Advertisement

Energy Efficiency

, Volume 7, Issue 5, pp 903–921 | Cite as

Modelling useful energy demand system as derived from basic needs in the household sector

  • Zahra A. Barkhordar
  • Yadollah SaboohiEmail author
Original Article

Abstract

Inter-fuel substitution in the household sector depends on whether their target energy use is similar or not. To account for the effect of end-use application on energy demand, the concept of useful energy is utilized in which energy carriers are grouped according to their end-use applications. Useful energy is assumed as a commodity demanded to satisfy needs. Therefore, it should possess certain characteristics in accordance with the nature of basic needs. These characteristics were investigated through a two-level budgeting system with demographic variables indicating rural and urban households of Iran. The model has been applied to estimate the behavioural parameters such as income and price elasticities of useful energy demand. The estimated values of income and own-price elasticity show that all categories of useful energy are necessities with a relatively inelastic demand. Among them, cooling and non-substitutable electricity has the highest income and own-price elasticity, while lighting and water heating are ranked as the most necessary types of useful energy due to their low-income elasticity. In addition, small values of cross price elasticities support the idea that different types of useful energy are almost independent. Therefore, the results confirm that useful energy demands could be considered as basic needs.

Keywords

Basic needs Useful energy Demand model Residential End-use energy 

Nomenclature

Variables

E

Expenditure elasticity

L

Likelihood function

p

Commodity price

pe

Price of final energy

U

Utility

x

Final energy

y

Quantity variable of either household size or household’s living area

Z

Commodity

µ

Expenditure

Parameters

Av

Availability of appliance

Pavg

Average rate of energy consumption

PF

Average utilization time

α

Marginal budget share in LES

β

Subsistence bundle of commodities

ε

Useful energy availability

η

Energy efficiency of appliance

Subscripts

i

Counter on useful energy

j

Counter on final energy

k

Counter on appliance type

n

Household expenditure decile

o

Counter on household characteristic (household size or living area)

