Electricity demand modeling in Saudi Arabia: Do regional differences matter?
Jeyhun I. Mikayilov, Fakhri Hasanov, Waheed Olagunju, Mohammad H. Al-Shehri
Abstract
The paper examines the electricity demand behavior for Saudi Arabia, using annual data for the period of 1990–2016, at regional level. The study finds that income, price and population are the main drivers of electricity demand at regional level. Although, the impacts vary across regions (central, eastern, southern and western), the estimated elasticities all are statistically significant, in both long and short run, and have the expected signs for all the regions. The income, price and population elasticities range from 0.10 to 0.93, from -0.63 to -0.06, and from 0.24 to 0.95, respectively, across regions in the long run. In the short run these intervals are (0.05, 0.47), (−0.27, −0.01) and (0.13, 1.49) respectively for income, price and population across the regions. The findings reported in this paper, should assist policy makers to develop insights about the potential regional impact of changes to electricity prices, income and population patterns.