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Annual Energy Outlook 2014

Release Date: May 7, 2014   |  Next Early Release Date: January 15, 2015   |  See schedule  |  full report

Market Trends: Commercial sector energy demand

Commercial sector energy intensity varies with technology improvements

In the AEO2014 Reference case, commercial sector energy intensity, or delivered energy consumption per square foot of commercial floorspace, declines by an average of 0.3%/year from 2012 to 2040 (Figure MT-14). During this period, delivered electricity consumption grows by 0.7%/year despite 1.0% annual growth in commercial floorspace. Natural gas consumption also increases over the period despite increases in building shells and equipment efficiency.


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Improvements in major end-use equipment and distributed generation technologies help to slow the growth of delivered energy consumption in the commercial sector. Varying the rate of improvement in the 2013 Demand Technology, High Demand Technology, and Best Available Demand Technology cases shows a range in which equipment and building shell efficiency improvement, or lack thereof, could affect commercial energy consumption.

In the 2013 Demand Technology case, which restricts equipment and shell efficiencies to those available in 2013, energy intensity is reduced by 2.7% from 2012 to 2040, averaging 0.1%/year as equipment is replaced over time and as new buildings are constructed. In the High Demand Technology case, which assumes lower costs and higher efficiencies for commercial equipment and building shells and a 7% real discount rate, commercial energy intensity falls by 0.6%/year, or twice the rate in the Reference case. As a result, energy intensity is 15.8% lower in 2040 than in 2012. The Best Available Demand Technology case allows for even greater shell efficiency improvements than the High Demand Technology case, and also limits future technology choices to only the most efficient models of equipment in each year. As a result, commercial sector energy intensity declines by 0.7%/year on average, to 18.5% below the 2012 level in 2040.

Energy use continues to shift from personal computing equipment to networked computing

Commercial energy intensity—the ratio of energy consumption to floorspace—decreases from 2012 to 2040 for most electric end uses in the Reference case, while commercial floorspace increases by 1.0% annually (Figure MT-15). Electricity accounted for 54.5% of commercial delivered energy use in 2012.


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Electricity use for personal computers (PCs), including desktop and laptop computers and monitors, continues to decline. Reductions in processor power use, improvements in display backlighting, and a general shift from desktop to mobile computing devices all cause the energy consumption of PC office equipment to fall by 5.6% annually. With expanding use of webbased services increasing the role of servers in data centers, electricity use by non-PC office equipment grows by 2.0%/ year in the Reference case.

Federal efficiency standards moderate energy consumption by major end-use equipment, such as space heating and cooling, water heating, lighting, and refrigeration. The Energy Independence and Security Act of 2007 (EISA2007) mandatory efficacy improvements for lighting continue to foster the adoption of advanced incandescent, fluorescent, and solidstate lighting technologies. As a result, the share of purchased electricity consumption used for lighting declines from 20.7% in 2012 to 14.7% in 2040.

The growing use of energy for miscellaneous electric loads, many of which are not currently subject to federal standards, leads to a 21.4% increase in energy intensity from 2012 to 2040 for other end uses in the Reference case. Miscellaneous electric loads in the commercial sector include medical equipment, video displays, and many other devices. Increases in the use of such devices and equipment can vary greatly by building type and service demand.

Efficiency gains for advanced technologies reduce commercial energy consumption growth

Behind the 0.3% average annual decline in delivered energy intensity in the commercial sector in the AEO2014 Reference case is a shift in the mix of end-use services, from core building services (space heating, space cooling, ventilation, water heating, lighting, cooking, and refrigeration) to other office equipment and electric services. Core end-use energy intensity falls by 0.9%/year from 2012 to 2040, and the intensity of other end uses increases by 0.6%/year on average.

The largest energy efficiency improvements in the Reference case are for lighting, as a result of new standards and the penetration of LED technologies. PC office equipment is a close second to lighting, as a result of the shift toward network computing. Refrigeration, electric space cooling, and electric water heating also show significant efficiency gains (Figure MT-16).


