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Modelling residential electricity demand in the GCC countries

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  • Atalla, Tarek N.
  • Hunt, Lester C.

Abstract

This paper aims at understanding the drivers of residential electricity demand in the Gulf Cooperation Council countries by applying the structural time series model. In addition to the economic variables of GDP and real electricity prices, the model accounts for population, weather, and a stochastic underlying energy demand trend as a proxy for efficiency and human behaviour. The resulting income and price elasticities are informative for policy makers given the paucity of previous estimates for a region with particular political structures and economies subject to large shocks. In particular, the estimates allow for a sound assessment of the impact of energy-related policies suggesting that if policy makers in the region wish to curtail future residential electricity consumption they would need to improve the efficiency of appliances and increase energy using awareness of consumers, possibly by education and marketing campaigns. Moreover, even if prices were raised the impact on curbing residential electricity growth in the region is likely to be very small given the low estimated price elasticities—unless, that is, prices were raised so high that expenditure on electricity becomes such a large proportion of income that the price elasticities increase (in absolute terms).

Suggested Citation

  • Atalla, Tarek N. & Hunt, Lester C., 2016. "Modelling residential electricity demand in the GCC countries," Energy Economics, Elsevier, vol. 59(C), pages 149-158.
    • Handle: RePEc:eee:eneeco:v:59:y:2016:i:c:p:149-158
    DOI: 10.1016/j.eneco.2016.07.027
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    More about this item

    Keywords

    GCC residential electricity demand; Structural time series model; Impact of weather and exogenous underlying energy demand trend (UEDT);
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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