Energy Demand Drivers

Abstract

Countries with similar level of economic development and energy prices may show significant differences as regards energy/cap and dynamics of energy demand in relation to GDP and prices. Climate, endowment in natural resources and geography are obviously discriminating factors. Policies and cultural habits also, through technology choices and social behaviour orientations. This chapter helps to better understand which are the actual drivers of energy demand and how they play. It proposes first an overview of the issue: the actual needs behind energy demand, the specific role of actors and social forces in the energy dynamics and its timing and so on. It then discusses in greater depth the critical aspects of energy demand in the three consuming macro-sectors: industry, transport and buildings. Finally, the determinants of increasing electrification are discussed.

1 Introduction

Energy demand is usually associated with economic development (Gross Domestic Product per capita—GDP/cap) and energy prices. Climate, endowment in natural resources and geography explain differences in energy/cap between countries with similar GDP/cap and energy prices and differences in the dynamics of energy demand in relation to GDP. To better understand the drivers of energy demand and how they are connected to GDP and energy prices, this chapter first proposes an overview of the issue and then discusses in greater depth the critical aspects of energy demand in the three consuming macro-sectors: industry, transport and buildings. Finally, the determinants of increasing electrification are discussed.¹

2 Assessing Energy Demand Drivers: Overview

2.1 Energy Demand: What Is Behind?

Energy “demand” refers to the energy quantities that people are willing to purchase (or to pick-up for free in nature). In the countries with supply availability constraints, potential demand may be higher than actual consumption. In this case, energy consumption can increase for the sole reason that more energy is made available (e.g. through electrification). Energy demand results from the fulfilment of energy needs in a given energy prices context. But no one “needs” energy for itself, rather for the services that energy provides. The same service can be provided by different energy quantities, depending on equipment used: moving over one kilometre with a bicycle or a car does not require the same amount of energy. Therefore, the dynamics of the “need” for energy services can be different from that of the energy “demand,” just because technology changes. To sum up, the drivers of energy demand are, first, the socio-economic drivers of the needs for energy services,² and, second, the technology drivers that convert these needs into energy demand.

This applies to final energy consumers, industries, buildings, transport modes, agriculture, and to standardized energy products elaborated and distributed by the energy sector (refineries, power plants, etc.). From a statistical viewpoint, this is captured by the “final energy consumption”³ metric. In order to elaborate and distribute these energy products, the energy sector itself consumes various primary energy resources (crude oil, natural gas, uranium, wind power, solar power, hydropower, etc.); imports and exports of all kinds of standardized energy products; and uses/loses part of these products in the transformation/distribution process (electricity transport/distribution losses for instance). Statistically, this reality is captured by the “primary energy consumption” metric: consumption of primary resources plus imports minus exports. The more important the losses in the energy transformation/distribution sector, the bigger the gap between primary and final energy consumption. One of the main determinants of the difference between primary and final energy consumption is the share of electricity in final energy demand, and how this electricity is generated: thermal power plants burning fossil fuels or uranium experience high transformation losses, ranging from 50% to 70% of the primary energy input. Therefore, the drivers of primary energy demand include the composition of the electricity generation mix. In this chapter, we focus mostly on final energy demand drivers, and give a brief overview of the contribution of the electricity sector to primary energy demand.

2.2 Time Issues

Energy demand drivers do not change over time at the same speed, and their relative contribution to the change of energy demand is very different whether we look at the short term (up to two years), the medium term (two to five years), the long term (up to 30 years) or the very long term beyond 30 years.

In the short term, all the drivers related to social change, structural change of the economy and technology change are almost constant, and their contribution to energy demand variations is negligible. On the contrary, cyclic climatic conditions, energy prices and GDP may change significantly, and cause significant variations in energy demand.

In the medium term, social changes remain almost negligible as regards energy demand. Same for average climatic conditions. Economic structures and the technology heritage are likely to change a little, but their impact on energy demand remains minor compared to that of economic growth (aggregate demand) and prices.

However, in the long term, everything is likely to change. Changes in average climatic conditions remain almost negligible compared to other forces affecting energy demand. Social changes may become significant, in particular in emerging countries. Changes in economic structures and technology background can be more and more dramatic as time flows, with increasingly severe impacts on energy demand, whatever the country. These impacts can become more important than those directly driven by economic growth or relative prices after 15 to 20 years.

In the very long term, changes in average climatic conditions may become not negligible, in particular if global warming keeps worsening. Progressively, social changes become the first driving force of energy demand, either directly (changes in needs) or through their impact on the overall economy. Technology change remains a key driving force, but is increasingly difficult to forecast, since it results at least partly from scientific discoveries in the future; only the part of today’s technology heritage (buildings, transport infrastructures, machinery, etc.) that will still be there in the distant future, and new technologies that can emerge from today’s scientific knowledge can be properly considered (Château and Alii 2002).

2.3 Role of Main Actors

Apart from those related to the physical and macro-economic environment, all the drivers of energy demand change over time according to decisions made by final consumers, either in their budget allocation or in their investment choices. These decisions depend obviously on the overall physical and macro-economic context, but also on incentives, regulations and equipment/technology offer, which frame the possibilities of choice.

Incentives are of two natures: psychological and economic. Psychological incentives are highly related to the cultural environment, and driven by two main forces: imitation and citizenship. Imitation is one of the strongest engines of consumerism, responsible for the spread of new consumer goods and services. Citizenship expresses the adequation, in anyone’s decisions, to commonly shared global objectives (like reducing CO₂ emissions for instance) proposed by various actors (public authorities, NGOs, etc.). Economic incentives include taxes, subventions and tax reductions. They contribute to change the relative prices of equipment goods and energy carriers in order to orient the investment decisions of the final consumers.

Norms and regulations frame the technology background of a country and the technical characteristics of each particular piece of equipment (in particular its energy yield). Investment decisions made by final consumers are therefore conditioned by them. These are elaborated primarily at the national level, but increasingly also at the international level: European Union, OECD, UN.

The technology/equipment offer is in the hands of industrial producers. Because of international trade, scale economies in production and globalization, there has been a movement towards the harmonization of this offer worldwide, accompanied by concentration in the hands of few very large industrial producers. This means that this offer may become less and less dependent on the specific economic and industrial conditions of each individual country. The dynamics of the equipment/technology offer is driven first by RD & D, which is concentrated in a limited number of countries worldwide (USA, China, EU, etc.) and dominated by the political, socio-economic and industrial context and priorities of these few countries.

