A general equilibrium analysis of potential demand side management programs in the household sector in Thailand

Abstract

PurposeThe purpose of this paper is to examine potential demand side management (DSM) programs in terms of their impacts to the overall economy in Thailand.Design/methodology/approachA multi‐sector computable general equilibrium (CGE) model of Thailand has been developed to accomplish the objectives of this study. The potential DSM program considered refers to replacement of less efficient electrical appliances with their efficient counterparts in the household sector in Thailand.FindingsThe study finds that the economy‐wide impacts of the DSM program (e.g., economic welfare, GDP, international trade) depend on three key factors: the project economics of the DSM option or the ratio of unit cost of electricity savings to price of electricity (CPR); the implementation strategy of the DSM option; and scale or size of the DSM option. This paper shows that the welfare impacts of the DSM programs would improve along with the project economics of the DSM programs. If the DSM program is implemented under the CDM, the welfare impacts would increase along with the price for certified emission reductions units. On the other hand, the welfare impacts would increase up to the optimal size or scale of the program, but would start to deteriorate if the size is increased further.Research limitations/implicationsThe welfare function considered in this paper does not account for benefits of local air pollution reductions. The study provides crucial insights on designing DSM projects in Thailand to ensure that DSM programs are beneficial for the economy as a whole.Originality/valueAnalyses of DSM options under the CDM using CGE models are not available in the literature. This is the first paper in this area.