Nonlinear Effect Analysis of Electricity Price on Household Electricity Consumption

Abstract

The household energy consumption has been a hot field in the study of household energy consumption in recent years. With the increase of residents’ income level and the pushing of urbanization, there is a complex nonlinear relationship between energy price and energy consumption. The purpose of this paper is to investigate the scenario effect of per capita income and regional differences in urbanization development on the relationship between electricity sales price and urban household electricity consumption. To this direction, based on the regional characteristics of economic development in China, with the residents’ disposable income and the urbanization level as the conversion variables and the electricity sales price as the core explanatory variable, the panel smooth transition regression (PSTR) model of electricity sales price and urban household electricity consumption from the perspectives of income level and urbanization has been constructed in this paper. The empirical results show the following: (1) Under the consideration of regional difference of residents’ income level, with the increase of residents’ disposable income level, there is a significant negative correlation between electricity sales price and urban household electricity consumption in the whole country, the eastern region, and the central region, while such correlation is significantly positive in the western region. (2) Under the consideration of the difference of urbanization development level, the national regional electricity sales price and the urbanization level are positively related to the urban household electricity consumption, and the urbanization level in the western region plays the biggest role in promoting the urban household electricity consumption, followed by the eastern region and then the central region which plays the smallest role. This paper discusses the effect of electricity sales price on urban household electricity consumption from the perspective of regional difference in income and urbanization, which provides the decision-making basis and empirical support for developing regional electricity price policy and household energy consumption policy.

Research on energy consumption in household sector: a comprehensive review based on bibliometric analysis

“…Belaid and Garcia (2016) conducted an empirical study on the main factors that motivate energy saving behavior in French households through econometric modeling. Zhang and Wen (2021) develop a Panel Smoothed Transition Regression (PSTR) model and explore the driving effects of urbanization level and income level on household electricity consumption according to empirical data. In addition, Least squares method (LMS) (Besagni and Borgarello, 2019) and Quantile regression model (Tilov et al, 2020) are frequently used to explain the effect of factors such as social-economic and household characteristics on HEC.…”