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The Anatomy of Electricity Demand: A CGE Decomposition for Norway

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Abstract

The paper derives a general equilibrium demand function for electricity by imposing a specific closure rule on a large CGE-model of the Norwegian economy. By a decomposition technique it quantifies the contribution from various mechanisms to the price sensitivity of aggregate electricity demand. Specifically, it identifies the contributions from substitution at the micro level, as well as changes in the industry structure to the substitution at the aggregate level. It also separates the substitution effects of equilibrium adjustments of other prices than the electricity price, and macroeconomic income effects on total demand. The direct price elasticity of aggregate electricity demand is estimated to -0.31. Within industry factor substitution contributes most to this response.

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  • Erling Holmøy, 2005. "The Anatomy of Electricity Demand: A CGE Decomposition for Norway," Discussion Papers 426, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:426
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp426.pdf
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    References listed on IDEAS

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    1. Seale, James Jr. & Walker, Wayne E. & Kim, In-Moo, 1991. "The demand for energy : Cross-country evidence using the Florida model," Energy Economics, Elsevier, vol. 13(1), pages 33-40, January.
    2. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, March.
    3. Longva, Svein & Olsen, Oystein & Strom, Steinar, 1988. "Total elasticities of energy demand analysed within a general equilibrium model," Energy Economics, Elsevier, vol. 10(4), pages 298-308, October.
    4. Fiebig, Denzil G. & Seale, James & Theil, Henri, 1987. "The demand for energy : Evidence from a cross-country demand system," Energy Economics, Elsevier, vol. 9(3), pages 149-153, July.
    5. Bentzen, Jan & Engsted, Tom, 1993. "Short- and long-run elasticities in energy demand : A cointegration approach," Energy Economics, Elsevier, vol. 15(1), pages 9-16, January.
    6. Kouris, George, 1983. "Energy consumption and economic activity in industrialized economies--a note," Energy Economics, Elsevier, vol. 5(3), pages 207-212, July.
    7. Hunt, Lester & Manning, Neil, 1989. "Energy Price- and Income-Elasticities of Demand: Some Estimates for the UK Using the Cointegration Procedure," Scottish Journal of Political Economy, Scottish Economic Society, vol. 36(2), pages 183-193, May.
    8. Field, Barry C & Grebenstein, Charles, 1980. "Capital-Energy Substitution in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 207-212, May.
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    Cited by:

    1. Peng Ou & Ruting Huang & Xin Yao, 2016. "Economic Impacts of Power Shortage," Sustainability, MDPI, Open Access Journal, vol. 8(7), pages 1-21, July.

    More about this item

    Keywords

    Electricity demand; Computable general equilibrium model;

    JEL classification:

    • 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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