To estimate the potential for energy efficiency, the Energy Information Administration’s (EIA’s) Annual Energy Outlook 2018 (AEO 2018)9 is used to give a baseline electricity for the country. Based on AEO2018, the annual energy consumption of the U.S. is estimated at 3,683 TWh for 2017, which represents 10.4 MWh per capita and 190 Wh per dollar of gross domestic product (GDP) in 2017.
This electricity consumption is well distributed across the residential, commercial, and industrial sectors, which make up 38%, 37%, and 26%, respectively. Figure 1-2 shows the breakdown of baseline electricity consumption by end-use for each sector. The primary electricity-consuming end-uses for the residential and commercial sectors are lighting and heating, ventilation, and air- conditioning (HVAC) equipment. These end-users are also major contributors in industry electricity consumption, where they are grouped under the “industrial facilities” category. Overall, “other” uses account for 29% of electricity consumption across all three sectors.
Figure 1-2. 2017 U.S. Electricity Consumption by Sector and End User
The overall consumption of electricity in the U.S. is projected to increase by 16% between 2017 and 2040, according to the AEO2018 Reference case baseline. Figure 1-3 shows the projected growth of electricity consumption, with forecast average annual growth of 0.62%.
Figure 1-3. Reference Case—AEO2018 Forecast of Electricity Consumption from 2017 to 2040
2007-2017: -0.22% CAGR | 2017-beyond: 0.62% CAGR
Although steady growth is predicted, the AEO forecast of growth in electricity consumption has been declining year-over-year to account for shifts in the economy, energy prices, technology innovation, etc. Macroeconomic drivers of the AEO forecast include population, employment, GDP, value of shipments, housing starts, and building construction. Average growth in GDP between 2017 and 2040 is forecast to be 2.0%, more than three times the rate of projected electricity growth, which implies a decline in the electricity intensity of the U.S. economy per GDP. By 2040, electricity use is projected to increase to 4,272 TWh annually, an increase of 16% over 2017 levels.
Yet the AEO Reference Case forecast already includes the electricity savings expected from several energy efficiency drivers, including:
Codes and Standards
- Federal, state, and local building codes already enacted
- Appliance and equipment standards already enacted, including the Energy Independence and Security Act (EISA) of 2007 which mandates higher lighting efficiency standards, among others
- Other potential related effects, including structural changes in the economy that impact overall electricity intensity
Market-Driven Efficiency
- Trends in consumer adoption of energy-efficient equipment that is attributed to market-driven effects outside of utility programs
Implicit Programs
- An estimate of the utility programs for energy efficiency that were adopted prior to 2017, and an estimate of the future impacts of existing programs
To estimate the total potential savings that are available from utility programs for energy efficiency, a baseline is needed that does not include the impacts of these programs. Therefore, the estimated program impacts that are embedded in the AEO2018 were “added back” to the Reference Case to construct an “adjusted baseline.” EPRI’s models then calculates savings relative to that adjusted baseline to avoid double-counting efficiency already built into the AEO Reference Case. This adjustment to baseline energy consumption is only made in the residential and commercial sectors. Baseline energy consumption in the industrial segment has not been adjusted due to the limited availability of data on the efficiency of industrial end-uses.
The baseline adjustment assumes that states continue to increase programmatic energy savings, with the growth of incremental annual savings equal to the average level of growth from 2006 to 2016. This baseline adjustment is bounded using EPRI’s achievable potential estimate for each state, which is an assumed upper bound on expected growth in programmatic energy savings in each year over the forecast period.
The baseline adjustment was calculated as the average annual incremental savings rate from 2006 to 2016, based on the American Council on Energy Efficiency Economy (ACEEE) state scorecard data.10 The compound savings that would be achieved by sustaining that average annual incremental savings rate is compared to the EPRI identified achievable potential as a percent of Reference Case consumption. Where the compound average incremental savings exceed the EPRI-identified achievable potential savings, the state savings are capped by the EPRI savings, ranging from 0-100% of the achievable potential. EPRI’s calculated potential is then presented relative to the adjusted baseline to avoid double counting. This adjusted baseline is shown as the red line in Figure 1-4, with the shaded area between the AEO Reference and the EPRI Adjusted Baseline representing the energy savings that can be attributed to existing programs.
As such, the adjusted Baseline forecast represents the forecast electricity consumption without the savings from utility programs for energy efficiency. Moreover, this baseline does not assume any expected savings from codes and standards that are not currently enacted. The baseline case does reflect the AEO2018 forecast of retail energy price, which is relatively flat in real terms over the forecast period.
Figure 1-4. Estimated Impact of Energy Efficiency Drivers Embedded in the AEO2018 Reference Case
9 “Annual Energy Outlook 2018 with Projections to 2050,” U.S. Energy Information Administration (EIA), Washington, D.C., 2018.
10 Average of 2006 through 2016 from 2017 State Energy Efficiency Scorecard data, representing the customer-funded incremental electric savings as a percent of state retail sales. Data provided by ACEEE, June 2018.