Despite continued economic growth, American households use less electricity than they did five years ago, writes Lucas Davis of the Energy Institute at Haas School of Business. The reason may surprise you, notes Davis: it’s energy-efficient lighting. According to Davis it is not clear yet whether household electricity use has peaked or will rise again in future. Courtesy Energy at Haas.
Americans tend to use more and more of everything. As incomes have risen, we buy more food, live in larger homes, travel more, spend more on health care, and, yes, use more energy. Between 1950 and 2010, U.S. residential electricity consumption per capita increased 10-fold, an annual increase of 4% per year.
But that electricity trend has changed recently. American households use less electricity than they did five years ago. The figure below plots U.S. residential electricity consumption per capita 1990-2015. Consumption dipped significantly in 2012 and has remained flat, even as the economy has improved considerably.
Source: Constructed by Lucas Davis at UC Berkeley using residential electricity consumption from EIA, and population statistics from the U.S. Census Bureau.
Broad decreases
The decrease has been experienced broadly, in virtually all U.S. states. The figure below shows that between 2010 and 2015, per capita residential electricity consumption declined in 48 out of 50 states. Only Rhode Island, Maine, and the District of Columbia experienced increases.
Source: Constructed by Lucas Davis at UC Berkeley using residential electricity consumption from EIA, and population statistics from the U.S. Census Bureau. Electricity use per capita is measured in megawatt hours.
This pattern stands in sharp contrast to previous decades. During the 1990s and 2000s, for example, residential electricity consumption per capita increased by 12% and 11%, respectively, with increases in almost all states. Previous decades experienced much larger increases.
Energy-efficient lighting
So what is different? Energy-efficient lighting. Over 450 million LEDs have been installed to date in the United States, up from less than half a million in 2009, and nearly 70% of Americans have purchased at least one LED bulb. Compact fluorescent lightbulbs (CFLs) are even more common, with 70%+ of households owning some CFLs. All told, energy-efficient lighting now accounts for 80% of all U.S. lighting sales.
It is no surprise that LEDs have become so popular. LED prices have fallen 94% since 2008, and a 60-watt equivalent LED lightbulb can now be purchased for about $2. LEDs use 85% less electricity than incandescent bulbs, are much more durable, and work in a wide-range of indoor and outdoor settings.
Source: Energy.Gov, “Revolution…Now”, September 2016.
Is this really big enough to matter? Yes! Suppose that between LEDs and CFLs there are now one billion energy-efficient lightbulbs installed in U.S. homes. If operated 3 hours per day, this implies savings of 50 million megawatt hours per year, or 0.16 megawatt hours per capita, about the size of the decrease above. Thus, a simple back-of-the-envelope bottom-up calculation yields a similar decrease to the decline visible in aggregate data.
Alternative hypotheses
No other household technology is as disruptive as lighting. Incandescent bulbs don’t last long, so the installed stock turns over quickly. Air conditioners, refrigerators, dishwashers, and other appliances, in contrast, all have 10+ year lifetimes. Thus, although these other technologies have also become more energy-efficient, this can’t explain the aggregate decrease. The turnover is too slow, and the gains in energy-efficiency for these other appliances have been too gradual for these changes to explain the aggregate pattern.
Traditional economic factors like income and prices also can’t explain the decrease in electricity use. Household incomes have increased during this period, so if anything, income effects would have led electricity use to go up. Moreover, between 2010 and 2015, the average U.S. residential electricity price was virtually unchanged in real terms, so the pattern does not seem to be the result of prices.
Another potential explanation is weather. The summer of 2010 was unusually hot, so this partly explains why electricity consumption was so high in that year. But the broader pattern in the figure above is clear even if one ignores 2010 completely. Moreover, I’ve looked at these data more closely and there is a negative trend in all four seasons of the year: Summer, Fall, Winter, and Spring.
Rebound effect?
This is not the first time in history that lighting has experienced a significant increase in energy-efficiency. In one of my all-time favorite papers, economist Bill Nordhaus examines the history of light from open fires, to candles, to petroleum lamps, to electric lighting. Early incandescent lightbulbs circa 1900 were terribly inefficient compared to modern incandescent bulbs, but marked a 10-fold increase in lumens per watt compared to petroleum lamps. However, as lighting has become cheaper, humans have increased their consumption massively, consuming thousands of times more lumens than they did in the past.
