An empirical analysis of electricity consumption in Cyprus

Abstract

The paper presents the first empirical analysis of electricity consumption in Cyprus. Using annual data from 1960 to 2004, we have examined electricity use in the residential and the services sectors, which are the fastest-growing electricity consumers in the island, and its interaction with income, prices and the weather. The analysis was performed with the aid of time series analysis techniques such as unit root tests with and without a structural break in levels, cointegration tests, Vector Error Correction models, Granger causality tests and impulse response functions. Results show long-term elasticities of electricity use above unity for income, and of the order of-0.3 to-0.4 for prices. In the short term electricity consumption is rather inelastic, mostly affected by weather fluctuations. Granger causality tests confirm exogeneity of electricity prices and bidirectional causality between residential electricity consumption and private income. The commercial sector is less elastic and reverts faster to equilibrium than the residential sector. Despite the relatively small sample size, results reported here are quite robust and can be used for forecasts and policy analyses.

Energy conservation policies, growth and trade performance: Evidence of feedback hypothesis in Pakistan

“…On the other hand, studies such as Cheng andLai (1997), Ghosh (2002), Soytas and Sari (2003), Yoo (2006), Halicioglu (2007) and Hu and Lin (2008) find evidence of the unidirectional causality running from economic growth to energy consumption. Finally, the evidence of bidirectional causality between energy consumption and economic growth has been found in, among others, Ebohon (1996), Yang (2000), Hondroyiannis et al, (2002), Yoo (2005), Zachariadis and Pashourtidou (2007), Wolde-Rufael (2006), Squalli (2007), Chen et al (2007), Akinlo (2008), Narayan and Smyth (2009), Wolde-Rufael (2009), and Shahbaz et al (2012.…”

On the causality and determinants of energy and electricity demand in South Africa: A review

“…Specifically for residential demand, variables representing micro-behaviour such as household size, or number of appliances have also been used in the literature (Wilson, 1971;Westley, 1984) along with variance in the weather conditions (Zachariadis and Pashourtidou, 2007;Diabi, 1998;Hondroyiannis, 2004;Donatos and Megos, 1991;Abosedra et al, 2009). For the South African case, except for Ziramba (2008) that looked at the residential demand but in a macro-approach, Louw et al (2008) examined the determinants of electricity demand for newly electrified low-income African households.…”

Regulatory Objectives and the Intensity of Unbundling in Electricity Markets

“…For Austria, Denmark, Germany, Ireland, the Netherlands, Portugal (Madlener et al, 2011), Cyprus (Zachariadis and Pashourtidou, 2007), France, the UK (Narayan et al, 2007;Madlener et al, 2011), Greece (Hondroyiannis, 2004;Madlener et al, 2011), Spain (Madlener et al, 2011;Blázquez et al, 2012) and Italy (Narayan et al, 2007;Madlener et al, 2011;Dicembrino and Trovato, 2013), the long-run price elasticity of household electricity demand is found to be negative and inelastic; results indicate the same for the long-run price elasticity of industrial power demand in Greece (Christopoulos, 2000;Polemis, 2007), Italy (Dicembrino and Trovato, 2013), Cyprus (Zachariadis and Pashourtidou, 2007; restricted to the service sector) and Germany (Madlener et al, 2011; only for food and tobacco, chemicals, pulp and paper, non-metallic minerals and transport equipment as subsectors of manufacturing). A negative and elastic long-run price elasticity of residental electricity demand is furthermore suggested for Finland (Madlener et al, 2011) and Germany (Narayan et al, 2007).…”