Projecting the Demand for Electricity

The demand for electricity depends on the demand throughout the economy for electricity-using services. Forecasts of electricity consumption are typically based on a few measures of aggregate economic activity, population growth, energy policy changes, and the stock of electricity-using equipment. This report describes the economic factors that should be accounted for in a forecast. It summarizes the forecast values, and the models used to derive them, that have been obtained from major national and regional forecasts. The authors analyze one leading forecasting model--the Regionalized Electricity Model--in detail. They then modify the model to incorporate new equations representing the demand for electricity and use them to generate new forecasts for both the United States and one geographic region. Finally, they investigate the degree of uncertainty associated with electricity load forecasts.