The pattern of electricity use in residential sector: The experiences from 133 economies

While growing electricity consumption in residential sectors worldwide will draw more attention in economic and policy related decisions, the fast-growing developing world still requires enormous amounts of electric power to achieve better living conditions. This dilemma can hardly be addressed without a thorough understanding of the relationship between economic development and residential electricity demand. Based on a country-level panel data set covering 133 countries or regions over four decades, this paper aims to investigate how the historical relationship between economic development and residential electricity use evolved. Different to previous studies, we are not assuming the curve shape of the electricity use and economy in advance. A flexibly piecewise spline model is employed rather than the commonly used linear, quadratic, cubic polynomial or S shape saturation curve model. We capture an inverted-U relationship, and the turning point is at about $20,000 (purchasing power parity, 2005 constant price). This pattern is robust in the sense that it is not sensitive to eliminating any special countries or to alternative model specifications. These results are important for understanding the future trend of electricity consumption in the less developed world.