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Semiconductors Are Now the Driving Force Behind U.S. Energy Efficiency Gains

Semiconductors Are Now the Driving Force Behind U.S. Energy Efficiency Gains


May 13, 2009

Media Contact(s):

Patrick Mitchell, 703-276-3266, Hastings Group
John A. "Skip" Laitner, 202-507-4029, Visiting Fellow

Washington, D.C. — Semiconductor technologies are so essential to advances in energy efficiency gains that the U.S. economy could expand by more than 70 percent through 2030 and still use 11 percent less electricity than it did in 2008, according to a major news study by the nonprofit and independent American Council for an Energy-Efficient Economy (ACEEE).

Titled Semiconductor Technologies: The Potential to Revolutionize U.S. Energy Productivity, the new ACEEE report concludes that semiconductors already are the leading factor behind energy efficiency gains.   The report states: "Compared to the technologies available in 1976, we estimate that the entire family of semiconductor-enabled technologies generated a net savings of about 775 billion kilowatt-hours (kWh) of electricity in the year 2006 alone … [H]ad we expanded the size and scope of the U.S. economy based on 1976 technologies, it appears that the U.S. would be using about 20 percent more electricity than actually consumed in 2006.  Stated differently, had we continued to rely on 1976 technologies to support the U.S. economy today, we might have had to build another 184 large electric power plants to satisfy the demand for goods and services."

In addition to eliminating the need for 184 additional power plants, the estimated 775 billion kWh savings in 2006 attributed to semiconductor-enabled technologies also can be expressed as:  $69  billion dollars in business and consumer savings (or $613  per U.S. household);  enough power to keep 64.5 million U.S. households going year round; and  the prevention of 479 million metric tons of carbon dioxide (CO2) equivalent emissions prevented – a 20 percent cut in electric utility industry emissions linked to climate change.

John A. “Skip” Laitner, Director, Economic and Social Analysis, American Council for an Energy-Efficient Economy, said:   “In many ways, the story of the gains in energy efficiency since the mid 1970s and the mid 1990s, in particular, is the story of the rise of the semiconductor.   However, the powerful connection between semiconductors and energy consumption is more than just unappreciated; it is actually misunderstood by some.    Despite the immediate growth in electricity demands to power the growing number of devices and technologies, semiconductors have enabled a surprisingly larger energy productivity benefit in that same period.”

Brian Halla, Chairman, President and CEO, National Semiconductor, said:  “For many years, it has been a commonly accepted view that future generations will have to lower their expectations and plan to live in a very different world – a world in which progress will be heavily constrained by energy issues.  Fortunately, that pessimistic vision of our future need not come to pass. As the ACEEE study shows, we have the ability to continue to drive economic growth, protect and enhance our environment, and pass on a better world to future generations. Our industry – the semiconductor industry – is hard at work today to invent and produce solutions to the most critical energy issues.”

Since their emergence in the 1970s and widespread use in the 1990s, semiconductors have been an essential tool for energy efficiency.   Faster, better, and cheaper microprocessors; computers; and telecommunications equipment – and the improved software capabilities that drive their performance – have accelerated both the adoption of these technologies and their growing networked use.      Semiconductors enable the improved operation of motors and the motor systems that heat and cool our homes, and that provide pumping and mechanical power in our industrial facilities. 

Energy solution that are described as “smart” – from smart buildings to smart appliances to the Smart Grid – have semiconductor sensors to measure temperature or other variables; communications chips to receive and transmit data; memory chips to store the information; and microcontrollers, microprocessors, and power management chips to adjust energy loads.  Smart grid technologies also enable a more cost-effective deployment of decentralized but cleaner renewable energy resources such as solar panels and wind turbines, which are also enabled by semiconductors.  Smart grids may also enable plug-in hybrid cars to stretch gasoline dollars, and provide battery storage units for the nation’s electric generation system. 

REPORT HIGHLIGHTS

  • Bulk of recent energy savings linked to semiconductors.  “U.S. energy intensity (energy per constant dollar of GDP) declined an average 1.2 percent annually between 1950 and 1995.  The level of U.S. energy intensity further declined to 2.1 percent between 1995 and 2008. More importantly however, this path-breaking analysis argues that a significant proportion of these energy productivity gains – especially in recent years – appear to be the result of the explosive growth in technologies supported and the related shift in the predominant technological paradigm.”  
  • More than 2-to-1 return on investment in more semiconductor energy efficiency.    The ACEEE report outlines an investment model to achieve the most from semiconductor-enabled energy efficiency.  “We estimate these to begin with a modest $7.1 billion of incremental investments in 2010, rising to as much as $28.7 billion by 2030.  The average annual investment over the next two decades is about $22.5 billion.  Cumulatively, the market for these new technology investments is about $472 billion over the period 2010 through 2030.  But there is a hefty return on these investments.  We estimate the electricity bill savings to average just over $61 billion over that same period of analysis, producing a cumulative electricity bill savings on the order of $1.3 trillion over that same time horizon. What’s the bottom line?  The savings are about 2.7 times the investment cost.”
  • Huge additional energy efficiency gains seen over the next 20 years.  “By our calculation here, the cumulative net electricity bill savings enabled by semiconductors might exceed $1.2 trillion through 2030.  Perhaps not surprising, a more productive economy might also support some 935,000 more jobs while substantially reducing environmental impacts – notably a reduction in energy-related carbon dioxide emissions that would exceed 700 million metric tons, also by 2030.”  
  • The need for 300 more power plants could be eliminated.   Smart investments “can facilitate productivity gains that reduce electricity use to only 3,364 billion kWh by 2030.  The resulting savings of 1,242 billion kWh in 2030 means that the economy may actually consume 11 percent less electricity than it did in 2008.  In other words, semiconductor-related technologies may support an economy in 2020 that is 35 percent larger than today, but one that uses 7 percent less electricity.  And by 2030 those policies may support an economy that is over 70 percent larger but uses 11 percent less electricity than in 2008 ... By 2030, we would need to build 296 fewer power plants.”
  • Major advances made in semiconductor industry energy efficiency.  “According to data from the U.S. Census Bureau’s Annual Survey of Manufacturers (2006), the semiconductor industry purchased 11.8 billion kilowatt hours of electricity in 2006, which was about 1.3 percent of manufacturer consumption and 0.3 percent of total U.S. consumption.  Perhaps even more impressive, the Bureau of Economic Analysis (2007) reports that while the economy as a whole increased energy use by 13 percent over the period 1997 through 2007, the semiconductor industry actually cut energy use by half over that same period.”

Semiconductor Technologies: The Potential to Revolutionize U.S. Energy Productivity is available for free download or a hard copy can be purchased for $30 plus $5 postage and handling from ACEEE Publications, 529 14th St, N.W., Suite 600, Washington, D.C. 20045, phone: 202-507-4000, fax: 202-429-2248, e-mail: aceee_publications@aceee.org.

ACEEE thanks the members of the Semiconductor Industry Association for providing needed primary information and other support for this project.