Household and industrial electricity demand in Europe

This paper examines the electricity demand, and its determinants, in 29 European countries during the liberalization of the electricity market. Based on panel data for these countries for the years 1995-2015 and using a dynamic partial adjustment model, price elasticities are estimated for both residential and industrial electricity demand. These elasticities and effects of other variables on electricity consumption are estimated using both GMM (generalized method of moments) and ML (maximum likelihood) approaches. It is found that the price elasticities are very small, especially in the short run, while the income elasticities are relatively large, especially for households and in the long run.