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Assessing the determinants of household electricity prices in the EU: a system-GMM panel data approach

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  • da Silva, Patrícia Pereira
  • Cerqueira, Pedro A.

Abstract

A meaningful portion of the consumer basket of European households and companies is embodied by electricity as well as gas or refined petroleum products. As energy products are essential inputs of nearly all final goods and services, whichever change of energy prices has a direct impact of the general price level. In this context, the main purpose of this study is to assess the main drivers of household electricity prices in the European Union (EU), throughout a period of deep sector transformation. Relying on Eurostat data, not only we analyze the long-term progress of household electricity prices across the EU, but also we provide empirical evidence on their determinants while confronting the results with the EU energy policy path. For this purpose a firsthand approach is herein developed based on a dynamic model with panel data through GMM proposal method by Blundell and Bond (1998) [4] with the Windermeijer (2005) [41] correction. The data analysis provides grounds for a relation between the variable of household electricity prices with variables related to sector liberalization, renewable energy sources which support the EU policy to boost liberalization. This study offers evidence that the sector liberalization is accompanied by a decreasing trend in prices, which is consistent with the European Commission's objectives to liberalize.

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  • da Silva, Patrícia Pereira & Cerqueira, Pedro A., 2017. "Assessing the determinants of household electricity prices in the EU: a system-GMM panel data approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 1131-1137.
    • Handle: RePEc:eee:rensus:v:73:y:2017:i:c:p:1131-1137
    DOI: 10.1016/j.rser.2017.02.016
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    More about this item

    Keywords

    Q28; Q48; C33; Household electricity prices; Market liberalization; Renewable energy; System-GMM panel data model;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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