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Modeling Household Electricity Demand in Tehran Province: A Structural Time Series Approach
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Mir Hossein Mousavi *1   , Esmaeel Safarzadeh |
| 1- , hmousavi@alzahra.ac.ir |
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Abstract: (6 Views) |
| Modeling Household Electricity Demand in Tehran Province: A Structural Time Series Approach Mir Hossein Mousavi Associate professor, Department of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran, (hmousavi@alzahra.ac.ir) Esmaeel Safarzadeh Assistance professor, Department of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran. (e.safarzadeh@alzahra.ac.ir) Farid Dehghani Instructor, Department of Energy, Industry and Mining, Parliament Research Center, Tehran, Iran, (fdehghani1979@gmail.com) Received: 2024/12/25 Accepted: 2025/01/19 Abstract 4 The imbalance between electricity supply and demand has caused a disequilibrium in the power grid. One of the solutions to address this imbalance is the reform of electricity tariffs, aimed at encouraging energy efficiency and private investment. However, this approach significantly impacts household welfare. In this article, by introducing the concept of the underlying trend and its role in electricity demand, we model household electricity demand in Tehran province using the structural time series method. For this purpose, time series data for the period 1982–2022 were utilized. The results indicate that the nature of the underlying trend in household electricity demand is stochastic and follows a smooth trend. The short-term and long-term own-price elasticities of electricity demand are -0.029 and -0.39, respectively, which indicate that electricity demand is inelastic to price changes. This reaction is greater in the long term than in the short term. The income elasticity of demand in the short term and long term is 0.38 and 0.5, respectively, meaning that electricity is a normal necessity good in the household consumption basket. Natural gas also serves as a substitute for electricity in the household sector, though the degree of substitution between them is low. Moreover, electricity demand is elastic with respect to the number of subscribers in both the short term and the long term. JEL Classification: E32, L94, D12, Q41, D50. Keywords: minimum subsistence, energy, Linear Expenditure System, seemingly unrelated regressions. |
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| Keywords: disequilibrium, electricity demand, unobservable component, structural time series model |
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Full-Text [PDF 1282 kb]
(3 Downloads)
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Type of Study: paper |
Subject:
E.Economic
Received: 2024/12/25 | Accepted: 2025/01/19 | Published: 2025/09/1 | ePublished: 2025/09/1
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