Himanshu A. Amarawickrama () (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey & Infrastructure Advisory, Ernst and Young LLP, London) Lester C. Hunt () (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)
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This study estimates electricity demand functions for Sri Lanka using six econometric techniques. It shows that the preferred specifications differ somewhat and there is a wide range in the long-run price and income elasticities with the estimated long-run income elasticity ranging from 1.0 to 2.0 and the long run price elasticity from 0 to –0.06. There is also a wide range of estimates of the speed with which consumers would adjust to any disequilibrium, although the estimated impact income elasticities tended to be more in agreement ranging from 1.8 to 2.0. Furthermore, the estimated effect of the underlying energy demand trend varies between the different techniques; ranging from being positive to zero to predominantly negative. Despite these differences the forecasts generated from the six models up until 2025 do not differ significantly. Thus on one hand it is encouraging that the Sri Lanka electricity authorities can have some faith in econometrically estimated models used for forecasting. However, by the end of the forecast period in 2025 there is a variation of around 452MW in the base forecast peak demand; which, in relative terms for a small electricity generation system like Sri Lanka’s, represents a considerable difference.
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Length: 46 pages Date of creation: Oct 2007 Date of revision: Publication status: Published in Energy 33(5) May 2008, pp. 724-739 (Revised Version). Handle: RePEc:sur:seedps:118
Find related papers by JEL classification: Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply
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