EN18 Electricity Consumption

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The trend in final electricity consumption by sector monitors progress made in reducing electricity consumption. The associated environmental impacts, however, depend on both the amount of electricity consumption and the way the electricity is generated (in particular fuel mix, efficiency and the use of abatement technologies).

Final electricity consumption grew across the EU-25 at an average annual rate of 1.8 % between 1990 and 2004 (overall increase: 22.6 %). This rate of increase was only slightly less than the average GDP growth rate over the same period, showing an apparent strong correlation between electricity consumption and economic growth. However, the increases in electricity consumption resulted not only from a growing economy, but also from an increasing share of electricity in final energy consumption, rising from 17.4 % in 1990 to 20.0 % in 2004. The attractiveness of electricity is due to its flexibility of use and the importance placed by consumers on the variety of energy services it provides. Furthermore, influenced by the liberalisation of the power market, electricity prices decreased considerably between 1990 and 2006.

For the EU-25 as a whole, growth in electricity consumption was particularly strong in the service sector, followed by households. The main reasons for increased electricity consumption in the service sector were the sustained growth of this sector throughout the EU, the increased use of electrical appliances (air conditioning, lighting, IT equipment, etc.) and the advent of new electrical devices. In the household sector, rising incomes, higher living standards and the trend towards smaller households led to more and larger dwellings and a growing demand for electrical appliances. In 2004 total household final energy consumption was 765 TWh across a total of around 150 million households in the EU.

There have been continued technical improvements in the efficiency of large electrical appliances; a decrease in average specific consumption of 1.5 % per year in the case of refrigerators, freezers, washing machines, dishwashers, TVs and dryers. However, these improvements have been offset by increases in the use, numbers and size of large appliances as well as a growing number of smaller appliances such as videos and computers (Enerdata et al, 2003). Also of concern is the growing level of electricity consumption from appliances in "stand-by mode", which are estimated to amount to approximately 5-10 % of EU household energy consumption (JRC, 2003). In particular, with 150 million set top boxes for digital and broadband entertainment across the EU, poor power management could push the annual power requirement in 2010 by around 60TWh (close to the total electricity consumption of Denmark) (JRC 2004).

Overall, prices for electricity for households in the EU-15 have fallen by 12 % from 1990 to 2006 (in constant prices; see EN31), primarily as a consequence of market liberalisation. Oil and gas price increases and the effect of the EU emissions trading scheme have started to push prices up again, with a 5% rise in the EU 25 between 2005 and 2006. The decreases over the last decade may have discouraged energy conservation and investments in energy efficiency, although the more recent price rises may act to reverse this situation. By comparison, in many of the new EU-10 Member States household electricity prices rose substantially as price controls and subsidies were removed, although real wages (Galgoczi, 2001) also increased, which in part helped to mitigate much of the restraining effect of such price rises on electricity consumption.

In the industry sector electricity consumption grew, but at a slower rate compared with the services and household sectors. In the EU-15 this was partly because of an extensive switch towards electrification in industrial processes that had already occurred in the late 1980s and because in the 1990s the industry sector, unlike all other sectors, only increased its energy consumption slightly (see EN16). Industry electricity consumption in the new Member States fell sharply during the early 1990s during the process of economic restructuring, although some growth has occurred more recently. Restructuring of the industry sector involved closing old and energy intensive plants that were uneconomic in a competitive market, the renewal of technologies and a shift to less energy intensive industries.

The transport sector is only responsible for around 2.7% of total electricity consumption in EU-25 and the increase in the 1990s can be attributed to growing consumption in the EU-15, due to increased electrification of Europe's railways (especially in France and the United Kingdom). The trend for the new Member States was opposite to that of EU-15, with a gradual decrease in electricity consumed for transport purposes due to lower usage of trains and other domestic public transport and an increase in car and air transport.

All countries in EU-25 saw increased electricity consumption over the period from 1990 to 2004, except for Latvia, Lithuania, Estonia, Hungary, Bulgaria and Romania. The growth rate of electricity consumption varied greatly by country, ranging from less than 1 % per year in the Czech Republic, Denmark, Poland, Norway, Croatia, Hungary, Slovakia and Sweden to over 5 % in Malta, Cyprus and Iceland. The decrease or low growth in electricity consumption in the new Member States was as a result of economic restructuring in the1990s. The high rates of increase in Malta, Cyprus and Iceland are explained by their low per capita electricity consumption in 1990 and their increasing living standards over the period. Electricity consumption per capita also varies greatly between countries, with the lowest per capita consumption occurring in some new Member States of central and eastern Europe and southern European countries (Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Portugal). Although the use of air conditioning in southern European countries contributes to a large increase in electricity consumption during the summer months, the highest consumption per capita was in the most northerly countries, Norway, Iceland, Sweden and Finland, where electrical heating based on low cost electricity produced by hydropower meets a large part of the overall heating requirements.

Electricity consumption is expected to continue increasing into the future. Baseline projections for the EU-25 indicate that electricity consumption will grow on average by 2.0 % per year to 2010, but the rate of growth is expected to slow slightly thereafter to 2030, because of higher fossil fuel prices, in particular natural gas, which will carry through into electricity prices.

Growth is expected to continue to be particularly rapid in the services sector, due to increasing levels of energy service demand. In the new Member States, predicted increases in real incomes and the increased use of electrical appliances are expected to result in electricity consumption also growing strongly in households. Industry electricity consumption is also expected to grow but at a slower rate than for services and households, reflecting the slow overall growth in industry energy consumption due to the shift away from energy-intensive industry, as well as the shift towards a more service-sector oriented economy. The transport sector's electricity consumption is expected to grow only slightly (due to electrification of trains and some use of electric cars).

The Low Carbon Energy Pathway (LCEP) scenario variant of the projections has previously shown a that a slightly slower rate of growth in electricity consumption could be achieved due primarily to a more rapid increase in end-use efficiency. This is the result of the assumed introduction of a carbon permit price that rises up to EUR 65/tCO2 in this scenario. The most important relative decreases in electricity consumption, compared to the baseline scenario, occur in the service sector out to 2030 and also in the household sector from 2020 to 2030, indicating an important saving potential. The increasing carbon permit price carries through into a rising price for electricity and stimulates energy savings and efficiency improvements in electricity end-use consumption, such as those for appliances, which were not previously cost-effective under the baseline scenario.