Principal Component Analysis of Electricity Consumption Factors in China

This study aims to identify the principal components in ten prevailing factors, which would account for the influence of major economic variables on electricity consumption. Principal component analysis on these variables suggests two principal components, which respectively have Eigen-values of 8.28 and 1.04 and a cumulative variance of 82.77% and 93.19%. The regression results between electricity consumption and two principal components indicate close match between the calculated and the actual electricity consumption. The first principal component positively impact on electricity consumption, while the second one has negative influence. According to the coefficient of each variable in the combination, we found that gross domestic product, income, industrial output value, commodity exports, added services industry value, household numbers, percentage of rural population and price index impact positively on electricity consumption, while increase in commodity imports and efficiency of electricity reduces electricity consumption. These imply the possibility to control the fast growth of electricity consumption by imposing policies to revise the concerned factors.