After rising for 100 years, electricity demand is flat

you can only have so many devices and appliances.

Jevons Paradox is not an immutable natural law. It's does not even have any predictive power. It's just a notice of an interesting thing that can happen but the naivest interpretation of microeconomics assumes it's impossible.

The current demand flatness is only temporary, esp. when we are ushering into the world of Electric Cars and 3D printers.

There is a hungry beast lurking its called "The Data Center". As the Data Center count increases over the future, we will also see raise in demand.

Over all, my bet is Jevons paradox will stand the test of time.

Now I have an LCD TV that uses well under half the power of a CRT, LED bulbs which use about 5% the power of incandescents, and an A-rated washing machine that uses about a half the power of the old-fashioned ones. At work I use a computer with an LED-backlit LCD monitor and a modern processor that idles at practically nothing.

For most people who had "all mod cons" 20 years ago, they're using less electricity today than they were then.

Electric cars are the one wrinkle, and I think they will drive electricity usage upwards. Other than that, though, domestic use is declining for the middle class, and commercial and industrial use are too in many cases. An awful lot of electricity usage 20 years ago was essentially waste, and we're getting quite good at eliminating that.

The mechanism by which increasing efficiency would increase consumption is lower prices and if that is missing then consumption won't increase.

I do know on a personal scale that LED lighting lets me have far more light hours for an incredibly lower bill. If anything I leave lights on more now. I even ran over a thousand feet of Christmas lights because their cost was so much less than before (like 12/15 to 1)

But more specifically in the case of electricity: there is no demand for electricity, and never has been. The actual demand is for what electricity can do. If the slope of the energy efficiency gains of electrical goods is steeper than the slope of the induced demand for those goods, there's no reason why more goods demand (in accordance with Jevons) shuldn't result in less electrical demand (seemingly contrary to Jevons).

I've always been confused with the labelling of the observation that the common shape of demand curves means lower price (all else being equal) leads to greater market clearing quantity as a “paradox”; what else would you expect?

That being said, all else has not been equal over time. Note that what has dropped is consumption of utility-supplied electricity; part of this may be drop in demand for electricity (use efficiency would seem to spur demand with more utility for each unit consumed, but it may suppress it if it means that the point where you hit steeply diminishing returns is hit faster), but an important part is the deployment of customer-owned generation capacity that is a direct substitute for utility-supplied electricity can be expected to hit consumption of utility-supplied electricity hard. And no one has ever labelled the effect “new perfect substitutes reduce consumption of the substituted good” a paradox.

I would be interested to know whether the embedded energy consumed by the US has been growing or shrinking. (To calculate this you would add in the energy used to make American imports.)

I think price has gone down far enough that the shape of the demand curve has steepened. As consumers, there just isn't much we can do with a lot of extra electricity, so even if the price drops a lot, we're not going to consume that much more.

That is: traditionally in China, you paid the doctor when you were well. When you were sick, treatment was offered without payment. The alignment of incentives is for patients to be healthy (or, for the cynical amongst you: for the doctor to be able to credibly claim this).

If various services were offered not on the basis of inputs consumed (as with electricity), but on the basis of outputs enabled, this dynamic would change.

For employees, this is the difference between measuring based on hours worked (or worse: present), and on deliverables achieved.

There's some complications to this: piecework payment is something that's long been criticised (Adam Smith argues against this in Wealth of Nations, 1776), largely in that it tends to overwork, even in the absence of overt coercion. Prices ultimately are meant to cover costs of provisioning, and there's the need to see that those costs are met. Measuring what is directly transacted is easier than measuring either complex inputs or often-at-a-remove outcomes (Smith also discusses the former, the latter is the topic of many decades of Monitoring and Evaluation theory and practice).

No one can build anything at all, even a few paving slabs, without adding "lighting as a feature". Often with colour or brightness cycling effects. This is usually broken a couple of years later.

Once businesses turned lights off outside business hours and left a little security lighting. Now everyone lights up the window, sign, and usually car-park, to daylight levels. Even solicitors, and doctor's surgeries. Larger franchises especially annoy by adding a 30' pole with a sign on top. With illumination more suited to anti-aircraft searchlights. It's become an arms race.

As a kid, street lights were turned off late at night. I think 2 in 3, but it's a distant memory now. I lived in a major city as a child.

