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Asymmetric price response of industrial electricity demand in India

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  • Tran, Nhan Dang
  • Sahu, Naresh Chandra

Abstract

This paper analyses the asymmetric effects of electricity prices on industrial electricity demand in India from 1981 to 2016 using the two-threshold nonlinear autoregressive distributed lag (NARDL) model. The results show that customers react more strongly to a large price cut than a large price increase, whereas a small price change does not affect electricity consumption. A large price decrease, which raises the quantity demanded by a higher percentage, makes it more challenging to reach net-zero emissions as electricity generation relies mainly on fossil fuels. Since demand is inelastic for price increases, a large price hike minimally reduces electricity consumption.

Suggested Citation

  • Tran, Nhan Dang & Sahu, Naresh Chandra, 2023. "Asymmetric price response of industrial electricity demand in India," Utilities Policy, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:juipol:v:82:y:2023:i:c:s0957178723000644
    DOI: 10.1016/j.jup.2023.101552
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    References listed on IDEAS

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    2. Tran, Nhan Dang & Sahu, Naresh Chandra & Le, Chon Van, 2024. "Evidence on the stationarity of electricity consumption in India," Utilities Policy, Elsevier, vol. 88(C).
    3. Gao, Feng & Lin, Yijie & Zhang, Xuanming & Li, Shanhong & Lv, Yanqin, 2023. "Interconnectedness between land resource misallocation and environmental pollution: Exploring the sustainable development potential in China," Resources Policy, Elsevier, vol. 86(PB).

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