Issue link: https://cp.revolio.com/i/860140
THE DATA CENTER JOURNAL | 23 www.datacenterjournal.com totAl energy consuMption: still stAgnAnt A major concern among execu- tives, politicians and other parties is energy consumption—particularly, its geopolitical and environmental impact. One might easily assume energy use in the U.S. is rising dra- matically and unsustainably. But EIA numbers tell a different story. Ac- cording to the agency, total primary energy consumption rose steadily aer World War II, dipping temporarily around 1980 aer peaking at roughly 81 quadrillion BTUs (that's 81x1015 BTUs, or 81 thousand million million BTUs). Growth resumed in the mid- 1980s but curiously leveled off in the 2000s at just about 100 quadrillion BTUs. Following the Great Recession, total consumption declined, keeping the relative plateau just under 100 quadrillion BTUs. It was about 97 quadrillion BTUs in 2016. Since total consumption was about 99 quadrillion BTUs in 2000, that means the U.S. has entered a nearly 20-year span of level—if not slightly declining—energy consump- tion. e years 2015 and 2016 were about flat at just under 97.5 quadril- lion BTUs. e question, then, is what's driving this plateau of energy consumption? Certainly the U.S. economy is energy intensive, particu- larly with the heavy focus on IT and automation technologies. So why isn't consumption rising? One possibility is greater efficien- cy. Certainly, greater efficiency puts nominal downward pressure on con- sumption—at least initially. But one counterargument is the Jevons para- dox: the observation that the more efficiently a resource is consumed, the greater the demand for that resource. Insofar as this paradox applies, greater efficiency should increase consump- tion rather than decrease it. If we consider per-capita energy use on the basis of EIA data, then consumption fell from 2000 to 2016 by about 14% for a compound annual growth rate (CAGR) of just under –1%. Such a decline seems reasonably attributable to greater efficiency, but only if the Jevons paradox doesn't apply. A potentially better explanation is a slowing economy despite headline benchmark numbers. Although the U.S. gross domestic product rose 33% between 2000 and 2016 (for a slightly less than 2% CAGR), M2 money velocity fell at about the same average rate over that time. (According to the Federal Reserve Bank of St. Louis, "If the velocity of money is increasing, then more transactions are occurring between individuals in an economy." So, declining money velocity would seem to mean less economic activity in terms of that currency.) Moreover, the civilian labor-force participation rate fell nearly 6% during the same period. Yet the headline unemploy- ment rate for 2016 was only about 1% higher than in 2000, hovering between 4% and 5%. Interpreting all these numbers is difficult. But if we look at the more concrete statistics—absolute and per- capita energy consumption, actual number of people in the labor force, and how many economic transac- tions are occurring in the economy— the picture seems to be a slowing economy. On the other hand, greater efficiency, higher-quality products at a similar price (e.g., faster but less expensive computers) and similar quality-of-life improvements could explain some of this apparent decline. In any event, the chief takeaway is that energy consumption is flat, whatever the cause. cost of energy Unsurprisingly, given the lack of growth in energy consumption, prices for electricity (the form of energy most relevant to data centers) have been similarly flat. e dynamics differ, though. Whereas consumption flattened and even declined slightly aer 2000, the average electricity price for industrial use moved from a flat or mildly down period between 1982 and 2000 to a period of fast growth. at growth only stopped with the arrival of the Great Recession, at which point prices leveled off again. e most recent trend of rising industrial electricity prices—perhaps coincidentally—corresponds with the period between the dot-com bust and the Great Recession. e higher prices naturally decrease demand, but only since about 2008 have both demand and price remained roughly constant. To be fair, the consumption numbers above are for all sectors (i.e., commer- cial, industrial, residential and so on)