Electricity consumption in the digital era: Micro evidence from Chinese households

Abstract

This paper studies the impact of internet access on household electricity consumption, using three waves (six years) of China Family Panel Study survey data. We separately explore short-, medium-, and long-term effects. The panel fixed regression results indicate that after gaining access to the internet, individual electricity consumption declines about 1.2% as the short-run effect (around two years). Difference-in-differences (DID) estimation shows that after using the internet for four years, individual electricity demand declines on average a total of 12.5% as the medium-term effect. For all internet users during the entire survey period, propensity score matching (PSM) shows that electricity consumption decreases 16.3% on average compared to nonusers, which can be seen as the long-term effect. Substitution and optimization of household appliances and individual pro-environmental behaviors and green lifestyles promoted by digitalization may explain the results. Our findings suggest that policies to enhance access to high-speed, affordable, and reliable internet services contribute to reducing household electricity consumption, thereby helping cut CO2 (carbon dioxide) emissions from fossil fuel-based power plants while also alleviating problems of insufficient electricity production capacity.