These Three Sectors Will Drive Near-term Load Growth: Morningstar Forecast
- Nov 26, 2020 3:20 pm GMT
The coronavirus pandemic hit utilities hard and U.S. electricity demand is expected to fall nearly 3% this year. In April and May, electricity demand fell 5.8%, the largest two-month drop in 50 years of recordkeeping. Commercial and industrial demand is down more than 10.
Recent analysis from Morningstar shows that while lectricity demand has decoupled from economic trends during the last decade, the pandemic “shows that the economy still matters.”
The firm forecasts 1.2% average annual U.S. electricity demand growth through 2030. That is down from the1.25% average annual growth estimate it published two years ago. Even so, its forecast is more bullish than other industry forecasts as electricity is set to take share from other energy sources.
The forecast expects electricity demand to bounce back to pre-pandemic levels in 2021 as the economy recovers.
The outlook combines a core growth forecast and projections for fast-growing new sources of electricity demand such as data centers, electric vehicles and cannabis cultivation. It estimates that electricity use from these sources will represent 18% of new electricity demand during the next decade and grow to 5% of total U.S. electricity use by 2030, up from 3% now.
Electric vehicle charging adds 8 basis points of annual growth, the largest contribution of any new source. The firm expects electricity demand from EV charging to climb 400% by 2030. It assumes EV and plug-in hybrid new-car sales will climb to 20% of total U.S. new-car sales by 2030 and that battery efficiency will improve 10% each year. EVs account for 1% of total U.S. electricity demand by the end of the company’s forecast in 2030.
Data centers add 7.5 basis points of annual growth. The forecast estimates that data center capacity will double from 2019, but electricity demand growth is partially offset by 3% annual energy efficiency gains. Annual data center electricity demand is forecast to grow 32% during the next decade; data centers account for 3% of total electricity demand by 2030, according to the forecast.
Cannabis cultivation adds 4.5 basis points of annual growth. The firm assumes 10% of the U.S. population regularly consumes a cannabis product by 2030, in line with rates in states that allow legal marijuana use. Annual cannabis cultivation electricity demand is forecast to grow 65% during the next decade to account for 1% of total electricity demand by 2030.
No discussions yet. Start a discussion below.
Get Published - Build a Following
The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.
If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.