‹ Analysis & Projections

Annual Energy Outlook 2014

Release Dates: April 7 - 30, 2014   |  Next Early Release Date: December 2014   |  See schedule

Market Trends — Commercial sector energy demand

For commercial buildings, pace of decline in energy intensity depends on technology


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Average delivered energy consumption per square foot of commercial floorspace declines at an annual rate of 0.4 percent from 2011 to 2040 in the AEO2013 Reference case (Figure 59), while commercial floorspace grows by 1.0 percent per year. Natural gas consumption increases at about one-half the rate of delivered electricity consumption, which grows by 0.8 percent per year in the Reference case. With ongoing improvements in equipment efficiency and building shells, the growth of energy consumption declines more rapidly than commercial floorspace increases, and the average energy intensity of commercial buildings is reduced.

Three alternative technology cases show the effects of efficiency improvements on commercial energy consumption. The 2012 Demand Technology case limits equipment and building shell efficiencies in later years to those available in 2012. The High Demand Technology case assumes earlier availability, lower costs, and higher efficiencies for equipment and building shells, and a 7-percent real discount rate for energy efficiency investments. The Best Available Demand Technology case assumes more efficient building shells for new and existing buildings than in the High Demand Technology case and limits replacement of new equipment to the most efficient models available in any given year.

The intensity of commercial energy use in the Reference case declines by 10.8 percent, from 105.2 thousand Btu per square foot in 2011 to 93.8 thousand Btu per square foot in 2040. By comparison, average commercial energy intensity drops by about 8.6 percent in the 2012 Demand Technology case, to 96.1 thousand Btu per square foot in 2040, by 20.5 percent in the High Demand Technology, and by 23.9 percent in the Best Available Demand Technology case.

Greatest reduction in energy intensity is in commercial lighting


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Commercial energy intensity, defined as the ratio of energy consumption to floorspace, decreases for most electric end uses from 2011 to 2040 in the AEO2013 Reference case (Figure 60). In 2011, electricity accounted for 52.4 percent of total commercial delivered energy use. Through the projection period, electricity use for lighting declines as a portion of total energy consumption in the Reference case. Advances in solid-state lighting technologies yield lamps with higher efficacy and lower cost, as well as products that can replace, or be retrofitted into, a wide variety of fixture types. As a result, the share of purchased electricity consumption used for lighting declines from 20.8 percent in 2011 to 15.1 percent in 2040 in the Reference case.

Commercial floorspace grows by an average of 1.0 percent per year from 2011 to 2040. Federal efficiency standards, which help to foster technological improvements in end uses such as space heating and cooling, water heating, refrigeration, and lighting, act to limit growth in energy consumption to less than the growth in commercial floorspace. Increasing energy use for miscellaneous electric loads, many of which currently are not subject to federal standards, leads to a 33.9-percent increase in energy intensity from 2011 to 2040 for "other" end uses in the Reference case. Miscellaneous electric loads in the commercial sector include medical equipment and video displays, among many other devices.

Although the recent recession slowed the rate of installation of new data centers, growing demand for web-based services continues to drive growth in energy use for non-PC office equipment, which increases by an average of 1.1 percent per year from 2011 to 2040. Improvements in data center cooling and ventilation equipment, as well as increased server efficiency, continue to moderate the increase.

Efficiency gains for advanced technologies reduce commercial energy consumption growth


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In the AEO2013 Reference case, delivered energy use for core commercial end uses (space heating, space cooling, ventilation, water heating, lighting, cooking, and refrigeration) falls by an average of 0.1 percent per year from 2011 to 2040, even as commercial floorspace increases by 1 percent annually. The share of commercial delivered energy consumption accounted for by the core end uses, which have been the focus of a number of energy efficiency standards, falls from 60 percent in 2011 to 50 percent in 2040. Energy consumption for the remaining end uses grows by 1.4 percent per year, led by other uses of electricity and by non-PC office equipment, including servers.

The largest efficiency gains in the Reference case are expected for lighting as a result of updated cost projections for advanced LED technologies, especially after 2030. Significant gains also are projected for refrigeration, based on provisions in the Energy Policy Act of 2005 and EISA2007, space cooling, electric space heating, and electric water heating (Figure 61).

