After Rising For 100 Years, American Electricity Demand Is Flat. Utilities Are Freaking Out

The American energy sector is in chaos, with all kinds of volatile changes occurring, from falling renewable energy prices to increases in natural gas production. But one trend that has received less attention is the stabilizing of energy demand. It looks like it isn't going to change much, if forecasts are to be believed. This shift is a big problem for a sector as slow moving as energy, and utilities are struggling to plan well for the future. 

The Tennessee Valley Authority (TVA), "the federally owned regional planning agency that, among other things, supplies electricity to Tennessee and parts of surrounding states, develops an Integrated Resource Plan (IRP) meant to assess what it requires to meet customer needs for the next 20 years". These plans are important. Energy utilities must make decisions that stretch far into the future as they must invest in large infrastructure projects that require huge capital inputs over many years. The 2015 report was outdated only three years after its release. 

"TVA, as a government-owned, fully regulated utility, has only the goals of 'low cost, informed risk, environmental responsibility, reliability, diversity of power and flexibility to meet changing market conditions' ... But investor-owned utilities (IOUs), which administer electricity for well over half of Americans, face another imperative: to make money for investors. They can’t make money selling electricity; monopoly regulations forbid it. Instead, they make money by earning a rate of return on investments in electrical power plants and infrastructure."

But if demand isn't increasing, there is no need for more infrastructure. This model was built under the assumption that demand would rise forever, and that model is crumbling before us. To address this issue is to require a paradigm shift and embrace the fact that demand is falling as a good sign. But as the sector is oriented now, towards ROI on infrastructure, it is a problem that is increasingly difficult to solve.