Modeling and Forecasting Medium-Term Electricity Consumption Using Component Estimation Technique

Ismail Shah, Hasnain Iftikhar and Sajid Ali
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Ismail Shah: Department of Statistics, Quaid-i-Azam university, Islamabad 45320, Pakistan
Hasnain Iftikhar: Department of Statistics, Quaid-i-Azam university, Islamabad 45320, Pakistan
Sajid Ali: Department of Statistics, Quaid-i-Azam university, Islamabad 45320, Pakistan

Forecasting, 2020, vol. 2, issue 2, 1-17

Abstract: The increasing shortage of electricity in Pakistan disturbs almost all sectors of its economy. As, for accurate policy formulation, precise and efficient forecasts of electricity consumption are vital, this paper implements a forecasting procedure based on components estimation technique to forecast medium-term electricity consumption. To this end, the electricity consumption series is divided into two major components: deterministic and stochastic. For the estimation of deterministic component, we use parametric and nonparametric models. The stochastic component is modeled by using four different univariate time series models including parametric AutoRegressive (AR), nonparametric AutoRegressive (NPAR), Smooth Transition AutoRegressive (STAR), and Autoregressive Moving Average (ARMA) models. The proposed methodology was applied to Pakistan electricity consumption data ranging from January 1990 to December 2015. To assess one month ahead post-sample forecasting accuracy, three standard error measures, namely Mean Absolute Error (MAE), Mean Absolute Percentage Error (MAPE), and Root Mean Square Error (RMSE), were calculated. The results show that the proposed component-based estimation procedure is very effective at predicting electricity consumption. Moreover, ARMA models outperform the other models, while NPAR model is competitive. Finally, our forecasting results are comparatively batter then those cited in other works.

Keywords: Pakistan electricity consumption; components estimation; forecasting; parametric and nonparametric models; MAPE and MAE (search for similar items in EconPapers)
JEL-codes: A1 B4 C0 C1 C2 C3 C4 C5 C8 M0 Q2 Q3 Q4 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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