An analysis of the electricity market and power needs in Shandong using vector autoregression

Based on relevant data of economic and social development in Shandong Province, the authors analyse the status of the electricity market and determined four factors which affect the electricity demand: economic development, energy structure, power supply and demand as well as electricity demand structure. This paper analyses the stability of the electricity demand variable by augmented Dickey-Fuller (ADF) test and projection pursuit (PP) test, and analyses DCO-integration of them by Engle-Granger (EG) method and Johansen method. Based on stability and cointegration analysis, this paper emphasised a VAR model to analyse the correlation between electricity demand indicators and four other influencing factors. In the end, this paper suggested that had a certain theoretical and practical significance for Shandong Provincial Electric Power Development.