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Price elasticity of wholesale demand for electricity in the regions of the Russian Federation

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  • Tomskiy, S.

    (HSE University, Moscow, Russia)

Abstract

This paper presents a study of the price elasticity of wholesale electricity demand in three regions of the Russian Federation: the Republic of Kalmykia, the Altai Republic, and the Astrakhan region. Hourly consumption data and hourly equilibrium prices on the day-ahead market for 2022 were used. Due to the endogeneity problem caused by the two-way causality, the two-stage least squares (2SLS) method was applied, where the production of alternative energy sources was chosen as the price instrument. The F-statistics of the first stage of the regressions indicate that the instruments are not weak. The results show that wholesale demand is generally price inelastic, which is consistent with the results obtained in the international literature. The elasticity in modulus in the Republic of Kalmykia turns out to be highly variable - from 0.5 to 1.4. At any time of the day, inelastic demand is observed in the Altai Republic (from 0.25 to 0.5) and the Astrakhan Region (up to 0.1). Moreover, in all the regions considered, night elasticity is higher than day elasticity. This may be a consequence of the policy of two-tariff pricing in the retail market (different tariffs during the day and at night).

Suggested Citation

  • Tomskiy, S., 2025. "Price elasticity of wholesale demand for electricity in the regions of the Russian Federation," Journal of the New Economic Association, New Economic Association, vol. 66(1), pages 117-131.
    • Handle: RePEc:nea:journl:y:2025:i:66:p:117-131
    DOI: 10.31737/22212264_2025_1_117-131
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    References listed on IDEAS

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    More about this item

    Keywords

    electricity; price elasticity of demand; demand assessment; 2SLS; regions of Russia;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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