due to lower-cost technologies for communicating with and managing end-use equipment. Third-party aggregators and emerging business models may facilitate the expansion of demand-responsive loads.