Price elasticity of wholesale demand for electricity in the regions of the Russian Federation

S. Tomskiy
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S. Tomskiy: HSE University, Moscow, Russia

Journal of the New Economic Association, 2025, vol. 66, issue 1, 117-131

Abstract: This paper presents a study of the price elasticity of wholesale electricity demand in three regions of the Russian Federation: the Republic of Kalmykia, the Altai Republic, and the Astrakhan region. Hourly consumption data and hourly equilibrium prices on the day-ahead market for 2022 were used. Due to the endogeneity problem caused by the two-way causality, the two-stage least squares (2SLS) method was applied, where the production of alternative energy sources was chosen as the price instrument. The F-statistics of the first stage of the regressions indicate that the instruments are not weak. The results show that wholesale demand is generally price inelastic, which is consistent with the results obtained in the international literature. The elasticity in modulus in the Republic of Kalmykia turns out to be highly variable - from 0.5 to 1.4. At any time of the day, inelastic demand is observed in the Altai Republic (from 0.25 to 0.5) and the Astrakhan Region (up to 0.1). Moreover, in all the regions considered, night elasticity is higher than day elasticity. This may be a consequence of the policy of two-tariff pricing in the retail market (different tariffs during the day and at night).

Keywords: electricity; price elasticity of demand; demand assessment; 2SLS; regions of Russia (search for similar items in EconPapers)
JEL-codes: C36 L94 Q41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2025:i:66:p:117-131

DOI: 10.31737/22212264_2025_1_117-131

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