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Household differentiation and residential electricity demand in Korea

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  • Ryu, Jun-Yeol
  • Kim, Dae-Wook
  • Kim, Man-Keun

Abstract

This paper investigates the impact of rapid demographic changes in Korea on residential electricity use. Demographic changes in Korea are characterized as i) household differentiation (increasing number of nuclear (one- or two-person) households despite the stagnant population growth) and ii) unprecedentedly fast-paced population ageing. Per capita electricity demand is estimated using a dynamic panel model with the system GMM. Results show that household differentiation has increased per capita electricity use in both short- and long-run; the ageing population has the negative impact on per capita electricity consumption. The impact of household differentiation, which is projected to be accelerated with the persistent low fertility in Korea, is substantial. Nuclear households use more electricity per person, but pay less electricity bill since Korea has the progressive electric billing system. Stakeholders and industry analysts should consider household differentiation to prepare the long-run electricity provision policy as well as the proper billing system. Lessons from the study have wider policy implications in other developed countries with the similar demographic changes.

Suggested Citation

  • Ryu, Jun-Yeol & Kim, Dae-Wook & Kim, Man-Keun, 2021. "Household differentiation and residential electricity demand in Korea," Energy Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:eneeco:v:95:y:2021:i:c:s0140988320304308
    DOI: 10.1016/j.eneco.2020.105090
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    More about this item

    Keywords

    Ageing population; Electricity consumption; Household differentiation; Korea; System GMM;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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