INCOME, EXTREME TEMPERATURE, AND RESIDENTIAL ELECTRICITY CONSUMPTION IN THE SPANISH PROVINCES

Abstract

The effect of income and extreme temperatures on the residential electricity consumption in Spain is analyzed. An electricity demand function is estimated by means of ordinary least squares-Driscoll and Kraay, feasible generalized least squares, and quantiles panel data techniques, for the total of the sample, and by coastal climatic zones. The results support the energy-environmental Kuznets curve hypothesis for Spain, the continental, and Mediterranean zones. An N form is found for the Atlantic zone. The results also reflect that increases in temperature above 22∘C and decreases below 15∘C increase electricity consumption, this increase being progressive as temperatures vary. Thus, extreme temperature generates electricity consumption growth. The Mediterranean zone is most sensitive to these temperature changes. The results also show that electricity consumption is more sensitive to cold than to heat. The results suggest an inefficient use of heating and cooling appliances in the areas with the highest electricity consumption.