An econometric model of household electricity consumption. A case study of Poland

Abstract

Purpose: Electrical energy is in this day and age fundamental to the functioning of every household. The use of gas, heating oil or solid fuels for home heating also involves the supply of electricity. Today, electric power is the most environmentally friendly source of energy. Experience has shown that substitution of an oil heating system with a heat pump resulted in significant financial savings for the household. Design/methodology/approach: The purpose of this paper shall entail the construction of a multi-equation econometric model describing the mechanisms of electricity consumption in a specified household. The model takes the nature of a system of interdependent equations. Described shall be the monthly volume of electricity consumption, payment amount of for this energy (in PLN), and price per 1 MWh in a given month. Monthly time series from September 2015 to November 2022 have been used, which resulted in a time series with a count of 87 statistical observations. Findings: The econometric model of household electricity consumption presented in this paper confirms both the hypothesis about feedback between the variables USAGE and PRICE as well as the recursive effect of electricity consumption volume on its value in monetary units. In addition to the cognitive value of the econometric modeling results obtained, the empirical tool constructed makes enables forecast estimation of the energy consumption volume, its value and unit price in subsequent months, for at least 12 consecutive months. Practical implications: This type of research has great practical utility. They make it easier for rational interaction between electricity sellers and specific consumers. Social implications: Knowledge about the mechanisms of electricity consumption on the farm home may influence the rationalization of consumption and spending. This type of rationalization should have a positive impact on the environment natural, contributing to the reduction of greenhouse gas emissions. Originality/value: The novelty and originality of the work are the identification of the mechanism behavior of a single household consuming energy electric. Feedback between magnitudes revealed electricity consumption and its price on a specific farm home. The recipients of the work will be electricity sellers, consumers, and researchers of household market behavior. Keywords: econometric model, electricity consumption, interdependent equations. Category of the paper: Research paper. Case study.