Estimating residential demand for electricity in Greece

Abstract

This paper examines the residential demand for electricity in Greece. The issues of structural stability, price and income sensitivity of both long- and short-run residential demand for electricity in Greece were examined employing monthly data over the period 1986–1999. The long-run residential demand for electricity is estimated taking into account changes in weather conditions weighted by the size of the population employing multivariate framework analysis. A long-run residential demand function for electricity, sensitive to real income, price level and weather conditions, is found to exist and the importance of short-run deviations is presented using vector error-correction model (VECM) estimation. The empirical evidence suggests the presence of a stable residential demand for electricity in Greece both in the long- and short-run periods and the policy implications of such a relationship are presented.