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Modelling Required Energy Consumption with Equivalence Scales

Abstract:
Due to difficulties in accessing detailed energy modelling and usage data that are required to estimate energy needs that are responsive to local circumstances, we propose an equivalence scale approach to the determination of required energy consumption. Our method requires the estimation of energy equivalence scales that are used to rescale reference household energy consumption and, thus, yield household-specific energy requirements. We apply the method using readily available income and expenditure data, finding that estimated required energy is well above actual energy expenditure for low- and middle-income households, which is consistent with an expectation that basic energy needs for poor households may not be met. The proposed approach is general enough to incorporate other features that might be deemed relevant and available in other settings, and, therefore, can be used to examine the affordability component of SDG 7, undertake energy poverty analysis or design appropriate policies.

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Keywords: Required energy consumption, Equivalence scale, Energy poverty, Semiparametric regression

DOI: 10.5547/01956574.43.6.yuye

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Published in Volume 43, Number 6 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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