2.4 Social Forces and Behaviour

Individual needs drive directly the energy demand of households and workers in buildings, offices and factories; but also, indirectly, the energy demand for producing, transporting and delivering the goods and services required to satisfy these needs.

Social forces drive demographic changes within countries. Besides overall population growth (or decline), in emerging countries migration from traditional rural to urban areas also has an impact on energy demand.

Income distribution and behaviour are the main driving forces of change in the intensity of needs. All behavioural drivers are likely to change over time, because of global changes in cultural habits, or in the physical environment, or finally in the sensitivity to environmental or social issues (citizenship).

3 Energy Demand Drivers in Industry

Industry refers to the production of manufactured goods. From a final energy demand viewpoint, industrial energy demand does not include the energy transformation sector (from primary to final) nor small-scale producers, which are included in the commercial sector; it is limited to production facilities and does not include energy used for transporting products or for office buildings outside the factory.

3.1 Outlook of Energy Demand in Industry

At world level, industry consumes around 3100 Mtoe⁴ (2018), that is, 31% of total final energy consumption. Industrial energy demand has roughly doubled over the last 50 years, and increased by 50% since 2000 (see Fig. 26.1).

Fig. 26.1

World energy consumption of industry, by energy carrier, Mtoe. (Source: Own elaboration on www.enerdata.net)

Coal and lignite remain the main energy sources used in industry. Their share, which slowly decreased from 1971 to 2000 (from 28% down to 26%), has dramatically increased since then (reaching 33% in 2018). At the opposite extreme, the share of oil has fallen continuously, from 27% in 1971, down to 16% in 2000 and 10% in 2018. That of natural gas has kept increasing rather slowly, from 19% in 1971 to 21% in 2000 and 22% in 2020. Electricity is obviously the winner in the evolution of the energy mix of industry: 14% of the total consumption in 1971, 23% in 2000 and 26% in 2018. Such electrification of energy consumption in industry is mostly the result of its structural evolution towards higher value-added activities.

Altogether, the steel and the non-metallic minerals industries, which are very big coal consumers, account for 35% of the total energy consumption of world industry (2017), and this share keeps increasing since 1990 (28% in 1990, 30% in 2000). This explains the high and increasing coal share in the energy mix of the industrial sector. Together with the chemical industry, whose share is rather constant around at 16%, these energy-intensive industries account in 2017 for more than half of total energy consumption (51%). In the remaining 49%, mining and construction only account for 4%.

3.2 Overview of Energy Demand Drivers in Industry

The energy intensity (EI) of Gross Domestic Product (energy consumption per unit of value-added) is normally taken to capture the technology driver of the energy demand. From a purely technological viewpoint, it is final energy consumption per unit of physical output that drives energy demand. For thermal end-uses, this means the specific useful energy consumption per unit of physical output and the average performance of the energy products. Changes in specific consumption indeed contribute to changes in EI. But, because EI is measured with respect to the value of production rather than to its physical measure, a change in EI can also result from changes in relative prices, independently of technology. Thus, assessing technology drivers through EI can sometimes be misleading.

The other technology driver, the overall performance of energy products, is captured by the ratio between useful energy and final energy. This depends on the contribution of the various energy products to useful energy (energy mix) and their relative yields.

This brief outlook suggests separating the discussion of energy-intensive industries, for which the drivers can be related directly to physical outputs, from general manufacturing.

3.3 Insights in Energy-Intensive Industries

Energy-intensive industries (EII) are mostly engaged in primary transformation and their output are intermediate products. They are characterized by high demand of process energy, frequently low value-added per ton of output and high concentration of production in relatively few, large plants. Worldwide, EII account for the bulk of coal, lignite and petroleum coke consumed in industry (77% of coal and lignite, 100% of petroleum coke). The most important energy-intensive industries are crude steel, cement and lime, primary aluminium and other non-ferrous metals, paper and pulp, glass, petrochemicals, chlorine and nitrogen production. See Fig. 26.2.

Fig. 26.2

Energy-intensive industries in final energy demand, world. (Source: Own elaboration on www.enerdata.net)

At the level of each individual factory, physical output determines directly one part of energy demand, and production capacity drives the other part, related to the management of the factory. For instance, a glass factory must keep the furnaces at an appropriate temperature all the time, whatever the quantity of glass actually produced. The lower the capacity utilization of the factory, the higher the energy requirement per ton of output.

Intermediate products are relatively homogeneous as they must fit well-established parameters. It is therefore possible to aggregate physical production and load factors as energy demand drivers in a fairly meaningful way. Productions and prices of energy-intensive products in each country may be influenced by global competition, partly disconnecting value-added from physical output, and national production from national aggregate demand; hence the necessity to consider physical outputs.

For many products of EII, a limited number of production processes are available and used. In some cases, the production process requires a particular energy product also due to its chemical composition: for example coke in blast furnaces, naphtha in steam-cracking or petroleum coke in clinker furnaces.

The unit energy consumption (UEC) can change over time because of changes in the process energy performance or changes in the EII structure. In time, less efficient plants are replaced by more efficient ones,⁵ driving a change in the average UEC of the whole EII. This structural movement is mostly driven by the obsolescence of existing plants and the speed of production growth. The level of obsolescence is the result of the industrial development history of the country. The speed of growth, as a driving force of UEC, shows interdependence between economic and technology drivers: competitiveness, which is a condition for production increase, is driven by energy performance (decrease in UEC), while production increase drives the change in UEC. This is illustrated in Fig. 26.3 for the steel industry.⁶

Fig. 26.3

Specific energy consumption of the steel industry according to time and processes. (Source: Own elaboration on www.enerdata.net)

3.4 Insights in Other Sub-sectors

Physical outputs can still be aggregated for well-focussed homogeneous sub-sectors (automobiles, sugar, etc.). But in most cases, the remaining sub-sectors are rather heterogeneous, producing a large variety of different products, with very different energy demand per product. Physical outputs can no longer be aggregated, and energy demand must be assessed through value added and energy intensity (EI). Since they aggregate many different productions with rather different EIs, the overall EI of the sub-sector can change only because the relative weight of the various products changes, without any relation with technology.

In these sub-sectors, the share of energy in production costs is generally rather small. This explains why changes in energy prices have limited direct consequences on their energy demand.

3.5 Some Critical Issues

Globalization affects industrial production levels in all countries, by disconnecting industrial production from internal demand, also thanks to the greatly reduced cost of long-distance sea transport. Labour-intensive industries tend to locate where labour force is cheap, energy-intensive industries where energy is cheap and high value-added industries where highly skilled labour is available.

