Regional analysis of electricity demand growth

Abstract

This paper presents the regional electricity demand-forecasting model developed at the Oak Ridge National Laboratory. The model forecasts electricity demand and price by sector and by state. Econometric models are estimated for each of the nine census regions separately, using pooled time-series and cross-sectional (state) data. Thus, the estimated demand elasticities used in the forecasting model vary from region to region. The paper also presents and analyzes the most recent forecasts for nine selected states. The results show that electricity demand will continue to grow in all sectors and in all states. However, the rates of growth will be considerably lower than those observed in the 1950s and 1960s. Furthermore, the forecasted rates of growth in electricity demand vary considerably from state to state. The reasons for these variations being the different patterns of projected future growth in population, income, and industrial activities, as well as the different degrees of demand responsiveness to price changes among states. These regional variations of electricity demand growth suggest that forecasts at the national level should not be used as the basis for making energy policies at the regional or state level.