The International Energy Agency (IEA) this week at a Group of 8 (G8) Energy Ministers’ Meeting in Rome announced its projections that world energy demand would fall by 3.5% in 2009. This marks the first time since 1945, that worldwide electricity demand will be lower than the previous year. Experts attribute this drop to the global recession that has significantly cut manufacturing demand as most of the drop is predicted to occur within the industrial sector.
When considering all the energy related events in the past 65 years, its still quite astounding. Perhaps this is the surest sign that the global economy has become more integrated than ever. Any subsequent economic recovery should parallel a rise in energy demand. For now the lower prices will aide that recovery with lower operating expenses for worldwide industry.
Power Smart Pricing participants have been able to see this trend with lower wholesale market prices for electricity. Unseasonably cool summer temperatures in the upper Midwest along with lower worldwide demand have attributed to lower than normal electricity prices throughout the first half of 2009.
As CNT Energy has carefully examined, Power Smart Pricing participants respond with lower electricity usage when prices rise. So as demand is lower, prices follow, but it should result in more usage, which will help the global recovery. When the price is not directly tied to demand, customers will continue to limit their usage as the price of energy rises as compared to the money coming in. The balance found within a functioning electricity market proves the value of real time pricing.
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