Residential Electricity Consumption and Economic Growth in Algeria

Abstract

Within the framework of the COP21 (Conference of the Parties) agreement, Algeria submitted its Intended Nationally Determined Contribution pledging to reduce carbon emissions by at least 7% by 2030. However, it will be a difficult task to reach this target as total final energy consumption has increased 32% from 2010 to 2014, with the major energy increases being related to electricity use in the residential sector. In this context, the relationship between residential electricity consumption and income is analyzed for Algeria in the period 1970-2013, by estimating a residential electricity consumption per capita demand function which depends on GDP per capita, its squared and cubed terms, the electricity prices, and the goods and services imports. An extended Autoregressive Distributed Lag model (ARDL) was adopted to consider the different growth patterns registered in the evolution of GDP. The estimate results show that the relationships between electricity use and GDP (in per capita terms) present an inverted N-shape, with the second turning point having been reached. Therefore, promoting growth in Algeria could be convenient to reduce the electricity consumption, as a higher income level may allow the use of more efficient appliances. Additionally, renewable energies may be adequate to increase the electricity production in order to cover the increasing residential demand.

Changes in Energy Consumption, Economic Growth and Aspirations for Energy Independence: Sectoral Analysis of Uses of Natural Gas in Ukrainian Economy

“…The existence of these connection was found in particular in [32], although, for example, it was not fixed in [33]. According to the authors of the paper [34], which explores the relationship between electricity consumption and economic growth in Algeria, the non-linearity of the relationship between these indicators is due to the fact that with the increase in their income consumers can afford to buy more energy-efficient devices.…”

Evaluation of the Adaptability of the Ukrainian Economy to Changes in Prices for Energy Carriers and to Energy Market Risks

“…The specific features of different countries that determine the needs of their economies in energy resources can be one of the reasons for these divergences. In addition, the fact that the consumption of energy carriers is influenced not only by their prices but also by other factors should be also taken into account [46,47]. In particular, some scientists include the income level of the population to these factors analyzing the impact of energy prices [48,49].…”

Measures to Promote Renewable Energy for Electricity Generation in Algeria

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