EFFECTS OF CLIMATE CHANGE ON ELECTRICITY CONSUMPTION: A DECOMPOSITION OF INDUSTRIAL, RESIDENTIAL, AGRICULTURAL, AND COMMERCIAL SECTORS

Abstract

This study explores the impacts of temperature changes on electricity consumption in South Korea. In particular, the study estimates the impacts by separating them into the residential, commercial, industrial, and agricultural sectors. The study found that temperature changes affect the electricity consumption of all four sectors. However, the size and shape of impacts vary depending on the sector. While the commercial and industrial electricity consumption increase both in hot and cold temperatures, residential consumption increases only in hot temperatures. The agricultural sector shows that its consumption responds to cold temperatures more significantly than hot temperatures. These results suggest that the sectoral variations should be considered when predicting future electricity consumption. With an assumption of 2°C average temperature increases, the electricity consumption of residential, commercial, industrial, and agricultural sectors is projected to increase by 6%, 8%, 1%, and 4% in the summer season (July to September), respectively. In the spatial analysis, the annual consumption of residential and commercial sectors is projected to increase in most counties while the agricultural sector shows the opposite result. With 2°C and 5°C average temperature increases, the study found that total electricity consumption in August would increase by 4.1% (1.5[Formula: see text]TWh) and 11.3% (4.1[Formula: see text]TWh). This would create additional costs of $0.17 billion and $0.45 billion with an assumption that the average marginal cost of electricity in South Korea was 11 cents per kWh.