March 4, 2013

Homes show greatest seasonal variation in electricity use

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Electricity use varies with the weather, as changes in temperature and humidity affect the demand for space heating and cooling. The three main sectors that use electricity—residential, commercial, and industrial—respond differently to seasonal changes in the weather.

• The residential end-use sector has the largest seasonal variance, with significant spikes in demand every summer and winter. Virtually all homes that have air conditioning use electricity as the main source of cooling in the summer, while winter heating needs are met by a variety of fuels. Some homes use electric resistance heating and electric heat pumps, but even homes with other heating fuels such as natural gas or fuel oil still use some electricity to power furnace fans, boiler circulation pumps, and compressors.
• The commercial sector experiences less variance in electricity use, although it shows a noticeable increase in the summer and a slight increase in the winter. Compared to the residential sector, a smaller portion of commercial sector energy consumption is devoted to heating, cooling, and ventilation. However, other energy fuels beyond electricity can be used in the commercial sector to meet both heating and cooling needs. For example, some commercial buildings use natural gas-fired chillers for cooling.
• The industrial sector's demand for electricity is relatively flat (with just a slight increase in the summer) because a much smaller portion of its energy consumption (electric and otherwise) is used for heating and cooling. Economic variables generally play a larger role in industrial energy use than weather-related factors. However, seasonal changes can affect industrial activity. For example, in the refining industry, different seasonal slates of petroleum products as well as different seasonal processes may affect electricity needs.

Residential electricity demand has both winter and summer peaks that can each range as large as 67 billion kilowatthours (kWh; see chart). The seasonal range for the commercial sector is smaller, with a range of 31 billion kWh between spring and summer, with a much smaller secondary winter demand peak. Demand for electricity in the industrial sector shows a smaller summer peak (about 18 billion kWh) with almost no winter peak.

These seasonal patterns of electricity demand affect a utility's costs for serving each customer class, and therefore, the electricity rates paid. Serving an industrial customer tends to cost less on a dollars-per-megawatthour basis because there is less hourly and seasonal variation in demand. Industrial facilities often run 24 hours a day to avoid ramp-up times or to meet manufacturing requirements. Also, industrial customers can take advantage of interruptible service contracts, in which the customer agrees to reduce its electricity use when the utility asks, in exchange for a lower rate. At such a time, the industrial facility can switch to onsite backup generation or shut down temporarily.

At the other end of the spectrum, residential customers cost the most to serve. Because of the wide range in hourly and seasonal demand, utilities must be equipped to serve peak demand with equipment and capacity that may be otherwise underused (or unused) much of the year. Also, residential customers are numerous and dispersed, aspects that affect the costs of electricity distribution and billing.