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The Anatomy of Electricity Demand: A CGE Decomposition for Norway

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The paper derives a general equilibrium demand function for electricity by imposing a specific closure rule on a large CGE-model of the Norwegian economy. By a decomposition technique it quantifies the contribution from various mechanisms to the price sensitivity of aggregate electricity demand. Specifically, it identifies the contributions from substitution at the micro level, as well as changes in the industry structure to the substitution at the aggregate level. It also separates the substitution effects of equilibrium adjustments of other prices than the electricity price, and macroeconomic income effects on total demand. The direct price elasticity of aggregate electricity demand is estimated to -0.31. Within industry factor substitution contributes most to this response.

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  • Erling Holmøy, 2005. "The Anatomy of Electricity Demand: A CGE Decomposition for Norway," Discussion Papers 426, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:426
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    Cited by:

    1. Peng Ou & Ruting Huang & Xin Yao, 2016. "Economic Impacts of Power Shortage," Sustainability, MDPI, vol. 8(7), pages 1-21, July.

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    More about this item

    Keywords

    Electricity demand; Computable general equilibrium model;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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