Remember this post on The Power Line last June? Here were the opening paragraphs of that post:
There is always lots of talk in the media about the growth of renewable power generation or the price war between coal and natural gas. This issues are usually framed as the big drivers of change in the US electrical system. But I think the problem of US electricity companies and regulators goes beyond these relatively superficial discussions.
As we saw in the PATH fight, the factor that is really killing new capital investment in the US electrical industry is declining electrical demand.
Check out this post by Taylor Kuykendall on today’s Grounded. Kuykendall covers a new report put out by an electrical industry consulting firm. Here is his initial description of the report’s conclusions:
Wood Mackenzie, a company that analyzes world energy and metals markets, recently released “A Lost Decade of Demand Growth.” The report highlights radical changes in demand growth projections and how that is “transforming the future of the power industry and complicating strategic and operational choices.”
While demand has taken a dive, the report states, energy efficiency is also on the rise, further reducing the need for new energy.
Good to see industry analysts catching up with a trend that Amory Lovins pointed out 20 years ago.
The gist of Wood McKenzie’s report is that while fossil fuel prices are currently roiling generation development, the real long term driver of chaos in electrical system investment is the long term decline in demand. This trend is long term, and not just the result of “the economic downturn” as many in the industry claim.
The investors in electricity technology who recognize the implications of long term stagnant demand will emerge from the current chaos as winners. Those who cling to obsolete myths of ever expanding demand will die.