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Has energy transition impacted the income elasticity of electricity demand? A Portuguese sectoral analysis

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  • Sérgio Cruz

Abstract

Discussion on the decoupling between income and energy demand has been sur- ging in the last years with focus on the eects of energy eciency policies, renewable self-consumption and structural economic changes. On the other hand, electrica- tion and declining of shadow economy may be putting inertia to this decoupling. Using a time-varying parameters framework, this paper provides insights on the de- coupling nature between income and electricity demand supplied by the network in Portugal, disaggregated by economic sectors and using regional data between 1995 and 2022. Results suggest a declining, but positive, income elasticity of aggreg- ated electricity demand and in the residential, services and industry sectors. For agriculture there is time invariant decoupling. The results enable to determine the importance of sensitivity analysis for electricity consumption in the context of en- ergy transition, particularly useful for investment decisions in electricity generation and grid planning and development.

Suggested Citation

  • Sérgio Cruz, 2024. "Has energy transition impacted the income elasticity of electricity demand? A Portuguese sectoral analysis," Working Papers REM 2024/0342, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp03422024
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    Keywords

    electricity demand; decoupling; time-varying parameters; sector level data; regional data.;
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