Climate-Related Electricity Demand Side Management in Oil-Exporting Countries: The case of the United Arab Emirates

The oil crisis of the seventies has increased the concern about the continuity of oil imports flow to major oil-importing developed countries. Numerous policy measures including Electricity Demand Side Management (DSM) programs have been adopted in such countries. These measures aim at reducing the growing need for electricity power that increases dependency on imported foreign oil and damages the environment. On the other hand, the perception that energy can be obtained at very low cost in oil-rich countries led to less attention being paid to the potential of DSM policies in these countries. This paper discusses such potential using the case of the United Arab Emirates (UAE). Since air conditioning is a major source of electric energy consumption, the relationship between climate conditions and electric energy consumption is considered. An electricity demand model is constructed using time series techniques. The fitted model seems to represent these relationships rather well. Forecasts for electricity consumption using the estimated model indicate that a small reduction in cooling degrees requirement might induce a significant reduction in electric energy demand. Hence, a DSM program is proposed with policy actions to include, among others, measures to reduce cooling degrees requirement.