Show March 16 Electricity UseOemamid demand is going to behave This has consequences for consumers where it matters most in the cost they pay for electricity The electric utility industry is also focused on peak demand because the likelihood of system outages is highest during peak times As a result utilities must build capacity to serve electricity for the most extreme peak loads which may only occur for one or two weeks of the year Since energy cannot be stored utility providers have two options during these times They can fire up the higher cost electricity generating plants to meet that peak demand or they can buy energy on the “spot” market at rates above the usual going price Both options are very costly and these costs are ultimately passed on to the consumer An analogy with another form of infrastructure helps highlight this problem better Building electrical generation capacity to only serve peak loads is akin to expanding to 10 lanes each way in order to accommodate rush hour traffic While this may sound like a wonderful idea for commuters who sit through the afternoon rush the rest of the day those 20 lanes will be sparsely populated with vehicles The costs for building such a highway are prohibitively high and do not make sense when the need for all 20 lanes is only for a few hours a day Utilities must build the infrastructure regardless of the efficiency in cost in order to meet peak demand While Utah’s average load has grown by 443 peak load grew by 512 during this period The average power plant that services Utahns produces approximately 400 megawatts (MW) per year and costs $450 million to build This does not include the cost of transmission lines from the plant to the con sumer or the ongoing costs of running the facility The $450 million price tag is just the capital cost Utah Foundation calculates the average gap between peak demand and base demand for July has grown approximately 200 MW from 1991 to 2001 and has been growing more rapidly since 1996 A 200 MW increase necessitates the building of a 400 MW plant to meet current peak demand as well as anticipated future demand In addition to this new infrastructure cost older facilities need to be maintained upgraded or replaced as they no longer operate For these reasons it becomes imperative to examine peak load growth and the causes behind it It is also important to determine which type of customers: residential commercial or industrial are contributing the most to this growth as conservation measures and pricing mechanisms vary accordingly An examination of PacifiCorp reveals data from that growth in commercial and residential usage during peak times have place nearly equal demand on the system While the commercial sector is a larger consumer of electricity in the number of megawatts used during peaks times residential consumption has grown at a faster percentage rate Figure 3 highlights the changes for each sector since 1991 first showing the total change in demand over the period as well as a look at each year These data only tell part of the story and while it is important to know in which sectors growth is occurring it is equally as important to know why The next sections discuss sources of growth for both residential and commercial customers Drivers of Peak Demand What can YOU do? Your family can make a difference in the lives of children by providing a safe and loving home Where do YOU begin? rOINDATION use and economic growth in constant 2002 dollars During the economic boom of the 1990s Utah’s GSP grew rapidly at an average annual rate of 57 Sectors’ Contribution 1 From Residential Consumption The number of housing units in Utah has seen an almost 1960s increase since the to Fuk Load Growth (MW) Strengthen a Family Become a Foster Parent If not YOU then WHO? County Gazette SlmNar July Temperature 4000 Days 1 (MW) Aohfanttal MnduRrial demand in one instance temperature tends to fluctuate within a relatively predictable band While global warming may be a cause of temperature increases the immediate impacts are not large enough to change the planning process for new power generation Demographic trends on the other hand affect housing and equipment use patterns Total customer growth in Utah averaged 29 annually in the period from 1992 is the highest growth to rate for the states PacifiCorp supplies Additionally The average annual growth in the number of households during that period was about 26 The final driver of electricity demand is the economy Economic trends are tied partly to demographics but also to business cycles and regional deveThe strong economic lopments growth of the mid to late 1990s led to more building construction and This electricity The consumption and peak nature of economic growth (eg whether caused by relatively more or less energy intensive industries) also affects electricity use Of these three economic factors seem to be the best indicator of growth in electricity consumption and average demand Regression analysis comparing electricity usage both consumption and summer peaks to gross state product (GSP) and per capita personal income (PCPI) showed very high correlations between electricity Additionally technological innovation has increased significantly and the economic boom experienced in Utah the 1990s provided throughout Utahns the means to accumulate and access that technology Furthermore that economic boom contributed to an increase in the median square footage of housing units while the number of people occupying those units have held steady or decreased The confluence of these three factors has created significant growth in electricity consumption in the residential sector Approximately 57 of Salt Lake’s households currently use some form of electrically produced air conditioning and 37 rely on central air conditioning systems that use significantly more energy than their counterparts In conjunction with the increased median square footage of households since the 1970s and the tendency of the electrical grid to peak during the summer months the difference in the numbers suggests that residences could be one of the driving factors of peak demand Growth in housing units with air conditioning is clearly outpacing general housing growth for the Salt Lake Metropolitan Statistical Area (MSA) This adds pressure to electricity demand but the other MSAs shown exhibit the same trends and these pressures are probably even greater in Denver and Portland than in Salt Lake There is a paradox however to housing units in Salt Lake City Page 9 1 Despite having the fastest growth rate of new housing units among the metropolitan areas reviewed Salt Lake City still has the oldest housing stock compared with those other areas of Salt Lake’s housing Only 445 stock was built after 1970 compared in Portland to 452 549 in Denver and 70 in Phoenix Older homes are less energy efficient even if retrofitted with a new air conditioner and require a greater amount of electricity to cool than a newer home of the same size Commercial ism efficiently Millard County Needs Foster Families! Utah Potter Care 1400- - )c - The Millard Continued from page Of the three main drivers of peak demand (climate demographics and the economy) only demographic and economic changes occur in way that can significantly change the characteristics of peak load and demand over time Climate can be held relatively constant because although a particularly hot summer may increase peak Fifuro 2004 and Industrial Growth Peak loads within the general service category are mainly driven by commercial building usage The general service category consists of commercial and industrial consumers Also the overall commercial load shape in California fairly resembles the load shapes of Utah commercial loads and so provides useful insight for Utah commercial building usage The figure shows that the largest contributors to peak demand and overall consumption are: air conditioning interior lighting “other" ventilation refrigeration office equipment hot water exterior lighting and cooking The “other" category includes office equipment portable fans and task Commercial loads rapidly rise lighting as the business day begins shortly after 6 am and significantly taper as the business day ends around 5 pm Because air conditioning’s contribution to peak loads is so substantial commercial peak loads are dramatically higher in summer months than at other times of the year Additionally commercial building space has been growing rapidly since 1995 While the industrial sector primarily manufacturing and warehousing still has the majority of square footage in Salt Lake City with approximately 97 million square feet or 663 percent of the total the commercial sector has been growing faster and is now a larger portion of the total than it was in 1995 The commercial sector contains two types of space retail and office While retail space grew from 17 milto 23 million square feet over the eight years office space grew from 15 million to 25 million square feet during the same time Starting in 2000 office space became a larger portion of the total inventory Together these data suggest that the commercial sector encompassing office and retail space have been the drivers of general service peak load growth during the 1990s while industrial customers have remained fairly constant Since commercial air conditioning is the largest component of business’ peak load usage this seems to be the main driver behind the general service peak load spikes seen during the hottest days of the year Utah Foundation is a nonprofit nonadvocacy research organization Our mission is to encourage informed public policy making and to serve as Utah’s trusted source for independent objective research on crucial public policy issues For more information please visit or call us at wwwutahfoundationorg lion |