Superscripts

UD

Useful energy

EN

Final energy

Acronyms

AIDS

Almost ideal demand system

CES

Constant Elasticity of Substitution

LES

Linear Expenditure System

MAED

Model for Analysis of Energy Demand

QAIDS

Quadratic AIDS

References

  1. Anandarajah, G., Kesicki, F. (2010). Global climate change mitigation: what is the role of demand reduction. In: (Proceedings) 11th IAEE European Conference.Google Scholar
  2. Attfield, C. L. F. (2005). A time series aggregate demand model with demographic and income distribution indices. UK: University of Bristol.Google Scholar
  3. Barnett, W. A., & Serletis, A. (2008). Consumer preferences and demand systems. Journal of Econometrics, 147, 210–224.CrossRefMathSciNetGoogle Scholar
  4. Barten, A. P. (1968). Maximum likelihood estimation of a complete system of demand equations. European Economic Review, 1, 7–73.CrossRefGoogle Scholar
  5. Becker, G. S. (1965). A theory of the allocation of time. The Economic Journal, 75(299), 493–517.CrossRefGoogle Scholar
  6. Bhattacharjee, S., Reichard, G., (2011). Socio-economic factors affecting individual household energy consumption: a systematic review, proceedings of the ASME 2011 5th International Conference on Energy Sustainability, USA.Google Scholar
  7. Bhattacharyya, S C., Timilsina, G R. (2009). Energy demand models for policy formulation: a comparative study of energy demand models, World Bank Policy Research Working paper WPS 4866.Google Scholar
  8. Böhringer, C., Rutherford, T.F. (2006). Combining top-down and bottom-up in energy policy analysis: a decomposition approach, ZEW Discussion Paper No. 06-007, Mannheim.Google Scholar
  9. Daioglou, V., van Ruijven, B. J., & van Vuuren, D. (2012). Model projections for household energy use in developing countries. Energy, 37, 601–615.CrossRefGoogle Scholar
  10. Deaton, A., & Muellbauer, J. (1980). An almost ideal demand system. The American Economic Review, 70(3), 312–326.Google Scholar
  11. Deaton, A., & Muellbauer, J. (1983). Economics and consumer behavior. United Kingdom: Cambridge University Press.Google Scholar
  12. Edgerton, D. L. (1997). Weak separability and the estimation of elasticities in multistage demand. American Journal of Agricultural Economics, 79(1), 62–79.CrossRefGoogle Scholar
  13. Filippini, M. (2011). Short- and long-run time-of-use price elasticities in Swiss residential electricity demand. Energy Policy, 39(5811), 5817.Google Scholar
  14. Fouquet, R. (2013). Long run demand for energy services: the role of economic and technological development, Working Papers 2013-03, BC3.Google Scholar
  15. Fullerton, T. M., Jr., Juarez, D. A., & Walke, A. G. (2012). Residential electricity consumption in Seattle. Energy Economics, 34, 1693–1699.CrossRefGoogle Scholar
  16. Geary, R. C. (1950). A note on ‘A constant utility index of the cost of living’. The Review of Economic Studies, 18(1), 65–66.CrossRefGoogle Scholar
  17. Gouveia, J. P., Fortes, P., & Seixas, J. (2012). Projections of energy services demand for residential buildings: Insights from a bottom-up methodology. Energy, 47(1), 430–441.CrossRefGoogle Scholar
  18. Grubler, A., Johansson, T. B., Mundaca, L., Nakicenovic, L., Pachauri, S., Riahi, K. et al. (2012). Chapter 1—Energy primer. In Global energy assessment—toward a sustainable future, Cambridge University Press, Cambridge, UK and New York, NY, USA and the International Institute for Applied Systems Analysis, Laxenburg, Austria, pp. 99–150.Google Scholar
  19. Guertin, C., Kumbhakar, S. C., & Duraiappah, A. K. (2003). Determining demand for energy services: Investigating income-driven behaviors. Winnipeg: International Institute for SustainableDevelopment (IISD).Google Scholar
  20. Guta, D. D. (2012). Application of an almost ideal demand system (AIDS) to Ethiopian rural residential energy use: panel data evidence. Energy Policy, 50, 528–539.CrossRefGoogle Scholar
  21. Hafele, W. (1977). On energy demand. 21st general conference of the International Atomic Energy Agency, Vienna, IAEA Bulletin 19:6.Google Scholar
  22. IAEA. (2006). Model for Analysis of the Energy Demand (MAED), Users’ manual for version MAED-2. Vienna: International Atomic Energy Agency.Google Scholar
  23. Iran Energy Balance Sheet (2010). Power and Energy Planning Department, Ministry of Energy of I.R.IRAN (available in Persian).Google Scholar
  24. Iranian Fuel COnservation company (IFCO). Applied information on efficient standards and energy labels. http://ifco.ir/building/standard/standard_inform.asp.
  25. Ivanco, M., Karney, B., Waher, K. (2010). Impact of conversion to compact fluorescent lighting, and other energy efficient devices, on greenhouse gas emissions, air pollution. V. Villanyi (Ed.).Google Scholar
  26. Lancaster, K. J. (1966). A new approach to consumer theory. The Journal of Political Economy, 74(2), 132–157.CrossRefMathSciNetGoogle Scholar
  27. Lula, J., & Antille, A. (2010). Estimation of private consumption functions for Switzerland (pp. 10–16). Trujillo: The Fifteenth World In forum Conference.Google Scholar
  28. Magnus, J. R. (1982). Multivariate error components analysis of linear and nonlinear regression models by maximum likelihood. Journal of Econometrics, 19, 239–285.CrossRefzbMATHMathSciNetGoogle Scholar
  29. Maslow, A. H. (1943). A theory of human motivation. Psychological Review, 50(4), 370–396.CrossRefGoogle Scholar
  30. McNeil, M., Letschert, V., de la Rue de Can, S., & Ke, J. (2013). Bottom–Up Energy Analysis System (BUENAS)—an international appliance efficiency policy tool. Energy Efficiency. doi: 10.1007/s12053-012-9182-6.Google Scholar
  31. Ministry of Industries and Mines (MIM). (2010). Active producers of industrial products. Tehran: Ministry of Industries and Mines (Available in Persian).Google Scholar
  32. NIORDC (National Iranian Oil Refining & Distribution Company). (2010). Statistical yearbook. Tehran: Public Relation of National Iranian Oil Refining & Distribution Company (Available in Persian).Google Scholar
  33. Pachauri, S. (2007). An energy analysis of household consumption: changing patterns of direct and indirect use in India. India: Springer.Google Scholar
  34. Pachauri, S., & Spreng, D. (2003). Energy use and energy access in relation to poverty. CEPE Working Paper Nr. 25. Switzerland: Centre For Energy Policy andEconomics.Google Scholar
  35. Pollak, R. A., & Wale, T. J. (1981). Demographic variables in demand analysis. Econometrica, 49, 1533–1551.CrossRefGoogle Scholar
  36. Samuelson, P. A. (1947). Some implications of linearity. The Review of Economic Studies, 15, 88–90.CrossRefGoogle Scholar
  37. Schermerhorn, J. R., Hunt, J. G., & Osborn, R. N. (2002). Organizational behavior (8th ed.). Hoboken: John Wiley & Sons, Inc.Google Scholar
  38. SCI (Statistical Center of Iran) (2010). Household Expenditure and Income Surveys. Statistical Center of Iran, Tehran. (Available in Persian).Google Scholar
  39. Stone, R. (1954). Linear expenditure systems and demand analysis: an application to the pattern of British demand. The Economic Journal, 64(255), 511–527.CrossRefGoogle Scholar
  40. Swan, L. G., & Ugursal, V. I. (2009). Modeling of end-use energy consumption in the residential sector: a review of modeling techniques. Renewable and Sustainable Energy Reviews, 13, 1819–1835.CrossRefGoogle Scholar
  41. Thoma, J. (1977). Energy, entropy, and information. Laxenburg: International Institute for Applied Systems Analysis.Google Scholar
  42. Tiezzi, S. (2005). The welfare effects and the distributive impact of carbon taxation on Italian households. Energy Policy, 33, 1597–1612.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Mechanical Engineering DepartmentSharif University of TechnologyTehranIran
  2. 2.Sharif Energy Research Institute (SERI)Sharif University of TechnologyTehranIran

Personalised recommendations