Yet another fear for the utility future: New motor standards may cut demand even further
Quick Take: More and more industry observers are talking about the potential for a death spiral in the electric power industry. More and more customers will start generating their own power. Meanwhile, load growth will flatten, then begin to fall due to energy efficiency measures.
The potential for a significant drop in demand just grew higher with the release of a proposed rule that would mandate stringent efficiency standards for electric motors. Why is that a scary prospect for utilities? Well, about 1/2 of all the electricity used by industry goes to motors.
The proposed new rules will save businesses an estimated $23 billion over 30 years. That's $23 billion that would otherwise have gone to utilities. To be sure, this kind of energy efficiency is good for businesses and for the environment. But it does add another worry about the long-term prospects for our industry unless we find a business model that does not rely on selling more electricity every year.
I've reproduced a short summary below, then added a link to the full rule. - By Jesse Berst
I. Summary of the Proposed Rule
Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles. Part C of Title III of EPCA (42 U.S.C. 6311-6317) established a similar program for "Certain Industrial Equipment,” including certain electric motors. (1) (Within this preamble, DOE will use the terms "electric motors” and "motors” interchangeably.) Pursuant to EPCA, any new or amended energy conservation standard that DOE may prescribe for certain equipment, such as electric motors, shall be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)). Furthermore, any new or amended standard must result in a significantconservation of energy. (42 U.S.C. 6295(o)(3)(B) and 6316(a)).