How prices, income, and weather shape household electricity demand in high-income and middle-income countries

Brantley Liddle and Hillard Huntington

Energy Economics, 2021, vol. 95, issue C

Abstract: This analysis provides an international perspective geared towards understanding the future demands being placed on the world's electricity system. It focuses upon the household or residential demand for electricity in a number of high-income and middle-income countries that may raise power demands for cooling in a warming world. Panel estimates on 26 high-income and 29 middle-income countries over the 1978–2013 period provide critical information on how household electricity demand responds to income, weather, and prices. Our dynamic panel estimates address nonstationarity, heterogeneity, and cross-sectional dependence. We believe these are the first panel estimates for middle-income/non-OECD countries and the first panel estimates for high-income/OECD countries to address all three of the previously identified statistical issues. Relative to high-income country responses, long-run elasticities for middle-income nations are larger for income (0.8 compared to 0.6), larger for cooling (0.3 versus insignificant), and smaller for prices (−0.08 relative to −0.2). As middle-income economies are likely to grow more rapidly than high-income/OECD economies, the trends related to income and cooling responses are likely to place greater pressure on a warming world unless the power sector can be decarbonized globally.

Keywords: Residential electricity demand; High- and middle-income panels; Common factor panel models; Dynamic models; Electricity prices; Elasticity estimates (search for similar items in EconPapers)
JEL-codes: C23 O13 Q41 Q43 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:95:y:2021:i:c:s0140988320303352

DOI: 10.1016/j.eneco.2020.104995

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