Liu, Y.; Gao, Y.; Hao, Y.; Liao, H. The Relationship between Residential Electricity Consumption and Income: A Piecewise Linear Model with Panel Data. Energies2016, 9, 831.
Liu, Y.; Gao, Y.; Hao, Y.; Liao, H. The Relationship between Residential Electricity Consumption and Income: A Piecewise Linear Model with Panel Data. Energies 2016, 9, 831.
Liu, Y.; Gao, Y.; Hao, Y.; Liao, H. The Relationship between Residential Electricity Consumption and Income: A Piecewise Linear Model with Panel Data. Energies2016, 9, 831.
Liu, Y.; Gao, Y.; Hao, Y.; Liao, H. The Relationship between Residential Electricity Consumption and Income: A Piecewise Linear Model with Panel Data. Energies 2016, 9, 831.
Abstract
There are many uncertainties and risks in residential electricity consumption during the economic development. Knowledge of the relationship between residential electricity consumption and its key determinant—income—are important to the sustainable development of electric power industry. Using panel data from 30 provinces for the 1995-2012 period, this study investigates how residential electricity consumption changes as incomes increase in China. Previous studies typically used linear or quadratic double-logarithmic models imposing ex ante restrictions on the indistinct relationship between residential electricity consumption and income. Contrary to those models, we employed a reduced piecewise linear model that is self-adaptive and highly flexible and circumvents the problem of “prior restrictions.” Robust tests of different segment specifications and regression methods are performed to ensure the conservatism of the research. The results provide strong evidence that the income elasticity was approximately one, and it remained stable throughout the estimation period. The income threshold at which residential electricity consumption automatically remains stable or slows has not been reached. To ensure the sustainable development of the electric power industry, introducing higher energy efficiency standards for electrical appliances and improving income levels are vital. And government should emphasize electricity conservation in industrial sector rather than in residential sector.
Keywords
residential electricity consumption; income; piecewise linear model; China; robust tests
Subject
Business, Economics and Management, Econometrics and Statistics
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
