Residential energy demand for space heating in the Nordic countries: Accounting for interfuel substitution

Based on the results of the mean average error and root-mean-square error criteria for three approaches across the Nordic countries, it was found that the second and third approaches were able to capture the complementary and substitution effects between fuels. This finding confirms our hypothesis that the interfuel substitution is a key factor for estimating changes in fuel demand and should be accounted for when residential energy demand is projected. The results additionally have important implications for climate change policy, by exploring the impact of fuel price on residential energy demand for space heating.