Estimation of residential electricity demand in Hong Kong under electricity charge subsidies

Tunç Durmaz, Aude Pommeret () and Huseyin Tastan

Energy Economics, 2020, vol. 88, issue C

Abstract: Over the past decade, the Hong Kong (HK) government provided electricity charges subsidies for residential accounts to alleviate the burden of inflation and, later, the burden of economic downturn. In this study, we estimate an econometric model of residential electricity demand and test the existence of a stable long-run relationship for the period 1980–2016, while accounting for the relief measures set out by the HK government since 2008. Empirical results suggest that there exists a long-run relationship among residential electricity consumption, electricity price, income per capita, and weather variables (temperature or cooling degree days). In the absence of electricity charge subsidies, the demand is found to be both price and income inelastic. On the other hand, HK's residential electricity consumers are unresponsive to price and income changes when electricity subsidies are in place. Following its new carbon reduction plan, HK is gradually phasing out coal for electricity generation to replace it mainly with natural gas. Our results suggest that new residential electricity charge subsidies can lessen the effectiveness of6 climate policies aimed at reducing electricity consumption through increases in the electricity price.

Keywords: Residential electricity; Price and income elasticities; Cointegration analysis; Electricity charge subsidies (search for similar items in EconPapers)
JEL-codes: C22 C32 Q43 Q48 Q58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988320300815
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Estimation of residential electricity demand in Hong Kong under electricity charge subsidies (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:88:y:2020:i:c:s0140988320300815

DOI: 10.1016/j.eneco.2020.104742

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().