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Electricity Consumption and Temperature: Evidence from Satellite Data

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  • Jiaxiong Yao

Abstract

Past studies on the relationship between electricity consumption and temperature have primarily focused on individual countries. Many regions are understudied as a result of data constraint. This paper studies the relationship on a global scale, overcoming the data constraint by using grid-level night light and temperature data. Mostly generated by electricity and recorded by satellites, night light has a strong linear relationship with electricity consumption and is correlated with both its extensive and intensive margins. Using night light as a proxy for electricity consumption at the grid level, we find: (1) there is a U-shaped relationship between electricity consumption and temperature; (2) the critical point of temperature for minimum electricity consumption is around 14.6°C for the world and it is higher in urban and more industrial areas; and (3) the impact of temperature on electricity consumption is persistent. Sub-Saharan African countries, while facing a large electricity deficit already, are particularly vulnerable to climate change: a 1°C increase in temperature is estimated to increase their electricity demand by 6.7% on average.

Suggested Citation

  • Jiaxiong Yao, 2021. "Electricity Consumption and Temperature: Evidence from Satellite Data," IMF Working Papers 2021/022, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/022
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    Cited by:

    1. Alejandra Martínez – Martínez & Silviano Esteve – Pérez & Salvador Gil – Pareja & Rafael Llorca - Vivero, 2023. "In search of factors that explain the impact of climate change on international trade," Working Papers 2310, Department of Applied Economics II, Universidad de Valencia.
    2. Eslahi, Mohammadehsan & Mazza, Paolo, 2023. "Can weather variables and electricity demand predict carbon emissions allowances prices? Evidence from the first three phases of the EU ETS," Ecological Economics, Elsevier, vol. 214(C).
    3. Edward Manderson & Timothy Considine, 2021. "The Effect of Temperature on Energy Demand and the Role of Adaptation," Economics Discussion Paper Series 2112, Economics, The University of Manchester.

    More about this item

    Keywords

    Electricity consumption; temperature; night light; climate change.; WP; electricity access; electricity demand; term E;
    All these keywords.

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