Electricity Consumption and Temperature: Evidence from Satellite Data

Jiaxiong Yao

No 2021/022, IMF Working Papers from International Monetary Fund

Abstract: Past studies on the relationship between electricity consumption and temperature have primarily focused on individual countries. Many regions are understudied as a result of data constraint. This paper studies the relationship on a global scale, overcoming the data constraint by using grid-level night light and temperature data. Mostly generated by electricity and recorded by satellites, night light has a strong linear relationship with electricity consumption and is correlated with both its extensive and intensive margins. Using night light as a proxy for electricity consumption at the grid level, we find: (1) there is a U-shaped relationship between electricity consumption and temperature; (2) the critical point of temperature for minimum electricity consumption is around 14.6°C for the world and it is higher in urban and more industrial areas; and (3) the impact of temperature on electricity consumption is persistent. Sub-Saharan African countries, while facing a large electricity deficit already, are particularly vulnerable to climate change: a 1°C increase in temperature is estimated to increase their electricity demand by 6.7% on average.

Keywords: Electricity consumption; temperature; night light; climate change.; WP; electricity access; electricity demand; term E (search for similar items in EconPapers)
Pages: 38
Date: 2021-02-05
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