Heterogeneities in the impacts of climate change on residential electricity consumption: Evidence from China

Abstract

Climatic factors (especially temperature) have been shown to affect residents’ electricity consumption behavior and the examination of climate change impacts on energy demand is of great significance for optimizing energy utilization and securing energy supply. However, existing studies have seldom explored heterogeneities in climatic impacts in the context of various electricity pricing regimes. In this paper, using monthly data in Anhui province in China, we examine the differences in residents’ electricity consumption responses to climate between urban and rural residents under different electricity pricing regimes, including tiered pricing for household electricity (TPHE) and time of use pricing (TOU). We also project future electricity demand separately for urban and rural residents with a suite of climate change scenarios. The results show that: (1) cooling degree day (CDD) has a significant positive effect on electricity demand, and rural residents are more sensitive to CDD than the urban counterparts (0.19% vs 0.08% increase in electricity consumption per 1 unit increase in CDD). We do not observe statistically significant effects of heating degree day (HDD) on electricity demand. (2) Households with already high electricity consumption levels tend to be less responding to climate, so are households who adopt the TOU pricing regime. (3) Substantial increases in electricity demand induced by climate change are expected in the future. With the pessimistic RCP8.5 scenario, our results suggest an increase of 35.5% and 77.1% in electricity demand for the urban and rural residents in 2080s relative to 2017, respectively.

Yabin Da

Assistant Professor

Research interests include Environmental Economics (Climate Change), Applied Econometrics, and Causal Inference.