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Price Elasticity of Electricity Demand in France

L’élasticité‑prix de la demande d’électricité en France

Stéphane Auray (), Vincenzo Caponi () and Benoît Ravel ()
Additional contact information
Stéphane Auray: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique
Vincenzo Caponi: CREST - Center for Research in Extreme Scale Technologies [Bloomington] - Indiana University [Bloomington] - Indiana University System
Benoît Ravel: Datastorm

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Abstract: Competition and climate becoming more important for electricity production and consumption, market operators are increasingly interested in reliable forecasts of electricity prices and consumption for planning their investments and regulating policies. Key for good forecasts is understanding the consumers' reaction to price changes, synthesized by the concept of elasticity. Using a unique dataset of millions of bi‑annual meter readings of electricity consumption in France from 2007 to 2015, we estimate the price elasticity of electricity expenditure of private households. We propose three specifications: a canonical one that regresses electricity consumption on a price per kilowatt/hour, where we find an elasticity equal to ‑0.8, a result remarkably in line and corroborating previous literature; a specification that follows Filippini's (1995) model of an Almost Ideal Demand System (AIDS), in which we substantially replicate his results; and finally, an extension of the latter that allows elasticities to be season‑dependent that shows the demand of electricity being more elastic in summer.

Keywords: price elasticity; electricity demand; élasticité-prix; demande en électricité (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://insee.hal.science/hal-05296125v1
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Published in Economie et Statistique / Economics and Statistics, 2019, 513, pp.91-103. ⟨10.24187/ecostat.2019.513.2002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05296125

DOI: 10.24187/ecostat.2019.513.2002

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