U.S. electricity production increases to record level in 2018

U.S. net electricity generation rose 4% in 2018, reaching a record high of 4.178 billion megawatt hours, according to the U.S. Energy Information Administration (EIA). Last year was the first time total utility-scale generation exceeded the pre-recession peak of 4.157 billion megawatt hours set in 2007.

Weather is the primary driver of fluctuations in electricity demand, which reached record levels in the residential and commercial sectors in 2018, and the rise in demand last year was largely a result of cold winters and a hot summer. Cooling degree days, which indicates warm weather and air conditioning demand, hit a record high in 2018. Heating degree days, which indicates cold weather and space heating demand, were higher in 2018 than in recent years. The primary fuel for air conditioning is electricity, but a variety of fuels are used for space heating. Cooling degree days have a greater impact on electricity generation than heating degree days.

Retail sales of electricity reached record highs in the residential and commercial sectors in 2018. About 87% of U.S. homes use air conditioning for cooling in the summer, and about 35% of the homes use electricity as the primary heating source in the winter. Retail electricity sales rose 6% in 2018, from 2017, as a result of the hot summer and cold winter months of 2018.

Over the same period, electricity sales in the commercial sector rose 2%. Electricity usage has been flat in the industrial sector in recent years, but retail sales of electricity in the sector declined 3% in 2018, from 2017. The transportation sector accounts for less than 1% of the remaining sales. Retail sales don’t include electricity generated by small-scale solar panel systems installed on residential rooftops. Electricity generated by these systems has risen, but the amount was not enough to meet increased demand for electricity in 2018. Customer-sited solar systems produced about 30 million megawatt hours of electricity, up from less than 1 million megawatt hours in 2007.

Electricity consumption is expected to rise over the long term but at a slower pace than in recent decades, according to the EIA. Economic and population growth drive rising electricity demand, and the number of households are expected to increase 0.7% annually and commercial floor space is projected to rise 1% per year, between 2018 and 2050. Electricity sales to the residential and commercial sectors are expected to rise 0.4% and 0.5%, respectively, as improvements in technology and energy efficiency standards slow the rise in electricity consumption.