In the real world, the average lifespan of a company in the S&P 500 is under 20 years. [1]

[1] https://www.cnbc.com/2017/08/24/technology-killing-off-corpo...

This is completely false. Where in the world did you get this idea?

Here is Lawrence Livermore National Laboratory's energy flow chart for the United States in 2007:

https://flowcharts.llnl.gov/content/energy/energy_archive/en...

And here's the most recent one, from 2016:

https://flowcharts.llnl.gov/content/assets/images/energy/us/...

Industrial sector primary energy demand barely declined, from 24.84 quads in 2007 to 24.5 in 2016. That's less than the decline from the residential sector, 11.43 to 11.00.

https://www.vizio.com/d32fe1.html

For reference, the average family car engine can generate on the order of 75kW, so 100kW for a truck is quite good, I think.

But unfortunately? Without safety measures like the Fed enabling such, economies have a history of imploding every fifteen years or so on the basis of insufficient currency circulation. Oh wait, that's where we are today... Carry on!

Commodity-backed currencies also have a problem - they implement their own fractional reserves as economies do grow. When they shrink? End-users learn to trade in the notes for the commodities, shrinking the pool of currency in circulation.

If my investment strategy is based purely on dividends, then it's true I do not require share prices to grow. But if I am going to grow my portfolio be reinvesting my dividends, then I need more shares that I don't already own to be created so that I can buy them, which means the total market cap of companies will have to have increased.

And, after I've grown my portfolio, I'll be looking to reinvest a correspondingly larger quantity of dividends, so that market cap will need to have grow by a correspondingly greater amount.

If you want compounding returns, whatever form those returns take, you need sustained exponential growth in the economy.

https://en.wikipedia.org/wiki/Second_law_of_thermodynamics

(And yes, the system you're in, writ large, is sufficiently closed for this to hold true.)

Approximately 98%-99% of all businesses started in the US every year, still fall under that banner. Half a million new businesses are started each year, 1%-2% of those are traditional venture capital backed (averaging the per year figures since ~2006).

Also great account name I have to say. That shows class and style.

I don't know what it is, but there seems to be a whole genre of physicists jumping into a field their unfamiliar with and trying to crunch numbers to prove the experts wrong without ever bothering to learn the fundamentals of the new field.

I disagree. We (sort-of) have your a) and b) and capitalism now but the implication part "what you get" is not obvious.

Do you have sources that show a consensus on this implication ?

If you give people property and trade they will trade in the hopes of growing their property. So it might be part of the official definition or not, it's what will happen every time you start a system with these rules.

> we're very far away from [needing, wanting, or being able to afford growth]

Far away from wanting? agreed. Far away from being able to afford faking it? I think you are not watching politics, but the risk level of reaching that end are increasing yearly.

> They deny the premise that capitalism is just freedom. But... where is the force being applied (by whom and to whom) to make capitalism

You just mentioned two rules. private property and freedom to trade. These must be enforced by law, police and military if necessary.

If you don't enforce property rights people will grab whatever they can carry. You wouldn't like that friends visiting your home for a football match and one leaving with the tv and another leaving with the couch (and another leaving with your girlfriend).

Being born in a socialist country I can tell you that the average person in such a country doesn't feel a force applied to them either. The same way you feel that capitalism is "just the way things are" such person would feel socialism is "just the way things are". The problem is that both sides have a distorted view about the other side.

For instance when I hear the word capitalism I don't think "freedom to do what I would naturally do", I think "strongre people making weaker people's life harder, monopolies, exploiting and lying to each other". When I hear the word "socialism" I think "helping each other, giving up a few unhealthy personal desires to give everybody an equal chance". The same way you feel police stopping people from stealing being a naturally good thing I feel police stopping people from their greed and selfishness being a good and natural thing. Someone who hurts the community by putting himself first needs to be punished. That's very natural thinking to me and nobody needs to force me to think that way.

If we are in a world of rising interest rates, it suggests upward cost pressure downstream of companies who exploited the low interest rate environment to load up on cheap debt.

Hypothesis would be companies and sectors with highest debt to income ratio would be most vulnerable and point us in the right direction. A quick google search showed utilities were indeed the ones with highest debt ratios, followed by "industrials."

If this were all true, might also suggest that merely equity financed companies could exploit that structural differential.

