Prediction of energy consumption: Variable regression or time series? A case in China

Abstract

AbstractEnergy consumption is closely related to industrial structure, economic prosperity, and population. Because of the Granger causal relationship between GDP and energy consumption, many researchers consider the regression method to predict energy consumption using economic variables. However, some other researchers regard the time series method (forecast) to estimate for energy consumption. To address the advantages and disadvantages of two methods in energy consumption prediction, we performed the deep learning (DL) based on the case of China. The experiment results show that the accuracy of time series forecast is much higher than regression methods. In addition, we also explored the relationship between industry, economy, population, and energy consumption. We found that GDP, population, secondary sector, and tertiary sector were significant to energy consumption. A tertiary sector can help to reduce energy consumption to some extent. This could give suggestions about changing industry structure. More and more attention has been paid to energy intensity. The strategic approach to sustainable development requires reducing energy intensity while developing the economy. Since China is committed to achieving carbon emission peak by 2030, this paper predicts the energy intensity of China in the next decade based on a DL algorithm. The prediction results show that energy intensity would slightly decrease in the next decade. Different types of energy represent the industrial structure behind economic growth. Therefore, this paper was conducted using ridge regression (RR) to explore the relationship between different types of energy and energy intensity. In addition, the effect (positive or negative) of different energy sources in reducing energy intensity has also been explored. We found that the best way of developing the economy and reducing energy consumption is to use natural gas and hydroelectric instead of coal. This can guide policy development about changing energy source structure.