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Annual Energy Outlook 2022

Release Date: March 3, 2022 Next Release Date: February 2023 AEO Narrative PDF
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Electricity demand grows slowly across the projection period, which increases competition among fuels

The U.S. annual average electricity growth rate remains below 1% for much of the projection period in the Reference case

Figure 10.

Figure 10

The three-year rolling average growth rate of electricity consumption in the United States peaks in 2023 as the economy returns to pre-pandemic levels of economic activity. In the short term, demand for electricity may fluctuate as a result of year-to-year weather, economic shocks, or other unpredictable events. Economic growth drives longer-term trends in electricity consumption, although the growth is somewhat offset by efficiency improvements. In the Reference case, the average annual growth rate of electricity consumption surpasses 1% but not until near the end of the projection period. Electricity demand in the AEO2022 High Economic Growth case grows about 0.25% faster than in the Reference case, and it grows about 0.25% slower in the Low Economic Growth case.

The share of onsite electricity generation increases across non-transportation sectors

Figure 11.

Figure 11

Through the projection period, onsite generation of electricity expands significantly in the U.S. residential, commercial, and industrial sectors, reducing growth in electricity purchased from centralized generators. We project that residential, commercial, and industrial sector onsite solar PV systems will account for more than 8% of total electricity generation by 2050, almost double the share held by onsite power generators in 2021.

Electricity demand in transportation remains low

We project that demand for electricity grows fastest in the transportation sector, even as consumption in that sector remains less than 3% of economy-wide electricity consumption in the Reference case. Fully electric vehicles grow from less than 1% of the on-road LDV fleet in 2021 to a little over 7% in 2050 in the Reference case. The increase in demand primarily follows evolutionary electric vehicle (EV) technology and market developments, as well as current fuel economy regulations. Both vehicle sales and utilization (miles driven) would need to increase substantially for EVs to raise electric power demand growth rates by more than a fraction of a percentage point per year. The transportation sector’s share of electricity consumption is greatest in the High Oil Price case, where it reaches 5% of the total in 2050.

The three-year rolling average growth rate of electricity consumption in the United States peaks in 2023 as the economy returns to pre-pandemic levels of economic activity.

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