Residential electricity demand in Spain: New empirical evidence using aggregate data

This paper presents an empirical analysis on residential demand for electricity. This analysis has been performed using aggregate panel data at the province level for 47 Spanish provinces for the period from 2000 to 2008. For this purpose, we estimated a log-log demand equation for electricity consumption using a dynamic partial adjustment approach. This dynamic demand function has been estimated using a two-step system GMM estimator proposed by Blundell and Bond (1998). The purpose of this empirical analysis is to highlight some of the characteristics of Spanish residential electricity demand. Particular attention has been paid to the influence of price, income, and weather conditions on electricity demand. The estimated short and long-run own price elasticities are negative, as expected, but lower than 1. Furthermore, weather variables have a significant impact on electricity demand.

► An empirical analysis on the Spanish residential electricity demand is presented. ► For the first time aggregate panel data at the province level are used. ► Particular attention is paid to the influence of price, income, and climate. ► Short and long-run own price elasticities are negative but lower than 1.