A cross-country analysis of residential electricity demand in 11 OECD-countries

Chandra Kiran B Krishnamurthy () and Bengt Kriström ()
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Chandra Kiran B Krishnamurthy: Centre for Environmental and Resource Economics, Postal: Umeå University, 901 87 Umea, Sweden, http://www.cere.se
Bengt Kriström: Centre for Environmental and Resource Economics, Postal: Umeå University, 901 87 Umea, Sweden, http://www.cere.se

No 2013:5, CERE Working Papers from CERE - the Center for Environmental and Resource Economics

Abstract: We provide consistent, cross-country estimates of price and income elasticity for the residential sector of 11 OECD countries. Using survey data from 2011 on annual consumption of electricity and sample-derived average electricity price, we provide country-specific price elasticity estimates and average income elasticity estimates. For most countries in our sample, we find strong price responsiveness, with elasticities varying between -0:27 for South Korea and -1:4 for Australia, with most countries elasticity being above (in absolute value) -0:5. Exploiting the presence of many attitudinal indicators, we find evidence for non-price related factors, in particular households’self-reported energy saving behavior, to reduce energy demand between 2 and 4%. In contrast, we find very weak income response, with income elasticities varying from 0:07 to 0:14 and no evidence for heterogeneity across the countries in our sample. Our results regarding price elasticity are in contrast with many existing studies which find low-to-moderate price responsiveness, and adds to a few recent studies indicating more policy space for demand reduction than previously thought.

Keywords: Residential Electricity Demand; Price Elasticity (search for similar items in EconPapers)
JEL-codes: D12 Q41 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-08-14, Revised 2014-06-30
New Economics Papers: this item is included in nep-ene
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