Electricity Use in Manufacturing

Abstract

For the past few years, manufacturing has accounted for around 22% of the US gross national product and has consumed about 650 billion kWh per year, or around 30% of the US total (Figure 1) (1, 2). Because of its importance in the economy and its large share of electricity consumption, trends in man­ ufacturing electricity use have important implications for energy sector plan­ ning and policy. Most of the United States now has surplus generating capacity, but utilities will eventually need to replace existing plants and add new ones, when demand catches up with excess supply. Manufacturing demand forms a large enough share of electricity demand that its growth rate will significantly influence the date new capacity is needed. The rate of growth in electricity demand will also determine the type of new capacity ordered; slow or erratic growth will push utilities toward smaller and more modular plants, and faster, steadier growth will push utilities toward larger plants (3). The capacity expansion question is therefore linked to forecasts of man­ ufacturing electricity consumption. A related question is whether there is a preferred level of electricity consumption. Several authors (4-7) have sug­ gested that productivity growth, and therefore economic growth, may require increased use of electricity in manufacturing. If this is true, government policies to encourage or facilitate greater electricity use might be appropriate.