It's part of the reason I am still a tesla/musk believer, as I think this is his underlying play.

I'm imagining things like, "3d print me a small refinery," or "blimp-drop me a sawmill in shipping containers," or "rent me a seed mill on a flatbed," "build me a foldable certified meat processing plant," or "create a new tractor platform with an open multi-tool interface." etc.

My parents used to apply a same kind of solution for our own house. It's called 'turn of the lights when you leave a room'.

Enron ring a bell? Granted that wasn't actual innovation but you can't deny them a certain amount of creativity in the bookkeeping department.

Some are, already, executing on some form of this strategy.

My residential electricity supplier sent around letters last year to every account offering what amounted to "water pipe insurance". Mind you, this was the "electric company", offering "water pipe insurance" but the deal was that for some "low monthly payment" amount (I forget now how much) they would cover the costs of fixing a leak between the locality water meter (installed street-side) and the pipe that entered through the wall into my basement to supply the house.

The letter was full of scary sounding things that /might/ happen, and of the huge sums of money a leak might cost to repair, should one occur (this figure I have some recollection of, their claim was that it was on the order of $3,000-$4,000 to repair).

I read it over, scoffed at most of their scare tactics, and recycle binned the letter. But I did wonder just how many folks would ultimately sign up for the "insurance".

Are they a cooperative who has the interests of its own users above profit? Are they receiving money from another entity to do it? Were they forced to do so in order to maintain their monopoly?

And if it's none of the above - it's just good people - then that's f'ing awesome. I wish more were like that.

But for a bigger place the setup is costly: you either need a couple units or a proper design, otherwise you'll end up with a only a portion of your home warm. Plus, AC units are still significantly more expensive than just a "trash-burner" type of furnace that is the most popular.

Electric heat should be the cheapest form. That would end a lot of air pollution that is a very serious health risk in Poland.

Here in the Bay Area my costs are approximately 30c kWh so energy saving are quickly and easily net positive.

I wouldn't save a lot of money doing those things, but I'll save a ton of money getting solar panels.

But actually an internal combustion engine is ludicrously inefficient, whereas an electric motor is not. So shifting to electricity saves loads of power, that's not why we're doing it, but it's why their intuition ends up wrong.

You could argue that those factors, whether they're outsourcing of heavy industry or whatever, will prove stronger than the dramatic decreases in energy prices brought by photovoltaics. But that doesn't seem very likely, because photovoltaics are dropping in price about 30% per year, while whatever forces are limiting demand for electrical energy seem to have been just sufficient to keep energy demand increase down to 1% during 2006-2016 (the last ten years on the graph), almost exactly counterbalancing a 14% increase in GDP over the same period. That is, they're pushing down electrical energy demand by about 1.3% per year. So if the long-term price elasticity of energy demand is somewhere in the neighborhood of -0.8, which seems like a reasonable guess based on a cursory glance at the econometrics research, we would expect energy demand to grow by about 25% per year once photovoltaics are the marginal source of energy — or 24% if whatever mysterious anti-growth figures this article is about continue to operate in the same way.

Now, you could argue that maybe the elasticity isn't -0.8. Maybe it's -0.2 or -1.2. But to suppose that a sudden and sustained 30% yearly drop in the price of energy would be wholly counterbalanced by whatever has held energy consumption constant over the last ten years requires the wholly implausible assumption that the absolute value of the elasticity is smaller than about 0.05.

You might argue that photovoltaic modules aren't really dropping in prices 30% per year. The old page at https://www.solarserver.com/service/pvx-spot-market-price-in... shows the historical price history from PVXchange from May 2009 (€2.62/Wp in Europe) to May 2017 (€0.45/Wp in Europe), and PVXchange's current prices http://www.pvxchange.com/priceindex/default.aspx?template_id... are €0.37/Wp in Europe in the "mainstream" division. Averaged over 8 years and 7 months, that's a 1.88% price drop per month, which works out to 20% per year (not 23%, as you might think). But much of that 20% was in the 2013–2015 price plateau, during which time the prices remained almost unchanged, and which seems to be over. Now, shipping volumes are way up, and so we should move much more rapidly down the learning curve. So 30% is, if not an open-and-shut prediction, at least a plausible one.

