Barclays Capital says power demand has dropped this year for residential and commercial consumers for the first time since complete national data about it became available in 1973.
"There used to be one reassuring maxim in the power industry," a Barclays commodities research report says. "Residential and commercial power consumption grows through good times and bad." But this bad time is unlike all the others.
Our colleague Mark Watson reports that some industry experts see the stressful economy as the main reason; their consumption will go back to previous levels once money is not such a problem. Others think "green" consciousness and energy-efficient products are producing a more permanent effect.
It's impossible to tell whether it will last. But the fact that a recession has pushed down these sectors, not just industrial demand, is something Barclays just couldn't get over.
"We have no analog for residential and commercial consumer behavior after a recession for the simple reason that they had not previously shown a significant shift in consumption during a recession, or heading out of one." The two sectors declined about 1% from the monthly average peak in mid-2007, Barclays said.
If home sales go up and commercial vacancies go down, electricity consumption will go right back up. If behavioral changes were borne solely of money fears. But Jim Jewitt, managing director of Tadanac Energy Advisors, told Watson that the "green concerns" driving efficiency and lower demand may be "durable."
"I think the fear that markets will suffer an oil market equivalent downturn, coupled with the overall downturn, will chill power project development, but less chilly and less durably than the environmental shift," Jewitt said.
Consulting firm McKinsey said in July that intensive efficiency measures -- not all of them likely to happen -- could cut projected 2020 power consumption by 23%. Barclays goes nowhere near that idea; it expects residential and commercial consumption to start growing again as usual once the economic fear passes. But there's a but: "If instead, the downward shift ... is more structural, then we see a more ominous future for the power industry."
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