The industrial infrastructure heritage, in particular in energy-intensive industries, weighs heavily on energy demand in industry. When the investment cost in capacity development or in capacity renewal is very large, requiring a long period of time to be paid back, it is convenient to use existing plants as much as possible, in particular when they have already been amortized. This weakens significantly the impact of energy prices on new technology uptake.

At the same time, globalization increases competition worldwide, and accelerates the obsolescence of existing processes in operating factories, in particular in countries with higher production costs.

Energy efficiency and environment policies set up regulatory frameworks, incentives and economic instruments that frame the decisions of industrial companies, either to commit themselves to required standards and regulation, or to improve their competitiveness. In general terms, this drives downwards the energy intensity of all industries.

3.6 National Versus Global Vision of Energy Demand in Industry/Regional Issues

3.6.1 How Energy Consumption for Industry is Distributed Among World Regions?

Altogether, the industrialized countries of Europe, North America and CIS, which accounted for the bulk of the world energy consumption in the early 1970s (72% in 1971), now account for only 28% (2018). At the opposite extreme, the share of China more than doubled from 1971 to 2000 (from 8% to 17%), and again from 2000 to 2018 (up to 36%). The Asian continent accounts today for 56% of the world energy consumption in industry. This evolution is due first to the rapid economic growth of emerging countries (so-called BRICs), in particular in China, since the early 1980s; and, second, to the delocalization of many industries from the Western world to these emerging countries. See Fig. 26.4.

Fig. 26.4

World energy consumption of industry by regions, Mtoe. (Source: Own elaboration on www.enerdata.net)

3.6.2 Energy Versus Industrial GDP and Share of Energy-Intensive Industries

When comparing the energy intensity of industry across regions/countries and time, the first observation is that the energy intensity of industry is globally inversely proportional to GDP/cap: the higher the GDP/cap, the lower the energy intensity of industry: this is true almost everywhere except in Middle East, where the petrochemical industry, which is highly energy intensive, developed rapidly during the last 20 years. This inverse relationship is due to the growing specialization in higher value-added industry in countries with high GDP/cap. Another reason is because, in most cases, the industry value-added grows with the extension of the value-chains towards higher value-added and less energy intense products. A last reason is because of the continuous progress in intelligence and information control and processing, which contributes to electrification of the energy demand and better energy performance of industry technology.

Nevertheless, for similarly low levels of GDP/cap, large discrepancies exist between countries, according to the weight of energy-intensive industries in energy consumption: 68% in China in 2018, 60% in the CIS, 47% in the rest of Asia. See Fig. 26.5.

Fig. 26.5

Energy intensity of industry versus GDP/cap, from 2000 to 2018. (Source: Own elaboration on www.enerdata.net)

The main discriminating factors among countries, when assessing energy demand drivers of industry, are the endowment in natural resources and the heritage in energy-intensive industries, in particular primary metals, primary chemicals, fertilizers or paper and pulp.

4 Transport

From an energy viewpoint, the transport sector includes all means of transportation of passengers and freight, whatever the owner and whatever the purpose. This is different from the economic definition of the transport sector, in particular in national accounts, where it includes only the value added of transport companies. In the energy balances, a distinction is made between the final energy demand of domestic⁷ transport (so-called transport sector in the final consumption section) and that of international air and sea transport, included under the label “bunkers” in the primary section of the balance. Except for the world, the final energy demand of the transport sector corresponds only to the domestic transport. For the world, it accounts for both.

Geography, transport infrastructure heritage and GDP/cap are the key factors differentiating transport energy consumption between countries. The bigger the size of the country, the more important high-speed trains and air transport to accommodate the demand for increased speed. The smaller the size, the higher the population density, the more cost-effective is public transport of passengers by road or rail and the less attractive are private vehicles.

Natural waterways have been used and fitted out everywhere for centuries. Rail transport emerged in the second half of the nineteenth century, well before motorized road transport, and, in many countries, rail infrastructures were developed on a large scale before roads started to be paved. The development of road infrastructure in the twentieth century contributed to the obsolescence of part of the rail and waterways infrastructure already in place. But the remaining part, maintained and modernized, constitutes a heritage that strongly influences the modal structure of the movement of passengers and freight. In countries which do not benefit from this heritage, the development of modern rail and waterways is very often hampered by the very high investment costs involved.

Energy prices have a relatively low impact on transport energy demand in the short-medium term, for two reasons: the high share of mandatory or highly constrained passenger travel and freight movement and the rigidity in modal switch for both passengers and freight. In the long term, energy prices influence changes in technology and modal competition.

4.1 Outlook of Energy Demand in Transport: Historical Evolution, Structural Aspects

At the global level, transport accounts for around 2800 Mtoe (2018), that is, 28% of total final energy consumption. This consumption has been multiplied by 3 over the last 50 years and increased further by 47% since 2000. Domestic transport alone consumes 2400 Mtoe (2018), and experienced a similar evolution. Road accounts for the bulk of transport energy consumption (76% in 2018), followed by air and waterways (12% and 10% respectively). With 2%, rail is almost marginal. See Fig. 26.6.

Fig. 26.6

World transport energy per mode, Mtoe. (Source: Own elaboration on www.enerdata.net)

Transport relies almost entirely on oil: 98% in 2000, 94% in 2018. Road transport accounts for 80% of this total oil consumption of transport (94% of its final oil consumption), while air transport (jet fuels) and sea transport (heavy fuel oil or bunkers) account for 18% (2018). Almost all the remaining oil (mostly diesel oil) is consumed by railways and internal waterways. Road transport relies almost entirely on gasoline and diesel oil, with a little LPG (butane and propane) and, recently, increasing quantities of natural gas and bio-additives (ethanol and biodiesel).

Sea bunkers have doubled over the last 50 years (220 Mtoe in 2018), and jet fuels for international air transport multiplied by 3.5 (194 Mtoe in 2018). Altogether, the energy consumption of international transport has grown a little slower than that of the domestic transport over the last 50 years (multiplied by 2.5), but more rapidly since 2000 (53%). See Fig. 26.7.

Fig. 26.7

World transport oil consumption per product, Mtoe. (Source: Own elaboration on www.enerdata.net)

Private vehicles, that is, cars and motorcycles, account for 40% to 70% of the oil consumption for road transport in industrialized countries and BRICs, and freight for 30% to 50% (2018). See Fig. 26.8.

