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Temperature Effects on Firms’ Electricity Demand: An Analysis of Sectorial Differences in Spain

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  • Moral Carcedo, Julián

    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Pérez García, Julián

    (Departamento de Economía Aplicada. Universidad Autónoma de Madrid)

Abstract

Global warming, intermittent production, and efficient use of energy require adequate demand response policies. The price inelasticity of electricity demand represents the main obstacle for developing adequate measures. A potential source of demand inelasticity is the temperature effect ‐the reaction of electricity demand to variations in temperature. Studies using aggregate data show that temperature‐driven electricity demand is growing in most countries. Using disaggregated data by sectors, we analyze the sectorial breakdown of temperature effects on firms’ electricity demand. In‐depth knowledge of sectorial demand responses to temperature changes is fundamental for improved energy planning. If electricity consumption in a sector heavily reacts to temperature, “flattening” electricity demand will eventually become infeasible. Our findings indicate that in Spain firms’ aggregate electricity demand is rather insensitive to temperature. However, there are marked differences among sectors, with the highest sensitivity found for firms in the service sector.

Suggested Citation

  • Moral Carcedo, Julián & Pérez García, Julián, 2015. "Temperature Effects on Firms’ Electricity Demand: An Analysis of Sectorial Differences in Spain," Working Papers in Economic Theory 2015/01, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    • Handle: RePEc:uam:wpaper:201501
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    3. Bigerna, Simona, 2018. "Estimating temperature effects on the Italian electricity market," Energy Policy, Elsevier, vol. 118(C), pages 257-269.
    4. Tang, Wenliang & Yang, Mian & Duan, Hongbo, 2023. "Temperature and corporate tax avoidance: Evidence from Chinese manufacturing firms," Energy Economics, Elsevier, vol. 117(C).
    5. Lanlan Li & Xinpei Song & Jingjing Li & Ke Li & Jianling Jiao, 2023. "The impacts of temperature on residential electricity consumption in Anhui, China: does the electricity price matter?," Climatic Change, Springer, vol. 176(3), pages 1-26, March.
    6. Manh-Hung Nguyen, 2021. "A Resilient Energy System to Climate change," Post-Print hal-04044554, HAL.
    7. Anukoolthamchote, Pam Chasuta & Assané, Djeto & Konan, Denise Eby, 2020. "Net electricity load profiles: Shape and variability considering customer-mix at transformers on the island of Oahu, Hawai'i," Energy Policy, Elsevier, vol. 147(C).
    8. Ang, B.W. & Wang, H. & Ma, Xiaojing, 2017. "Climatic influence on electricity consumption: The case of Singapore and Hong Kong," Energy, Elsevier, vol. 127(C), pages 534-543.
    9. Mosquera-López, Stephanía & Uribe, Jorge M. & Manotas-Duque, Diego F., 2018. "Effect of stopping hydroelectric power generation on the dynamics of electricity prices: An event study approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 456-467.
    10. Zheng, Shuguang & Huang, Guohe & Zhou, Xiong & Zhu, Xiaohang, 2020. "Climate-change impacts on electricity demands at a metropolitan scale: A case study of Guangzhou, China," Applied Energy, Elsevier, vol. 261(C).
    11. Mukherjee, Sayanti & Vineeth, C.R. & Nateghi, Roshanak, 2019. "Evaluating regional climate-electricity demand nexus: A composite Bayesian predictive framework," Applied Energy, Elsevier, vol. 235(C), pages 1561-1582.
    12. Moral-Carcedo, Julián & Pérez-García, Julián, 2017. "Integrating long-term economic scenarios into peak load forecasting: An application to Spain," Energy, Elsevier, vol. 140(P1), pages 682-695.

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    More about this item

    Keywords

    sectorial electricity demand; temperature effect; “cooling” and “heating”; electricity demand.;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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