Economists refer to this price effect as the “rebound effect”. As lighting becomes more energy-efficient, this reduces the “price” of lighting, leading to increased consumption.  An important unanswered question about LEDs is to what extent will these energy efficiency gains be offset by increased usage? Will households install more lighting now that the price per lumen has decreased? Will households leave their lights on more hours a day? Outdoor lighting, in particular, would seem particularly ripe for price-induced increases in consumption. These behavioral changes may take many years to manifest, as homeowners retrofit their outdoor areas to include additional lighting.
Conclusion
It is not clear yet whether U.S. household electricity use has indeed peaked or this is just a temporary reprieve. Probably the biggest unknown in the near future is electric vehicles. Currently only a small fraction of vehicles are EVs, but widespread adoption would significantly increase electricity demand. It is worth highlighting, though, that this would be substitution away from a different energy source (petroleum), so the implications are very different from most other energy services.
Over a longer time horizon there will also be entirely new energy-using services that become available, including services that are not yet even imagined. The 10-fold increase in electricity consumption since 1950 reflects, to a large degree, that U.S. households now use electricity for many more things than they did in the past. The recent decrease is historic and significant, but over the long-run it would be a mistake to bet against our ability to consume more energy.
Editor’s Note
Lucas Davis is Associate Professor at the Haas School of Business, Faculty Director at the Energy Institute at Haas (University of California, Berkeley), and Research Associate at the National Bureau of Economic Research. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.
His work appears in leading academic journals including the American Economic Review, the RAND Journal of Economics, and the Journal of Political Economy. He blogs along with other Energy Institute researchers at energyathaas.wordpress.com.
This article was first published on the Energy at Haas blog and is republished here with permission.
[adrotate group=”9″]
GuenterB says
According to EIA lighting contributes with about 11% to the electric power consumption of a US household. I hardly can imagine the lighting having such a big effect on the development. Not only dryers, washing facilities etc. probably have become more efficient. When studying the decrease of consumption one may also consider the contribution of a change in behavior, e.g. when consumers switch from desktop computers to tablets and smartphones.
Bob Wallace says
Over recent years we’ve gone from desktops computers to laptops to smartphones. Cutting energy use at each step.
The power draw of some of our ‘stuff’ has drastially dropped. My sister bought a very large screen TV which I assumed would use a lot of electricity. Nope, only 80 watts. My 19″ CRT monitor pulled 150 watts.
A few years back the federal government created a one million dollar prize for the company that could create the most efficient refrigerator. I don’t recall the amount of drop but I do remember it being impressive.
Induction range tops are much more efficient that the resistance coils we’ve used for decades of electric range cooking.
Heat pumps have taken a big jump in efficiency.
The vampire loads of voltage converters (power bricks) is a thing of the past.
As people replace worn out stuff they are generally replacing them with more efficient stuff. And many probably don’t realize what is happening.
EVs will drive up household electricity usage, but so what? We’re just moving the gas station from down the block to into your garage. And cutting overall energy use by a huge factor.
The US wastes about 60% of the primary energy we use. Thermal losses. Waste heat. Burning stuff to boil water is an inefficient way to turn energy into electricity. And the internal combustion engine is extremely inefficient. ICEVs waste about 80% of the energy we put into them. EVs waste about 20% (battery charging and drivetrain friction heat loss).
Nigel West says
The US should have become more energy efficient decades ago. LED lighting is well established in Europe – better than CFLs too. Plasma TVs are a thing of the past having been replaced with LED ones that use a fraction of the electricity. European electric dryers are efficient using condensing tech. and now heat pumps. If the weather is good people dry clothes outside to save energy.
I know people who were sold heat pumps for new build developments in the UK and they are not happy with the results. Low grade heat compared to gas heating. Likely will not succeed here.
If ‘power bricks’ means power supplies for phones and computers being left plugged in while not in use they are a minor issue. Uninformed eco types just thought they were.
If one considers the emissions associated with the electricity used to charge an EV, in the US, Germany and UK EVs are only marginally better than cars. If a large portion of UK consumers switched to EVs rapidly that would push up coal and gas burn in power stations and cause network problems.
http://shrinkthatfootprint.com/electric-car-emissions
Electricity consumption is not the real issue though, more important is the emissions associated with each kWh consumed. E.g. Iceland, Norway, Canada and France have low carbon electricity supply so consumption is not such an issue for the environment.