Fig. 26.8

Road transport by vehicles types, selected countries, 2018. (Source: Own elaboration on www.enerdata.net)

4.2 Drivers Related to Mobility and Trade

As regards determinants of energy demand consumption in transport, passengers and freight must be discussed separately.

For passengers, energy is required to meet accessibility needs—to access work places, shops, community spaces and so on—which are determined by either the formation or the use of income (GDP). Movements between home and workplace or school and for business services are mandatory; shopping is constrained at least to some extent, while leisure is not.

Empirically, it has been observed that everywhere in the world, and for the last two centuries at least, the average time an individual spends for mobility is roughly the same, around 1 hour per day (Zahavi 1974). This implies that the distance that each individual covers on average depends on the speed of movement, which has proved to be highly correlated to GDP.⁸

Technically, speed and accessible distances depend on the transport means. Walking, horse riding and bicycling are slow, the accessible distances are short, but they do not require commercial energy. Using motorized vehicles increases speed a lot, and allows for access over much greater distances, creating new accessibility opportunities, but requiring commercial energy. The speed of motorized vehicles differs according to the various modes and infrastructure: rail, road, waterways, air. To a certain extent, any increase in average speed can only occur through modal switch towards faster modes. Therefore, because of differences in energy demand per distance/speed across transport modes, the change of average speed drives passenger transport energy demand.⁹

Private vehicles (motor-cycles, motor-cars) can respond to almost all kinds of accessibility needs, while public motorized transport modes (buses, trains, planes, boats) respond to only part of them , those located on their dedicated routes. As a result, the average yearly mobility (kilometres travelled each year) of individuals having a private mode at their disposal is usually much higher than that of those who don’t. Therefore, to assess properly energy demand drivers for passenger transport, private vehicles must be considered separately.

4.2.1 Passenger Transport in Private Vehicles

For those using private vehicles (cars and motorcycles), mobility is first a matter of equipment. The mobility needs covered by these vehicles are determined by the number of vehicles used, the average distance they travel and the average number of persons travelling together in the same vehicle (load factor).

Income and vehicles’ prices are the two main drivers of the changes in the number of vehicles in use. However, beyond a certain level the market may become saturated and the increase in the number of vehicles in circulation will slow down.

Distances travelled yearly by private vehicles are determined by their use according to travel purposes, inside the time-budget constraint, and by the quality of road infrastructure. The distribution of car and motorcycles use among travel purposes changes very slowly in time. The same is true for road transport infrastructure. Ownership appears to be the main driver of the average yearly distance travelled by private vehicles in the medium-long term.¹⁰ Consequently, in general, income growth is accompanied by a decrease of the average distance travelled over the medium-long term, which slows down the growth of the energy demand.

Energy prices influence the distance travelled by private vehicles, partly through substitution with public modes, partly through financial constraints on discretional movement. But the price elasticity of the energy demand of private vehicles in the short term is very low (Labandeira et al. 2017).

Load factors of private vehicles (number of persons per vehicle on average) are rather specific to travel purposes and closely related to the size of households and to ownership level: the higher the ownership, the lower the load factors. So, income is indirectly a driver of the average load factor, through the size of households in countries experiencing a demographic transition, and through ownership. The lower the load factor, the higher the energy demand per passenger-km.

4.2.2 Passenger Transport in Public Modes

For public transport modes, as for private vehicles, total travel determines energy consumption. Load factors are very high at peak times and rather low otherwise, but energy consumption does not change much.

The offer of public transport is likely to drive changes in both the private vehicles stock and yearly distance travelled in the medium-long term. When people can choose among different modes to fulfil their accessibility needs, relative prices, comfort and relative speed determine their choice. The higher the speed, the more appealing the mode.¹¹ In congested urban areas where car traffic is very slow, offering rapid public transport (tramways, urban trains, metro, buses on dedicated lanes) drives people away from private vehicles, decreasing their yearly distance travelled by car. The same is true also for long distances, with a new offer of fast trains or domestic air transport. For people living in big urban areas, this may decrease significantly the desire for multi-vehicle ownership, and in some cases (very big conurbations) even the desire to own a car at all, hence the size of the car stock.

Altogether, the structure of public transport services and private vehicles ownership drive the change of average load factors of alternative modes, that is, the energy demand per passenger-km.

4.2.3 Freight Transport

The final energy demand of the transport sector includes only movements over land (including from/to borders), while international bunkers cover international sea and air trade.

Energy demand for freight is determined by the travel of the freight transport modes (vehicle-km) in response to the freight transport demand, that is, the tons which need to be transported over distances (ton-kilometres).

Domestic freight transport demand is highly correlated with GDP. But GDP growth also brings changes in the structure of the domestic and international trade. This impacts the mix of products transported, usually towards higher value/lower density products, which favours road transport. Because of the much higher energy demand per ton-kilometre of road transport as compared to rail and waterways (see Fig. 26.9), this evolution contributes to making freight transport more and more energy intensive as GDP expands. As a consequence, road transport accounts today for the bulk (above 85%) of the freight transport energy demand everywhere: 87% in Canada where road accounts only for 39% of freight traffic, up to 93% in the European Union, where it accounts for 77% of freight traffic (Enerdata 2019c).

Fig. 26.9

World oil bunkers, Mtoe. (Source: Own elaboration)

Historically, international sea transport was driven by primary commodities (oil, coal, ores, primary metals). These accounted for the bulk of sea transport until the end of the 1980s. Since then, globalization, in relation to the dramatic fall of the sea transport costs, has boosted the international long-distance trade of all kinds of products, and became the main driver of international sea transport. As a consequence, world oil bunkers demand, which had slowly decreased between 1970 and 1990 (−10%), almost doubled between 1990 and 2010, and has roughly stabilized since then. See Fig. 26.9.

4.3 Drivers Related to Technology

Technology-related drivers must be appraised at two levels: transport modes infrastructures and vehicles within each mode.

4.3.1 Transport Modes Infrastructures

Passengers and freight traffic are distributed among infrastructures, which have specific characteristics as regards loading capacity (passengers and freight) and speed, and therefore energy demand per traffic unit. In general terms, the higher the loading capacity, the lower the energy required; and the higher the speed, the higher the energy required. Thus, the modal split drives energy demand for both passengers and freight transport.

Fig. 26.10 compares average unit consumption of various modes/vehicles, that is, statistical records of energy consumed per passenger-km or ton-km, in actual traffic conditions.

