Assessing the impact of Brazilian economic growth on demand for electricity

Abstract

This study analyzes the effect of increased Gross Domestic Product (GDP) on demand for electricity in Brazil from 2004 through 2018 using a transfer function model. The data was derived from a time series of monthly Brazilian GDP and from a monthly series of total Brazilian energy consumption. As an increase in GDP is considered a proxy for economic growth, the study indicates that a 1% increase in Brazilian GDP results in a 0.475% increase in total electricity consumption in Brazil. In addition, electricity consumption forecasts were obtained for the 2018–2023 period using two procedures: the “standard” and “one-step-ahead” procedures. Two quantity indexes were also calculated for this period: one based on consumption forecasts obtained in this study and another based on estimates of installed capacity provided by the EPE. Growth was observed in both indexes, but the series for consumption had a very conservative growth in relation to that recorded for installed capacity. This analysis intends to provide an important contribution to existing literature by assessing the impacts of different GDP growth rates on demand for electricity.