Extreme temperatures and residential electricity consumption: Evidence from Chinese households

Abstract

We estimate the causal effect of extreme temperatures on household electricity consumption using the China Residential Energy Consumption Survey (CRECS), which contains validated data on electricity consumption from respondents' electricity bills. We find that for each additional day in which the mean temperature exceeds 32 °C, relative to a day in which temperature is in the range 10 °C–16 °C, there is an 8.9% increase in annual electricity consumption. Exploiting rich information on the use of major home appliances which is available in CRECS, we demonstrate that this large effect is due to households using air conditioners more, at both the extensive and intensive margins, to cope with heat stress. Combining our baseline estimates with daily temperature projections from eight recent climate models, we simulate changes in future electricity consumption due to global warming. We find that residential electricity consumption would increase by 9.59–30.09% in the medium term and by 9.77–47.70% in the long term, depending on whether measures are taken to curb greenhouse gas emissions.