Fig. 26.10

Unit energy consumption per transport mode, 2018. (Source: Own elaboration on www.enerdata.net, ODYSSEE)

Transport infrastructure changes rather slowly. It takes 5 to 10 years, sometimes more, to build a new motorway, rail track or canal. Therefore, infrastructure’s influence on overall average unit energy consumption per passenger-km or ton-km is very small in the short-medium term, but increases with time, and becomes critical in the very long term. Infrastructure changes are driven by two main forces: cost-effectiveness and demand for higher speed. Over time, low-speed infrastructure tends to disappear and new fast-speed infrastructure to expand. This usually drives the overall average unit energy consumption per ton-km or passenger-km upwards for most transport services, except those in congested urban areas.

4.3.2 Vehicles Technology

The other main driving force of the UECs is the specific energy consumption (SEC) per vehicle-km of the vehicles in circulation. The SECs of existing vehicles almost do not change over time, but the SECs of new vehicles are often lower than those of existing ones. Which means that, for each category of vehicles, their average SEC is driven by the stock and the life time span of the vehicles: the faster the stock increase, the higher the proportion of new vehicles, the faster the change in average SEC; the shorter the lifetime span, the faster the replacement of old vehicles by new ones, the faster the change of average SEC.

The lifetimes of vehicles depend on the mode and type of service: quite short for road trailers and buses (<7–10 years), longer for private cars and planes (15–25 years), even longer for rail and waterways vehicles (up to 30–40 years). Lifetimes almost do not change over time, or very slowly.

The SEC of new vehicles is driven by two forces: energy prices and energy efficiency and environment policies. Because energy accounts usually for a big share of the operating cost of the vehicles, whatever the mode, energy prices drive the competition among vehicles manufacturers towards lower SECs. This is particularly true for road, air and waterways, less for rail. The higher the energy price expectations, the lower the SEC targeted for each category of vehicles. Energy efficiency and environment policies influence SEC evolution in two ways. Economic incentives/penalties (taxes, bonus/malus, subsidies) influence consumer choices when purchasing a new vehicle, and then give appropriate signals to manufacturers as regard SEC. Regulation and norms set on exhaust gas emissions can be fulfilled in two different ways: adapting the motorization to reduce NOx, particles and so on per vehicle-km, or limiting the CO₂ emission per vehicle-km. Both ways impact the SEC of new vehicles: often upwards in the first case, and downwards in the second. See Fig. 26.11.

Fig. 26.11

Specific energy consumption of cars in France, l/100 km. (Source: Own elaboration on www.enerdata.net, ODYSSEE)

The speed of replacement of old vehicles is influenced by the evolution of energy prices (including taxes) and incentives to purchase new vehicles (e.g. to promote electric cars, as in many countries nowadays).

4.3.3 Main Issues

When assessing the technology drivers of transport energy demand, three main issues must be kept in mind: the transport infrastructure heritage, worldwide competition in the automotive industry and the policy context for energy efficiency and the environment.

Transport infrastructure has very long lifetimes, over 50 years in general, and changes very slowly over time. Since part of the energy demand drivers is directly linked to the availability and performances of the transport infrastructure, heritage drives the speed of change of transport energy demand in the future.

The vehicles manufacturing industry is highly concentrated, with few, very large companies located in a limited number of countries worldwide. Their technological innovations spread rapidly in all countries of the world, whatever the specific economic or geographic conditions of these countries.

Energy efficiency and environment policies set up regulatory frameworks, incentives and economic instruments. These frame the decisions of vehicles purchasers and manufacturers, either to commit themselves to required standards and regulation, or to reduce their costs and improve their competitiveness. In general terms, this drives downwards the UECs of the various transport services.

4.4 National Versus Global Vision of Energy Demand in Transport

4.4.1 How Energy for Transport Is Distributed Worldwide?

The distribution worldwide of domestic transport energy consumption has changed a lot during the last 50 years. The share of the industrialized countries of Europe, North America and CIS, which was up to 80% in the early 1970s, decreased to 64% in 2000, and, even more rapidly, to 49% in 2018. At the opposite extreme, China’s share surged from 2% in 1971 to 5% in 2000 and 14% in 2018, pulling the share of Asia as a whole from 11% to 20% and 34% for the same years. See Fig. 26.12.

Fig. 26.12

Domestic transport energy consumption per region, Mtoe. (Source: Own elaboration on www.enerdata.net, GlobalStat)

4.4.2 Transport Energy and GDP According to World Regions, and Motor Fuel Prices

Transport energy demand is correlated to GDP almost everywhere in the world. Indeed, GDP drives almost all direct determinants of energy demand: average speed, households’ ownership in private vehicles, infrastructure development, public transport offer, freight transport demand. But the relation between GDP/cap and transport energy demand per capita differs between countries. This is due obviously to differences in the size of the countries, but also in transport infrastructure (e.g. rail infrastructure in Europe), in urbanization and in energy prices (very low in Middle East and North America, for instance). See Fig. 26.13.

Fig. 26.13

Transport energy consumption versus GDP, from 2000 to 2018. (Source: Own elaboration on www.enerdata.net, GlobalStat)

5 Buildings

From an energy viewpoint, the sector of buildings includes the residential and tertiary sectors of the energy balance. The energy tertiary sector includes the energy demand of the tertiary sector as defined in national accounts, less that accounted for by transport (transport companies), plus everything not accounted for elsewhere: handicraft and very small industries or the informal sector. The residential sector is quite different from the category of households in national economic accounts, as it covers only the energy consumption and expenses related to dwellings.

5.1 Outlook for Energy Demand in Buildings: Historical Evolution, Structural Aspects

Buildings account for 30% of the final energy consumed in the world, that is, 3000 Mtoe (2018). This consumption doubled over the last 50 years, as did world population. The increase in fossil fuels consumption has been much slower than total energy consumption: fossil fuels accounted for little more than half of total consumption in 1971, but only 37% in 2018. Biomass consumption has grown faster than that of fossil fuels, but the champion is electricity: its consumption has been multiplied by a factor of almost 7 over the last 50 years, and it accounts today for one third of total consumption, the highest share among energy products. See Fig. 26.14.

Fig. 26.14

Buildings’ energy consumption, World. (Source: Own elaboration on www.enerdata.net, GlobalStat)

5.2 Overview of Needs and Energy End-Uses in Buildings

Energy is used in buildings to fulfil three main needs of households and workers: comfort, food and social life. Energy is also used in services buildings for some production activities.

5.2.1 Housing Buildings

• Comfort means space-heating, space-cooling, water-heating, lighting. Except for lighting, the energy involved in these end-uses is in close relation with the climate and the space area of the buildings, either directly (space heating and cooling) or through the number of persons accommodated in the building (hot water). For lighting, energy is mostly related to the number of persons.

