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Peak-to-average electricity demand ratio rising in New England and many other U.S. regions

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graph of new england peak-to-average demand ratio, as explained in the article text

Source: U.S. Energy Information Administration based on Ventyx Energy Velocity Suite

Across the United States, but most pronounced in New England, the ratio of annual peak-hour electric demand to average hourly demand has risen over the past 20 years. In New England, the peak-to-average demand ratio has increased from 1.52 in 1993 to 1.78 in 2012. In other words, the highest peak-hour electric demand for the year in 1993 was 52% above the hourly average level while in 2012 peak-hour demand had risen to 78% above the hourly average level.

This higher ratio translates into decreasing average utilization levels for generators in New England and other regions. Electric systems maintain sufficient capacity to meet expected peak loads plus a reserve margin. As the peak-to-average ratio rises, generators called on to meet peak-hour demand are running fewer hours and/or at lower output levels the rest of the year. Because energy payments are generator's primary source of revenue in regional transmission organization (RTO) systems such as New England's Independent Systems Operator (ISO), the rising ratio of peak-to-average hourly demand is likely cutting into generator revenues and increasing the importance of capacity market payments to generators.

Source: U.S. Energy Information Administration and Ventyx

A more nuanced way to look at hourly demand is the construction of what is called a load duration curve. This is the graphical representation of hourly electric demand from highest to lowest over a certain time interval. In the chart above, hourly electric demand in New England for every hour of each year from 1993 to 2012 has been ordered from highest to lowest and indexed to the peak value for each year. It reveals two groups, one between the years 1993 to 2000 and the second between the years 2001 to 2012. EIA does not know the exact reasons for this change, but likely candidates include:

  • A rising share of climate control in electricity consumption that leads to greater sensitivity to weather, lifting peak demand levels in the summer relative to average levels for the year
  • Changes in consumption technologies and patterns (such as increased energy efficiency) that reduce average electric demand, such as more efficient refrigerators and light bulbs
  • Shifts to a more service-based economy (from an industrial base that uses energy more evenly throughout the year)

Because of differences in housing stock, climate, and general economic conditions, the peak-to-average demand ratio can vary considerably by region (see tabs below). Also, because electricity demand is highly sensitive to weather that varies by year, it is best to analyze these trends over several years.

 

Graph of peak-to-average demand ratio, as described in the article text

Source: U.S. Energy Information Admnistration

Both peak and average load levels steadily increased in New England from 1993 to 2005. But beginning in 2006, average load levels have been trending downwards while peak levels have remained more or less flat, leading to a continued increase in peak-to-average demand levels. Throughout this time period, the annual peak load day in each year in New England occurred from June to August except for 1993, when the peak hour happened in February.

Principal contributor: Timothy Shear

Today in Energy, published every weekday, brings you short, timely articles with graphics on energy facts, issues, and trends. Questions, comments, story suggestions? Email us at todayinenergy@eia.gov.

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