Effect of the subsidised electrical energy tariff on the residential energy consumption in Jordan

Abstract

The application of a fair tariff for electricity pricing is aimed at controlling demand and promoting sustainability by motivating homeowners to use household appliances as well as heating and cooling systems that offer increased energy efficiency. It is possible to structure the price levels such that customers (typically those who have increased demands for electricity) are encouraged to lower their overall demand. The reorganisation of electrical subsidies within the residential sector has considerable importance for the country’s economy as well as for more effective management of the consumption of electricity and the resulting effects on the environment, which lays the foundation for more sustainable development. In the current research, data from 260,000 regular customers paying standard electricity tariffs were gathered and the energy usage of in excess of 1,000 energy-subsidised District Electricity Distribution Company (IDECO) members of staff was recorded over a period of two years (2017 and 2018). A comparison was made between the two aforementioned groups to investigate the outcomes of energy subsidies on energy usage as well as consumption patterns within the residential sector. The results of the analysis indicated that on average, normal homeowners used approximately 297 kWh/month, whereas customers whose electricity was subsidised consumed approximately 615 kWh/month. In both winter and summer, there was an increase in the amount of energy consumed, particularly among those receiving subsidies, as the demand for heating and cooling was raised. The application of electricity tariffs (with no subsidisation) provides a means of controlling the demand profile that is particularly effective. The structure of tariffs can motivate customers (typically those electricity consumption levels are high) to lower their overall consumption in addition to peak demand (which has the consequence of limiting the strain on the grid and power stations) by requiring them to pay for electricity at maximum prices.