Navigating uncertainty: exploring electricity demand dynamics in Swedish industrial sectors amid global shocks and instability

Abstract

This study aims to provide insights into the factors shaping electricity demand in Swedish industrial sectors using the nonlinear version of the autoregressive distributed lag model (NARDL). This approach captures the complex short- and long-run relationships between uncertainty and electric power use in Swedish industrial sectors. The results reveal sector-specific responses to uncertainties and asymmetries in electricity use patterns. By examining the entire industrial sector in Sweden, this approach uncovers underlying issues and hidden patterns, while also providing insights into the functioning and behaviour of industrial systems. The rapid electrification and new green industrialisation initiatives in Sweden, coupled with the integration of a circular economy, underscore the importance of understanding the dynamics of electricity use in the face of uncertain shocks. This knowledge is vital for ensuring, amongst other things, grid stability, mitigating the need for costly peaking capacity, and identifying potential challenges in the interconnection of energy and material circular flows.