• Food means food preparation, food conservation and cooking. Energy is required for food preparation and conservation only where electricity and dedicated electrical appliances (e.g. refrigerators) are available, that is, in electrified areas. Energy for cooking is universal. But the expression of the need is very different according to the socio-cultural contexts. In remote rural areas of many developing countries, cooking means open fires usually maintained several hours a day, depending on biomass availability, whatever the number of persons actually fed. And it turns out that the yearly average biomass consumption per household in these areas is three to four times higher than that of gas in a modern kitchen.

• Social life involves energy end-uses which are specific to electricity: radio, TV, telephone, computers and so on. These concern only electrified areas, and the expression of the needs is similar everywhere, whatever the socio-cultural context.

Figure 26.15 shows households’ energy consumption per end-use and per capita in selected countries.

Fig. 26.15

Households’ energy consumption per end-use and per capita, selected countries, 2018, koe/cap. (Source: Own elaboration on www.enerdata.net, EnerDemand)

5.2.2 Services Buildings

Depending on their function, the buildings dedicated to services require specific combinations of energy end-uses, and specific space area (m²) per worker.

• Office buildings, either private or public, involve similar end-uses as those of modern urban multi-flats housing buildings, with similar m²/person.

• Commercial buildings (groceries, shops, storage facilities, etc.), which accommodate clients from outside, need much larger space area per worker than office buildings. Part of the energy end-uses are similar to those of office buildings, but part is specific to the type of commerce: ovens for bakeries, cooling-freezing-atmosphere for storage, machinery for garages, and so on.

• Education, transport and health buildings also accommodate people from outside, and need larger space area per worker. Education buildings involve similar end-uses as those of offices. Health buildings also, but at higher intensity. Health building involves also specific end-uses, mostly related to electricity, for caring: radiology, fluids circulation and so on. Transport buildings (airports, train stations, sea terminals) involve similar end-uses as those of offices plus some others specific: luggage conveying or passengers’ information for example.

Figure 26.16 shows the energy consumption of services, per end-use and per capita in selected countries.

Fig. 26.16

Energy consumption of services, per end-use and per capita, selected countries, 2018, koe/cap. (Source: Own elaboration on www.enerdata.net, EnerDemand)

5.3 Socio-economic-Related Drivers

5.3.1 Housing Buildings

The number of occupied dwellings¹² is the first driver of the energy demand. This is a matter of total population and average size of households. The latter is driven firstly by the economic development in lower income countries,¹³ and secondly by socio-cultural forces specific to each country. Dwellings construction and availability, mostly driven by GDP, play a crucial role in a number of countries: even if they wish to, youngsters and elderly people can live in their own dwellings only to the extent that enough dwellings are available

Income, income distribution and energy prices are the second set of main economic drivers. Indeed, they determine the ability to purchase equipment and energy for each category of households, except those harvesting free energy resources in nature.

Social standards (inside temperature socially considered as comfortable, hygiene practices, etc.) and behaviours (environmental concern for instance) are the last main drivers. Large discrepancies exist between traditional rural areas, and modern urbanized ones. In the latter, technology evolution, imitation from more advanced countries and marketing drive mostly the change of social standards.

5.3.2 Services Buildings

In services buildings, the three main economic drivers are the buildings floor area, the employment and production.

Occupied floor areas drive energy demand in space heating and refreshing, and in lighting. Employment drives the energy demand in water heating, cooking, information processing. Production drives the energy demand in specific end-uses directly related to the nature of production (bakeries, data centres, storage, etc.).

Employment and production are highly correlated to the value-added of the tertiary sector, that is, to the commercial GDP and to the public services.

Occupied floor areas (m²) are indeed in close relation with employment, but may follow different dynamics, according to sub-sectors and buildings scarcity. Because of the strong inertia of the building stock, new m² built are the real driver of the occupied floor areas in most countries. This is driven by the tertiary value-added, public services policy and private services profitability.

5.4 Technology-Related Drivers

Technology-related drivers play at two levels: that of buildings and that of energy equipment.

5.4.1 Buildings

The size of a building, the materials used for its construction, its architecture, determine its specific useful energy consumption (SEC) per m² or per dwelling for a given space heating or space refreshing need: for example, to get 21°C inside all the rooms of a building in winter time as opposed to under the tropics. The size of the building is a matter of floor area and height (number of storeys): ceteris paribus, the higher the building, the lower the SEC per m². Architecture involves building shape, orientation and openings, which all determine the communication between natural energy sources (solar, wind) outside and indoor climate. Modern climatic architecture aims at making use of the natural energy sources to improve indoor comfort while decreasing the SEC. Materials used for construction, through their heat transfer properties, may have significant impacts on SECs: the use of insulation materials may reduce by a factor of 2 to 4 the SEC per m² for space heating purposes in countries with cold winters.

Existing buildings can be further insulated in order to decrease the SEC and energy cost per m² or per dwelling, through retrofitting operations implying appropriate materials for walls, floors, ceilings, roofs and windows. For new building constructions, insulation standards are imposed by national regulations, in most industrialized and emerging countries (Château and Alii 2010). Insulation level is then part of the building concept, as well as its SEC per m². For existing buildings, as for new constructions, energy prices and energy efficiency policies are the main drivers of changes in insulation, either as incentives to retrofitting (lowering the investment cost and increasing the energy cost) or as incentives to change the regulations.

Fig. 26.17 shows how insulation has progressed in the housing stock in France and in the EU, since 1990.

Fig. 26.17

Unit energy consumption per dwelling for space heating, toe/dw. (Source: Own elaboration on www.enerdata.net, ODYSSEE)

5.4.2 Equipment

Two kinds of equipment are involved in the fulfilment of the needs: those which directly deliver the services required (cooling, information, lighting), almost entirely powered by electricity; and those providing the useful energy required from various alternative energy products (heating or cooling equipment mostly). In the first case, the SEC per dwelling or per person/employee is determined by the size/power and the energy performance of the equipment: for instance, the SEC/dwelling for lighting is determined by the number of light bulbs and the bulb technology (ignition versus LED). In the second case, the energy product used and the equipment performance determine the final energy requirement per unit of useful energy needed.

