Estimating and forecasting residential electricity demand in Iran

- The factors affecting residential electricity demand for Iran are examined.
- The most significant factor affecting residential electricity demand is cooling degree days.
- The number of electrified villages also positively impacts electricity demand.
- Forecasts suggest the need for increasing the generation of electricity.

This study examines the short- and the long-run relationship between electricity demand and its determinants in the Iranian residential sector. The study employs unit root tests, cointegration and error-correction models on annual time series for the period, 1967-2009. The results show that electricity price is insignificant and income elasticity is lower than unity. The most influential factor influencing household electricity demand is cooling degree days. The number of electrified villages (an indicator of economic progress) is statistically significant, showing that economic progress has a positive impact on electricity demand. Electricity demand is forecast until 2020. The results show that under the most probable projection, electricity consumption in the residential sector will grow at an annual rate of 29% and 80% by 2014 and 2020, respectively.