We aren't seeing these demand-stimulation effects yet because, although photovoltaics' growth and price reduction is exponential and rapid, they're still only a tiny percentage of the overall marketed energy supply, and we don't have grid-scale storage online yet. That's why it will take until the early 2020s for these effects to become dominant — maybe even later in the US.

Consider an immediate 50% improvement in fuel efficiency, but with a 10% increase in usage per year. In less than a decade, you are back to where you started, but now the chances of another 50% improvement in efficiency are very low. Worse, the lower cost due to the efficiency improvement may have actually accelerated consumption.

The question is whether the "kick the can" approach will eventually leave you in a position where you can't recover, and whether your efforts would have been better spent on solving the underlying problem of system that depends on limitless growth and the externalization of environmental damage. Unfortunately, it's hard to come up with a "real" solution that doesn't involve massive cutbacks in consumption and/or hard caps on human population.

In my case, in an oft-forgot part of the country, 13% of my power is generated by solar and wind, 20%+ when you count in nuclear, too.

That there will be an expansion (renewable or otherwise) to meet the coming demand is beyond question. The current power excess is a temporary situation. The eventual (and IMO inevitable) conversion of petroleum-based transportation to electric will require more capacity than our grid can presently provide.

https://yearbook.enerdata.net/electricity/electricity-domest...

And even if you can't meaningfully cut your usage any further, inflating utility prices would still make a local solar installation more attractive.

With TV this will end badly unless something drastically changes because the rising prices will drive more and more people to cut-the-cord. I suspect as soon as you can get major sporting events in a convenient form outside of having a cable subscription it'll be game over.

Utilities have significant fixed costs. These are the capex costs of building plants and power infrastructure. These don't get any cheaper if consumers consume less power. The most likely response is simply to raise prices.

Solar in particular has been on a rapid decline in recent years. Utility price increases will only hasten adoption.

Here's another thing to consider: electricity tends to be more expensive during the day and cheaper at night. This is because industrial and commercial usage tends to be at peak during the day. Utilities typically need to maintain a base load on their infrastructure to cover peak usage so any usage at night is "free" for them essentially, hence the subsidized cost.

But consider this: in addition to residential usage of solar another response you'll see with increased utility prices is people installing batteries. This will not only store excess solar power but will allow customers to store power at night. Batteries too continue to get cheaper. I imagine that net this won't be good news for utilites either.

The logic behind this statement is mindblowing. It's like saying that because I want a ferrari, let's just assume one will appear.

For what it's worth, Mr market has already priced in a significant fall in profits.

Trying to raise prices on commercial and industrial users just makes alternatives that much more attractive. There's a similar effect with residential hot water and space heating, both huge components of residential usage.

Edit: Better in-depth look: https://www.theglobeandmail.com/news/national/why-does-elect...

Caesar's wasn't obligated to pay, but they chose to to prevent the utility from passing that cost on to the residential customers.

It's worth noting that generation occurs in different groups based on how expensive it is to increase or lower output, which is necessary constantly because usage fluctuates cyclically:

1. Hydroelectric is cheapest to scale up and down, so there's incentive to inflate prices and wait for high-usage times, especially when water levels are low.

2. Fossil fuels are mid-price to scale up and down, so there's some incentives for inflating prices, but fuel prices are also a factor.

3. Nuclear is extremely expensive to scale up and down, so there's incentive to try to always be the lowest price. Turning off and on is sometimes more expensive than selling generation at a loss.

4. Wind/solar are cheap to scale up/down, but are weather/time dependent and therefore unpredictable and uncontrollable to an extent. You can scale down cheaply by dumping energy into the ground, but you may not be able to scale up at any cost.

It should be clear from this how important hydroelectric is to our power system's pricing. Nuclear/wind/solar often result in the most competitive generation costs, but if hydroelectric goes up in cost, nuclear would have to scale generation up and down more often at great cost. When wind/sun are good, there's competition for flexibility, but when they aren't, hydroelectric controls the price of adjusting generation. So I think that if companies adjust their numbers up to maintain profits, it will mostly be hydroelectric generation.

I don't understand the effects of wind/solar on the market as well, because they weren't as large a sector when I worked at an RTO. However, I am under the impression that efficient energy storage would have a large impact on allowing wind/solar to compete with hydroelectric on ability to scale up/down. And this is urgent, because the inflated cost of hydroelectric's scaling is capped at the cost of fossil-fuel scaling, which is only going up in price in the long run.