Innovation, electricity prices, norms and regulations drive the changes of the SEC per person or per dwelling for all kinds of equipment specific to electricity inside the buildings. For each equipment category, norms and regulations set minimum mandatory performances for new appliances sold on the market and make all the performances clear for the clients. They drive the average SEC for that equipment through the replacement of existing appliances by new ones, and through the growth of the stock of appliances. Lifetimes are usually short for this type of equipment (5–15 years), which makes the replacement rhythm rather high.

Electricity prices depend on tariff structure and on taxation, both elements which can be influenced by energy efficiency and environmental policies. Although electricity prices should determine the most cost-effective appliance, marketing and behaviours (for households) drive also the actual choices of the clients among all competing appliances. For example, people can choose a A+++ refrigerator, even if it is not the more cost-effective, just because it is fancier, or because of environmental protection concern.

The same statements could be made for the yields of equipment for space heating, space refreshing, hot water or cooking. For each energy product, only very little differences can be found in yields of new equipment across countries. The average yield per equipment changes therefore because the stock changes, and because the mix of energy products changes.

The heating, hot water and cooling distribution systems have great inertia within existing buildings, because they are usually integrated in the building structure. Their performances can be improved, but in rather small proportions. In new constructions, the energy performances of these systems are usually different (from those in existing buildings), and much better. So, here again, the overall average performances of the heating, hot water and cooling distribution systems on the whole stock of buildings change mostly because of the new constructions and replacement of existing buildings.

5.5 The Main Issues

5.5.1 Building Heritage

In countries with high heating or cooling needs, the dynamics of the demand for fossil fuels and biomass, and to a lesser extent that for electricity, depends strongly on the growth of the stock of buildings and replacement of existing ones, through the specific energy requirement per m² or dwelling, and the overall performance of the heat, water and cooling distribution systems. The very long lifetimes of most existing stock of buildings implies very low replacement rates, and this puts high constraints on the evolution of the energy demand. This is particularly true in industrialized countries, where population growth is weak, and which experience limited population migrations inside the country.

5.5.2 Budget Coefficients

It has been observed in many countries all over the world that the share of building-energy expenses of households in their private consumption (the so-called budget coefficient) remains rather constant over time, with limited fluctuations (+/− 25%) due to short-term energy price effects (Fig. 26.18). This means that, at any time, households make trade-offs between their needs’ intensities and affordable technology possibilities, according to their income and the prices of energy products. Within the same budget coefficient, more efficient technologies allow households to maintain their needs intensities despite energy prices increases, and an income increase allows for increased needs intensities or for new modern needs corresponding to new equipment made available by innovation.

Fig. 26.18

Budget coefficients in dwellings (%). (Source: Own elaboration on www.enerdata.net, GlobalStat)

5.5.3 Information Spread and Imitation

Imitation plays a key role in the dissemination of lifestyles and preferences. Within any country, people tend to adopt lifestyles and equipment of the upper socio-economic classes, as exhibited by the media and social networks, and strongly encouraged by marketing. This is one of the main engines of the growth of final consumption of households. Globalization has enlarged and accelerated this imitation phenomenon worldwide, first through the huge increase in information flows, and second because all consumption opportunities become available everywhere. For example, high- and middle-class Chinese have nowadays lifestyles and consumption patterns much closer to those of the Western countries than to traditional Chinese ones.

5.5.4 Energy Efficiency and Environment Objectives

Energy efficiency and environment policies target buildings’ energy demand in three ways: buildings’ insulation, energy performance of new equipment and individual behaviour. Building insulation depends primarily on norms and regulation for new constructions. Altogether, we can observe worldwide a rapid evolution towards increased efficiency in several fields: lighting, cooling-freezing devices, washing machines, TV and so on. Behaviour is mostly a question of information, education and citizenship. Worldwide, only limited policy implication and success can be observed in this regard. But this may change rapidly in the future along with more severe impacts of climate change.

5.6 National Versus Global Vision of Energy Demand in Buildings

5.6.1 How Energy for Buildings Is Distributed Worldwide?

Buildings’ energy consumption accounts for 30% of the world energy (2018). This share has decreased since the early 1970s (35% in 1971), mostly due to the increase in the share of transport. Europe, North America and CIS, which are countries with cold winters, account for 42% of this consumption (2018), although they represent only 17% of the world population. Asia accounts for 37% of global consumption (2018), with 54% of the population. See Fig. 26.19.

Fig. 26.19

Energy consumption of buildings per world region, Mtoe. (Source: Own elaboration on www.enerdata.net)

5.6.2 Buildings’ Energy and GDP According to World Regions, and Energy Prices

Energy demand for buildings is highly dependent on climate. In cold winter countries, up to 80% of the buildings’ energy demand can be for space-heating and hot water (Canada, Russia, for instance (Enerdata 2019c)). As shown in Fig. 26.20, the consumption per capita in these countries is less related to GDP or prices, than to other forces, like the building stock. In tropical countries, air cooling may represent up to 60% of the buildings’ energy demand (Saudi Arabia (Enerdata 2019c)).

Fig. 26.20

Buildings’ energy consumption per capita across the world. (Source: Own elaboration on www.enerdata.net)

Buildings’ electricity demand per capita is much more closely correlated to GDP than overall energy, as shown in Fig. 26.21. But still, Middle East and North America show that, for high GDP/capita, the relation to GDP depends also on additional factors, in particular space cooling requirements.

Fig. 26.21

Buildings’ electricity consumption per capita across the world. (Source: Own elaboration on www.enerdata.net)

6 Electricity

Electricity is both an energy product which competes with fossil fuels and renewables in many end-uses of energy, and a captive energy product for other end-uses. The drivers of electricity demand, and of its share in the final energy demand, must be appraised separately in these two cases.

6.1 Overview

The share of electricity in world energy demand has roughly doubled during the last 50 years, with a rather steady rate of growth across time. Such penetration of electricity in final energy consumption can be observed all over the world, with some disparities across regions: similar growths in Europe, North America and the rest of Asia, much faster in China, slower in CIS and Africa. See Fig. 26.22.

Fig. 26.22

% Electricity in the final energy consumption. (Source: Own elaboration on www.enerdata.net)

6.2 Electricity Substituting for Fossil Fuels

6.2.1 Drivers and Limitations

From a technical viewpoint, electricity can substitute for any other energy product in most thermal end-uses, except those where the chemical content of the energy product makes the difference (blast furnaces, clinker, petrochemicals, etc.). Such a substitution involves generally a change in the whole thermal system, not just in the heat generator. From an economic viewpoint, what drives the substitution is the relative cost, that is, relative energy and equipment prices.

