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The Effect of development on the climate sensitivity of electricity demand in India

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  • Eshita Gupta

    (Indian Statistical Institute, Delhi
    Institute of Economic Growth)

Abstract

The climate sensitivity of electricity demand in India is likely to be highly sensitive to growth in income. Thus, both intensive and extensive adjustments in cooling and heating will play an important role in determining future climate change impacts on electricity demand. This chapter utilizes a national level panel dataset of 28 Indian states for the period 2005-2009 to show that (1) electricity demand is positively related to temperatures in summers and negatively related to temperatures in winters; (2) the effect of temperature increase on demand in summers is higher in a hotter climate as people adapt with the use of higher cooling equipment whereas there is a higher negative response to temperature increase in winters in colder climates as people adapt using higher heating equipment; (3) the eects of both the hotter and the colder climates on electricity demand are expected to be more pronounced at the higher income levels. The preferred estimates indicate that climate change will increase electricity demand by 6.9 percent with 4 percent p.a. GDP growth and 8.6 percent with 6 percent p.a. GDP growth in 2030 over the reference scenario of no climate change. This re?ects the fact that the estimated marginal effect of a hotter climate is greater when income is higher. The results suggest that over 50 percent of the climate change impacts will be due to extensive adjustments and that electricity demand models that do not account for extensive adjustments are likely to underestimate the climate change impacts on electricity demand especially in developing countries like India where the current penetration of air- conditioning equipment is very low.

Suggested Citation

  • Eshita Gupta, 2014. "The Effect of development on the climate sensitivity of electricity demand in India," Discussion Papers 14-05, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:14-05
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    References listed on IDEAS

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    1. Eshita Gupta, 2012. "Global warming and electricity demand in the rapidly growing city of Delhi: A Semi-parametric variable coefficient approach," Discussion Papers 12-02, Indian Statistical Institute, Delhi.
    2. Guilherme Depaula & Robert Mendelsohn, 2010. "Development And The Impact Of Climate Change On Energy Demand: Evidence From Brazil," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 187-208.
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    7. Sailor, David J. & Muñoz, J.Ricardo, 1997. "Sensitivity of electricity and natural gas consumption to climate in the U.S.A.—Methodology and results for eight states," Energy, Elsevier, vol. 22(10), pages 987-998.
    8. Gupta, Eshita, 2012. "Global warming and electricity demand in the rapidly growing city of Delhi: A semi-parametric variable coefficient approach," Energy Economics, Elsevier, vol. 34(5), pages 1407-1421.
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    Cited by:

    1. Waite, Michael & Cohen, Elliot & Torbey, Henri & Piccirilli, Michael & Tian, Yu & Modi, Vijay, 2017. "Global trends in urban electricity demands for cooling and heating," Energy, Elsevier, vol. 127(C), pages 786-802.

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