Household Electricity Demand in Spanish Regions. Public Policy Implications

Abstract

This paper analyses the determinants of household electricity demand with a panel data, partial adjustment model of Spanish regions in the 1998-2009 period. The results show that electricity demand responds positively and significantly to electricity demand in the previous year, income, temperature range, penetration of electric water heating in households and the number of heating and cooling degree days. It is significantly and negatively related to electricity prices, gas prices, penetration of electric heating in households and whether households have at least one member being 64 years or older. Price elasticities in the preferred model are -0.26 (short-term) and -0.37 (long-term). Income elasticities are 0.31 (short-term) and 0.43 (long-term). Several implications for electricity-efficiency policies are derived from the results of the analysis.