Residential electricity consumption in Poland

Abstract

The aim of this paper is to identify key factors that influence electricity consumption in the residential sector in Poland. We used a fixed-effects model, which includes time effects, and a set of covariates, which is based on the model developed by Houthakker et al. [8]. This model estimates electricity demand by using lagged values of the dependent variable along with current and lagged values of electricity prices, and other variables that affect electricity demand such as: population, economic growth, income per capita, price of related goods, etc. We modified the model according to our research results and results obtained by Bentzen and Engsted [1]. The set of covariates was extended to the lagged electricity price given by a tariff taken from two years previous to the time of interest) and heating degree days index (it is a very important factor in European Union countries, where the climate is temperate). In this paper, we propose four models of residential electricity demand, for which we assumed a confidence interval of 95%. Estimation is based on Polish quarterly data for the years 2003-2013.