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Annual Energy Outlook 2014

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

Market Trends — Residential sector energy demand

Residential energy intensity continues to decline across a range of technology assumptions

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In the AEO2013 Reference case, the energy intensity of residential demand, defined as annual energy use per household, declines from 97.2 million Btu in 2011 to 75.5 million Btu in 2040 (Figure 55). The projected 22-percent decrease in intensity occurs along with a 32-percent increase in the number of homes. Residential energy intensity is affected by various factors—for example, population shifts to warmer and drier climates, improvements in the efficiency of building construction and equipment stock, and the attitudes and behavior of residents toward energy savings.

Three alternative cases show the effects of different technology assumptions on residential energy intensity. The 2012 Demand Technology case assumes no future improvement in efficiency for equipment or building shells beyond what is available in 2012. The High Demand Technology case assumes higher efficiency, earlier availability, lower cost, and more frequent energy-efficient purchases for some equipment. The Best Available Demand Technology case limits customer purchases of new and replacement equipment to the most efficient models available at the time of purchase—regardless of cost. This case also assumes that new homes are constructed to the most energy-efficient specifications.

From 2011 to 2040, household energy intensity declines by 31 percent in the High Demand Technology case and by 42 percent in the Best Available Demand Technology case. In the 2012 Demand Technology case, energy intensity is slightly higher than in the Reference case but still declines by 17 percent from 2011 to 2040 as a result of the replacement of pre-2012 appliance stocks with 2012 vintage equipment.

Electricity use per household declines from 2011 to 2040 in the Reference case

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Average electricity demand per household declines by 6 percent in the Reference case, from 12.3 megawatthours in 2011 to 11.5 megawatthours in 2040. As the number of households grows, however, total delivered electricity consumption in the residential sector increases by about 24 percent. Over the same period, residential use of natural gas falls by 12 percent, and use of petroleum and other liquids falls by 25 percent. Total energy demand for most electric end uses increases, even as it declines on a per-household basis. In 2040, space cooling and "other uses" consume 42 percent and 52 percent more electricity, respectively, than in 2011 and remain the largest residential uses of electricity. Electricity use for personal computers (PCs) and related equipment and for clothes washers declines.

The largest reduction in residential electricity use is for lighting (Figure 56). The Energy Independence and Security Act of 2007 (EISA2007) phases in standards that require a reduction of about 30 percent in energy use for general-service lamps between 2012 and 2014, with specific dates that vary by light level. On January 1, 2013, the requirements went into effect for 75-watt incandescent bulbs; the requirements for 100-watt incandescent bulbs went into effect a year earlier. The EISA2007 standards result in the replacement of incandescent bulbs with more efficient compact fluorescent lighting and light-emitting diode (LED) lamps.

Among electric end-use services in the residential sector, lighting demand declines at the fastest rate (1.8 percent per year) and "other uses" rise at the fastest rate (1.4 percent per year). The growth in other uses stems from the introduction of new electrical devices in households, with little coverage by efficiency standards. Electricity use for water heating also increases, but at a slower rate (0.7 percent per year) than the growth in number of households (1.0 percent per year)

Efficiency can offset increases in residential service demand

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The number of households increases by 32 percent, and total residential square footage increases by 41 percent from 2011 to 2040 in the AEO2013 Reference case. Without efficiency improvements, energy demand for uses such as heating, cooling, and lighting would increase at similar rates; however, for many end uses, delivered energy consumption increases more slowly or, in some instances, declines in the Reference case. Three alternative cases show how efficiency improvements could affect energy consumption levels (Figure 57). The High Demand Technology and Best Available Demand Technology cases assume different levels of efficiency improvement without anticipating new appliance standards. The Extended Policies case assumes the enactment of new rounds of standards, generally based on improvements seen in current ENERGY STAR equipment.

Energy consumption declines in the Reference case for two major end uses, space heating and water heating. Energy use for space cooling in the Reference case grows by 42 percent from 2011 to 2040—faster than the number of households, reflecting both population shifts and changes in the number of degree days. In the Best Available Demand Technology case, which includes greater adoption of efficient space cooling equipment, energy use for space cooling declines over the same period.

In all four cases, substantial declines in energy use for lighting reflect EISA2007 efficiency standards. For the category of miscellaneous loads—a wide range of small appliances and electronics, most of which are not currently subject to efficiency standards—delivered energy use increases at the same rate as the number of households in the Extended Policies case (32 percent from 2011 to 2040) and more rapidly than the number of households in the Reference, High Demand Technology, and Best Available Demand Technology cases because of more limited efficiency improvement.

Planned expiration of tax credits affects renewable energy use in the residential sector

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Consistent with current law, existing investment tax credits (ITCs) for residential households installing renewable energy technologies expire at the end of 2016 in the AEO2013 Reference case. The credits can offset 30 percent of installed costs for a variety of technologies, including solar photovoltaic (PV) and wind generators, ground-source heat pumps, and solar thermal water heaters. In the Reference case, expiration of the ITCs drastically slows adoption of renewable technologies. In the AEO2013 No Sunset case, the ITCs are extended through 2040, and the adoption of renewable technologies continues to rise (Figure 58).

In the Reference case, combined PV and wind capacity in the residential sector grows from 1.1 gigawatts in 2011 to 9.5 gigawatts in 2016. After 2016, expiration of the ITCs results in slower growth, with an additional 4.1 gigawatts added from 2017 through 2040. In the No Sunset case, more than 58 gigawatts of residential PV and wind capacity is added over the same period. In all cases, the majority of the added capacity is solar PV rather than wind.

Expiration of the ITCs also affects the penetration of renewable space-conditioning and water-heating equipment. With a 30-percent tax credit available, the number of ground-source heat pumps and solar water heaters grows from a combined 1.3 million units in 2011 to 2.4 million units in 2016; but after 2016 only 1.4 million additional units are added through 2040 in the Reference case. Even in the more optimistic No Sunset case, however, the two renewable technologies are adopted in only a small percentage of households—fewer than 6 percent—by 2040. In the No Sunset case, with the ITC extended, 6.4 million additional units are installed after 2016..

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 4. Residential 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 22. Residential Sector Equipment Stock and Efficiency XLS