Household and industrial electricity demand in Europe

This paper examines the electricity demand, and its determinants, in 29 European countries during the liberalization of the electricity market. Based on panel data for these countries for the years 1995–2015 and using a dynamic partial adjustment model, price elasticities are estimated for both resi...

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Bibliographic Details
Published in:Energy policy 2018-11, Vol.122, p.592-600
Main Authors: Cialani, Catia, Mortazavi, Reza
Format: Article
Language:English
Subjects:
Complex Systems – Microdata Analysis
Consumption
Demand
Electric industries
Electric power demand
Electricity
Electricity consumption
Electricity demand
Electricity pricing
Energy consumption
Energy policy
EU-29
Europe
Europe EU-29
Generalized method of moments
GMM
Households
Komplexa system - mikrodataanalys
Liberalization
Method of moments
Panel data
Price elasticity
Prices
Residential energy
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Summary:This paper examines the electricity demand, and its determinants, in 29 European countries during the liberalization of the electricity market. Based on panel data for these countries for the years 1995–2015 and using a dynamic partial adjustment model, price elasticities are estimated for both residential and industrial electricity demand. These elasticities and effects of other variables on electricity consumption are estimated using both GMM (generalized method of moments) and ML (maximum likelihood) approaches. It is found that the price elasticities are very small, especially in the short run, while the income elasticities are relatively large, especially for households and in the long run. •Electricity demand in EU-29 is inelastic with respect to its price in the short-run.•Income elasticities in EU-29 are slightly higher than price elasticities.•Residential sector is less sensitive to prices change than the industrial sector.•Electricity demand is more sensitive to cold than to hot weather in Europe.
ISSN:0301-4215
1873-6777
1873-6777
DOI:10.1016/j.enpol.2018.07.060