Estimation of urban residential electricity demand in China using household survey data

This paper uses annual urban household survey data of Sichuan Province from 2007 to 2009 to estimate the income and price elasticities of residential electricity demand, along with the effects of lifestyle-related variables. The empirical results show that in the urban area of Sichuan province, the residential electricity demand is price- and income-inelastic, with price and income elasticities ranging from −0.35 to −0.50 and from 0.14 to 0.33, respectively. Such lifestyle-related variables as demographic variables, dwelling size and holdings of home appliances, are also important determinants of residential electricity demand, especially the latter. These results are robust to a variety of sensitivity tests. The research findings imply that urban residential electricity demand continues to increase with the growth of income. The empirical results have important policy implications for the Multistep Electricity Price, which been adopted in some cities and is expected to be promoted nationwide through the installation of energy-efficient home appliances.