Will Electrical Demand “Recover”? Not Likely

The people who run PJM keep talking about a “recovery” of electrical demand the way politicians talk about an economic “recovery.”  Here is an article in today’s New York Times about that “recovery” stuff.

There are two factors that drive demand for electricity — industrial expansion and new housing.

Here’s the situation in new housing, as reported by NYT:

Sales of new single-family homes in February were down more than 80 percent from the 2005 peak, far exceeding the 28 percent drop in existing home sales. New single-family sales are now lower than at any point since the data was first collected in 1963, when the nation had 120 million fewer residents.

Builders and analysts say a long-term shift in behavior seems to be under way. Instead of wanting the biggest and the newest, even if it requires a long commute, buyers now demand something smaller, cheaper and, thanks to $4-a-gallon gas, as close to their jobs as possible. That often means buying a home out of foreclosure from a bank.


Construction of new single-family homes usually surges after a recession because of lower rates and pent-up demand. But the Census Bureau said this week that while multi-unit construction had picked up strongly in the last year, single-family home construction fell 21 percent to an annual rate of 422,000.

These statistics show a clear long term trend away from new single unit housing to multi-unit apartments.  Multi-unit housing is far more efficient, in almost every way, in terms of electrical use.  The NYT article focuses on the Chicago area, but makes clear that Chicago is just one example of a nationwide trend.

It is clear that all the managers of the US electrical grid, from FERC to the RTOs like PJM to power companies to electrical consumers need to completely overhaul the way they think about US electricity demand.  We are now shifting from a mentality created when demand doubled every decade to a system where demand is essentially stagnant or declining.

PJM’s recent 2011 RTEP figures showed how desperately they are clinging to their obsolete model.  They started including demand projections from other sources, when their own projections, based on real experience, failed to show expanding demand.  Rather than face reality, these supposedly hard headed engineers decided to go with more rosy projections that fit their own expansion agenda.

As I have suggested repeatedly on The Power Line, PJM should change the name of their annual plan from the Regional Transmission Expansion Plan (old dead reality) to Regional Transmission Improvement Plan.  Of course that would also involve a completely new way of thinking at PJM, which appears unlikely in the near future.

(Cross posted on Coalition for Reliable Power)