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Elasticities of Electricity Demand in Urban Indian Households

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  • Massimo Filippini

    ()
    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Shonali Pachauri

    ()
    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

Abstract

Energy demand, and in particular electricity demand in India has been growing at a very rapid rate over the last decade. Given, current trends in population growth, industrialisation, urbanisation, modernisation and income growth, electricity consumption is expected to increase substantially in the coming decades as well. Tariff reforms could play a potentially important role as a demand side management tool in India. However, the effects of any price revisions on consumption will depend on the price elasticity of demand for electricity. In the past, electricity demand studies for India published in international journals have been based on aggregate macro data at the country or sub-national/ state level. In this paper, price and income elasticities of electricity demand in the residential sector of all urban areas of India are estimated for the first time using disaggregate level survey data for over thirty thousand households. Three electricity demand functions have been estimated using monthly data for the following seasons: winter, monsoon and summer. The results show electricity demand is income and price inelastic in all three seasons, and that household, demographic and geographical variables are important in determining electricity demand, something that is not possible to determine using aggregate macro models alone.

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Bibliographic Info

Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 02-16.

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Length: 13 pages
Date of creation: Mar 2002
Date of revision:
Handle: RePEc:cee:wpcepe:02-16

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Keywords: Residential electricity demand; price elasticity; income elasticity;

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References

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  1. Flaig, Gebhard, 1990. "Household production and the short- and long-run demand for electricity," Munich Reprints in Economics 20345, University of Munich, Department of Economics.
  2. Shonali Pachauri, . "A First Step to Constructing Energy Consumption Indicators for India. Interim Report of The Indicator Project," CEPE Working paper series 99-02, CEPE Center for Energy Policy and Economics, ETH Zurich.
  3. Massimo Filippini & Jörg Wild & Michael Kuenzle, 2001. "Scale and cost efficiency in the Swiss electricity distribution industry: evidence from a frontier cost approach," CEPE Working paper series 01-08, CEPE Center for Energy Policy and Economics, ETH Zurich.
  4. Andrea Scheller, . "Researchers' Use of Indicators. Interim Report of The Indicator Project," CEPE Working paper series 99-01, CEPE Center for Energy Policy and Economics, ETH Zurich.
  5. Jung, Tae Yong, 1993. "Ordered logit model for residential electricity demand in Korea," Energy Economics, Elsevier, vol. 15(3), pages 205-209, July.
  6. Uri, Noel D., 1979. "Energy demand and interfuel substitution in India," European Economic Review, Elsevier, vol. 12(2), pages 181-190, April.
  7. Filippini, Massimo & Wild, Jorg, 2001. "Regional differences in electricity distribution costs and their consequences for yardstick regulation of access prices," Energy Economics, Elsevier, vol. 23(4), pages 477-488, July.
  8. Nesbakken, Runa, 1999. "Price sensitivity of residential energy consumption in Norway," Energy Economics, Elsevier, vol. 21(6), pages 493-515, December.
  9. Halvorsen, Robert, 1975. "Residential Demand for Electric Energy," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 12-18, February.
  10. Bose, Ranjan Kumar & Shukla, Megha, 1999. "Elasticities of electricity demand in India," Energy Policy, Elsevier, vol. 27(3), pages 137-146, March.
  11. Massimo Filippini, 1999. "Swiss residential demand for electricity," Applied Economics Letters, Taylor & Francis Journals, vol. 6(8), pages 533-538.
  12. Tiwari, Piyush, 2000. "Architectural, Demographic, and Economic Causes of Electricity Consumption in Bombay," Journal of Policy Modeling, Elsevier, vol. 22(1), pages 81-98, January.
  13. Massimo Filippini & Silvia Banfi, 2002. "Impact of the new Swiss electricity law on the competitiveness of hydropower," CEPE Working paper series 02-12, CEPE Center for Energy Policy and Economics, ETH Zurich.
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