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The Best Available Demand Technology case demonstrates significant potential for further improvements—especially for electric equipment in the core end uses. In this case, core end-use intensity declines at more than twice the rate of the Reference case, and core delivered energy use in 2040 is 1.3 quadrillion Btu lower than in the Reference case. Lighting accounts for 35% of the additional delivered energy savings, resulting from both earlier and more widespread penetration of LED technologies than in the Reference case. Beyond lighting, the Best Available Technology case projects significant savings for variable air volume ventilation systems, high-efficiency chiller systems for space cooling, high-efficiency natural gas furnaces, and various advanced refrigeration technologies. Together with lighting, those end uses account for more than 90% of the energy savings relative to the Reference case, with delivered energy consumption in 2040 only 0.6 quadrillion Btu higher than in 2012 and delivered energy intensity declining by 0.7%/year.

Renewable technologies drive more additions to distributed generation capacity

Renewable energy sources, chiefly solar photovoltaic and wind, continue to dominate new commercial distributed generation capacity in the AEO2014 Reference case, accounting for 62.3% of commercial capacity in 2040. Lower prices for photovoltaic inverters and panels, decreasing installation costs, federal investment tax credits, and state and utility rebates all contribute to growth in commercial photovoltaic capacity, which increases by 5.7%/year from 2012 to 2040 in the Reference
case. The current 30% federal investment tax credit continues through 2016, after which it reverts to 10%. In the No Sunset case, with investment tax credits for all distributed generation technologies extended through 2040, photovoltaic capacity increases by an average of 7.0%/year.

Small-scale wind capacity grows by 14.2%/year from 2012 to 2040 in the No Sunset case, compared with 7.9%/year in the Reference case (Figure MT-17). As in the case of solar photovoltaic, additional federal and local incentives help to support the growth in commercial wind capacity. Commercial wind capacity accounts for 11.1% of the 35.7 gigawatts (GW) of total distributed generation capacity in 2040 in the No Sunset case, with photovoltaic capacity accounting for 58.1%.


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Rising fuel prices offset the effects of the 10% investment tax credit on nonrenewable technologies for distributed generation. In the Reference case, microturbine capacity using natural gas grows by 15.3%/year on average, from 98.3 MW in 2012 to 5.4 GW in 2040, and its growth rate in the No Sunset case is only slightly higher, at 15.7%/year. The microturbine share of total distributed generation capacity in 2040 is 16.2% in the No Sunset case, compared with 20.4% in the Reference case. Fuel cell capacity grows by an average of 12.3%/year in the Reference case and 12.7%/year in the No Sunset case.


Reference Case Tables
Table 1. Total Energy Supply, Disposition, and Price Summary XLS
Table 2. Energy Consumption by Sector and Source - United States XLS
Table 3. Energy Prices by Sector and Source - United States XLS
Table 4. Residential Sector Key Indicators and Consumption XLS
Table 5. Commercial Sector Key Indicators and Consumption XLS
Table 6. Industrial Sector Key Indicators and Consumption XLS
Table 7. Transportation Sector Key Indicators and Delivered Energy Consumption XLS
Table 8. Electricity Supply, Disposition, Prices, and Emissions XLS
Table 9. Electricity Generating Capacity XLS
Table 10. Electricity Trade XLS
Table 11. Petroleum and Other Liquids Supply and Disposition XLS
Table 12. Petroleum and Other Liquids Prices XLS
Table 13. Natural Gas Supply, Disposition, and Prices XLS
Table 14. Oil and Gas Supply XLS
Table 15. Coal Supply, Disposition, and Prices XLS
Table 16. Renewable Energy Generating Capacity and Generation 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 19. Energy-Related Carbon Dioxide Emissions by End Use XLS
Table 20. Macroeconomic Indicators XLS
Table 21. International Petroleum and Other Liquids Supply, Disposition, and Prices XLS