The Best Available Demand Technology case demonstrates significant potential for further improvements—especially in electric equipment. In this case, the core end uses account for only 43 percent of total delivered energy use in 2040, when their total delivered energy use is more than 1 quadrillion Btu lower than projected in the Reference case. More than 30 percent of the reduction in demand is attributed to lighting, followed by ventilation and space heating. Additional efficiency gains for commercial lighting arise from earlier and more widespread penetration of LED technologies. Other notable contributions result from high-efficiency versions of variable air volume ventilation systems and chillers for space cooling. Overall, delivered energy consumption in 2040 in the Best Available Demand Technology case is only 0.1 quadrillion Btu higher than in 2011, despite a 33-percent increase in commercial floorspace.

Renewable energy fuels most additions to commercial distributed generation capacity

PV and wind account for 58.7 percent of commercial distributed generation capacity in 2040 in the AEO2013 Reference case. Exponential growth of PV capacity has occurred in both new and existing construction during recent years as a result of utility incentives, new financing options, and the 30-percent federal ITC that reverts to 10 percent in 2017. In the Reference case, commercial PV capacity increases by 6.5 percent annually from 2011 to 2040. In the No Sunset case, with ITCs for all distributed generation technologies extended through 2040, PV capacity increases by an average of 7.4 percent per year.


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Small-scale wind capacity increases by 7.4 percent per year from 2011 to 2040 in the Reference case and by an even greater 12.6 percent per year from 2011 to 2040 in the No Sunset case (Figure 62). As with PV, additional federal and local incentives help to drive growth in commercial wind capacity. Wind capacity accounts for 10.7 percent of the 28.4 gigawatts of total distributed generation capacity in 2040 in the No Sunset case, and PV accounts for 55.2 percent.

Rising fuel prices offset the effects of the 10-percent ITC on nonrenewable technologies for distributed generation. In the Reference case, microturbine capacity using natural gas grows by 15.0 percent per year on average, from 83.3 megawatts in 2011 to 4.7 gigawatts in 2040; and the growth rate in the No Sunset case is only slightly higher, at 15.3 percent. The microturbine share of total DG capacity in 2040 is 18.0 percent in the No Sunset case, as compared with 21.6 percent in the Reference case, and fuel cell capacity grows at an annual rate of roughly 10.9 percent in the Reference case and 11.3 percent in the No Sunset case.

Reference Case Tables
Table 2. Energy Consumption by Sector and Source - United States XLS
Table 2.1. Energy Consumption by Sector and Source - New England XLS
Table 2.2. Energy Consumption by Sector and Source - Middle Atlantic XLS
Table 2.3. Energy Consumption by Sector and Source - East North Central XLS
Table 2.4. Energy Consumption by Sector and Source - West North Central XLS
Table 2.5. Energy Consumption by Sector and Source - South Atlantic XLS
Table 2.6. Energy Consumption by Sector and Source - East South Central XLS
Table 2.7. Energy Consumption by Sector and Source - West South Central XLS
Table 2.8. Energy Consumption by Sector and Source - Mountain XLS
Table 2.9. Energy Consumption by Sector and Source - Pacific XLS
Table 5. Commercial Sector Key Indicators and Consumption XLS
Table 17. Renewable Energy Consumption by Sector and Source XLS
Table 18. Energy-Related Carbon Dioxide Emissions by Sector and Source - United States XLS
Table 18.1. Energy-Related Carbon Dioxide Emissions by Sector and Source - New England XLS
Table 18.2. Energy-Related Carbon Dioxide Emissions by Sector and Source - Middle Atlantic XLS
Table 18.3. Energy-Related Carbon Dioxide Emissions by Sector and Source - East North Central XLS
Table 18.4. Energy-Related Carbon Dioxide Emissions by Sector and Source - West North Central XLS
Table 18.5. Energy-Related Carbon Dioxide Emissions by Sector and Source - South Atlantic XLS
Table 18.6. Energy-Related Carbon Dioxide Emissions by Sector and Source - East South Central XLS
Table 18.7. Energy-Related Carbon Dioxide Emissions by Sector and Source - West South Central XLS
Table 18.8. Energy-Related Carbon Dioxide Emissions by Sector and Source - Mountain XLS
Table 18.9. Energy-Related Carbon Dioxide Emissions by Sector and Source - Pacific XLS
Table 19. Energy-Related Carbon Dioxide Emissions by End Use XLS
Table 23. Commercial Sector Energy Consumption, Floorspace, and Equipment Efficiency XLS