When electricity is generated from fossil fuels in thermal plants, the cost of electricity per Joule is at least 2.5 to 3 times higher than the price of the input fuel per Joule, because of the limited efficiency of the power plant (within a range 30%–45%).

For industry, which relies on the same fuels as power plants and at the same prices, this discrepancy between the prices of electricity and fossil fuels remains unchanged. If the price of equipment is similar, electricity becomes competitive only in end-uses where the difference in yields with respect to fossil fuels is roughly of a similar magnitude, that is, for very high temperature furnaces. In some cases, electricity becomes competitive also because it involves a different, more competitive process: for instance, reverse osmosis for desalination.

For buildings, the prices of fossil fuels per joule are higher than those paid by power plants, because of higher quality, distribution costs and taxes. The price of electricity is also higher than the production cost, for similar reasons. Therefore, despite the fact that the price of electric equipment is similar or lower than that using fossil fuels, electricity is not competitive with fossil fuels when generated itself from fossil fuels. Two exceptions nevertheless exist: hot water production and cooking. But the reason is more often lack of alternatives (no gas grid for instance), than competitiveness.

For transport, the price of motor fuels is usually much higher than that of the fuels used by power plants (also because taxes are in general higher), but the performance of the engines is also much lower than that of electric engines, and more than compensate the difference in prices. The key question is therefore the difference in the price of equipment. From this viewpoint, motor fuels have a great advantage over electricity, since they can be stored in the vehicles, at very low cost. Electricity can also be stored in vehicles, but at very high cost. Otherwise, electricity must involve specific electric lines (electric trains, trams) which are also costly, but prove to be cost-effective if the utilization rate is high enough.

When electricity is generated from renewables (hydro, wind, solar) or nuclear rather than fossil fuels, production costs are disconnected from the prices of fossil fuels. In that case, the higher the prices of fossil fuels, the higher the competitiveness of electricity in thermal end-uses. In France, Norway or Quebec, for instance, this has driven very strong development of electric space heating, which, in contrast, almost does not exist in countries where a large share of electricity is generated from fossil fuels.

6.2.2 Information and Complementarity

There is another form of substitution of electricity for fossil fuels, through the increase in the performance of fossil fuel equipment. Such an increase occurs generally when improving the management of the equipment. This requires collecting and computing information related to fossil fuel consumption (metering, regulation, etc.). As a result, the fossil fuel demand decreases while that of electricity increases for the same service.

6.2.3 Impacts on Primary Energy Demand

When electricity is generated from fossil fuels or nuclear, the amounts of primary energy necessary to generate the electricity exceed that contained in substituted fossil fuels, except for very high temperature furnaces or transport vehicles. In addition, electricity involves transport/distribution losses up to 15%, which is not the case with fossil fuels. In that case, when electricity substitutes for fossil fuels, final energy demand decreases (because electricity is more efficient), but the primary energy input increases, widening the gap between the two. The gap between primary and final energy use increases still more when low efficiency primary fuel (coal, nuclear) substitutes for higher efficiency final fossil fuel (gas for instance) through electricity.

When electricity is generated directly from hydro, solar or wind power, the substitution of electricity for fossil fuels drives the final and primary energy demand downwards at the same speed.

6.3 Specific/Captive End-Uses of Electricity

6.3.1 Information Mastering and Electricity Expansion

Almost all the new-technology equipment relies on electricity. The main reason is that they rely massively on information technologies: data collection and storage, data processing, data transfer and so on. These are today one of the main engines of the GDP growth worldwide. As a consequence, almost everywhere in the world, the electricity demand grows at a higher speed than demand for fossil fuels.

6.3.2 Impacts on Primary Energy Demand

The impact on primary demand depends on the generation mix of electricity. When generated from fossil fuels or nuclear, the primary energy necessary to deliver 1 kwh electricity to final consumers is between 2.5 and 4 times higher than the final energy contained in the kwh. The faster the growth of electricity demand, the wider becomes the gap between final and primary energy demand.

When generated from hydro, wind or solar power, the only difference between primary energy and final energy is due to electricity transport/distribution losses. The closer the generation of electricity to the final consumers (solar panels, windmills), the lower the losses.

6.4 Main Issues

Except in countries and areas where electrification is not complete, electricity is now involved in all energy end-uses of all final consumers: either because the end-use requires electricity, or because electricity is used to monitor and pilot the equipment part of the end-use. The progress in intelligence and information control, intimately connected to GDP growth, boosts captive end-uses through innovation and delivery of new services. It also boosts the substitution of fossil fuels with electricity, through energy efficiency improvements. Altogether, this drives a continuous, structural, increase of the share of electricity in final energy demand. It also drives a continuous, structural, decrease of the overall final energy intensity of GDP, which translates into a growing disconnection of final energy demand from GDP (Chen 1992). Depending on how electricity is generated, the primary energy intensity of GDP may follow the same decreasing trend, but at a lower rate, or may even increase in some cases.

The way electricity is generated influences the speed of electrification of final demand. When it is generated from fossil fuels, the direct substitution of electricity for fossil fuels is scarcely cost-effective, and plays a very little role in electricity demand growth.

When generated from nuclear, because of the huge investment cost involved, the generation cost per kwh decreases when electricity production increases, much faster than in fossil fuels plants. So, there is a threshold in production where the nuclear electricity becomes competitive; passed that threshold, the higher the production, the lower the cost, the stronger the competitiveness and the lower the price to the final consumer. This obviously boosts the substitution of electricity for fossil fuels, but also slows down the progress of efficiency in electrical appliances; and, for households, allows for less constrained electricity consumption. Altogether, this results in faster electrification of energy demand as compared to when electricity is generated from fossil fuels.

Direct renewables (solar, wind, hydro) also have high (but rapidly decreasing) investment costs per kW, with similar consequences as for nuclear. But the main difference is that part of renewable electricity production (wind, solar) has to face physical constraints that do not exist for nuclear, because of intermittency and low spatial densities. It often results in higher costs to meet appropriate stability and safety conditions for electricity delivery (except for hydro), as compared to thermal electricity generated from fossil fuels. This discourages direct substitutions of electricity for fossil fuels, and increases the quest for more efficient electric appliances. For households, because of budget constraints, this results in more constrained electricity consumption. Altogether, in most countries, the higher the share of direct renewables in electricity generation, the lower the rate of electrification of final energy demand, and the lower final energy demand growth. Things are nevertheless different in countries with huge hydropower resources (Quebec, Norway, Brazil): here, the physical constraints do not play, and the situation is very similar to that of the countries with a lot of nuclear.