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Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico

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  • Hancevic, Pedro Ignacio
  • Lopez-Aguilar, Javier Alejandro

Abstract

Increasing block pricing schemes represent difficulties for applied researchers who try to recover demand parameters, in particular, price and income elasticities. The Mexican residential electricity tariff structure is amongst the most intricate around the globe. In this paper, we estimate the residential electricity demand and use the corresponding structural parameter estimates to simulate an energy efficiency improvement scenario, as suggested by the Energy Transition Law of December 2015. The simulated program consists of a massive replacement of electric appliances (air conditioners, fans, refrigerators, washing machines, and lights) for more energy-efficient units. The main empirical findings are the following: in the main counterfactual scenario, the overall residential electricity consumption decreases 9.9% and the associated expenditure falls 11.3%. Additionally, the electricity subsidy decreases 7.5 billion of Mexican Pesos per year (i.e., 403 million of USD at the average exchange rate registered in 2017) and there is an annual cut in CO2 emissions of 3.9 million of tons.

Suggested Citation

  • Hancevic, Pedro Ignacio & Lopez-Aguilar, Javier Alejandro, 2019. "Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico," Energy Policy, Elsevier, vol. 131(C), pages 320-331.
    • Handle: RePEc:eee:enepol:v:131:y:2019:i:c:p:320-331
    DOI: 10.1016/j.enpol.2019.04.015
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    Cited by:

    1. Martínez-Cruz, Adán L. & Núñez, Héctor M., 2021. "Tension in Mexico's energy transition: Are urban residential consumers in Aguascalientes willing to pay for renewable energy and green jobs?," Energy Policy, Elsevier, vol. 150(C).
    2. Hancevic, Pedro I. & Nuñez, Hector M. & Rosellon, Juan, 2017. "Distributed photovoltaic power generation: Possibilities, benefits, and challenges for a widespread application in the Mexican residential sector," Energy Policy, Elsevier, vol. 110(C), pages 478-489.
    3. Andrés Felipe Ramírez Sánchez & Juan Sebastián Solís-Chaves & Andrea del Pilar Rodríguez-Muñoz & Luis Alejandro Arias Barragán & Diana Ximena Serna-Pérez & Omar Fredy Prías Caicedo, 2022. "Residential Refrigeration MEPS in Colombia: A Review and a Comparative Analysis," Energies, MDPI, vol. 15(17), pages 1-35, September.
    4. Li, Lanlan & Ming, Huayang & Fu, Weizhong & Shi, Quan & Yu, Shiwei, 2021. "Exploring household natural gas consumption patterns and their influencing factors: An integrated clustering and econometric method," Energy, Elsevier, vol. 224(C).
    5. Hancevic, Pedro I. & Sandoval, Hector H., 2023. "Solar panel adoption among Mexican small and medium-sized commercial and service businesses," Energy Economics, Elsevier, vol. 126(C).
    6. Verma, Pramit & Kumari, Tanu & Raghubanshi, Akhilesh Singh, 2021. "Energy emissions, consumption and impact of urban households: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 147(C).
    7. Ayertey, Winfred & Sharifi, Ayyoob & Yoshida, Yuichiro, 2024. "The impact of increase in block pricing on electricity demand responsiveness: Evidence from Ghana," Energy, Elsevier, vol. 288(C).
    8. Castro Pérez, José E. & Flores, Daniel, 2023. "The effect of retail price regulation on the wholesale price of electricity," Energy Policy, Elsevier, vol. 173(C).
    9. Pedro I. Hancevic & Hector H. Sandoval, 2023. "Solar Panel Adoption in SMEs in Emerging Countries," Working Papers 222, Red Nacional de Investigadores en Economía (RedNIE).

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    More about this item

    Keywords

    Increasing block pricing; Energy efficiency; Residential electricity users; Electric appliances; Energy subsidies; Air pollution;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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