Analysing the drivers of the efficiency of households in electricity consumption

Abstract

Households play a very relevant role in energy demand in general and electricity demand in particular. Although electricity is an essential product in our daily life, reductions of electricity demand have generally been defended on environmental and energy security grounds. The aim of this paper is to analyse the level and the drivers of efficiency in household electricity consumption using an estimator for endogenous stochastic frontiers. A panel of data is built for this purpose, using statistical matching techniques with seven waves of the Spanish Household Budget Survey (SHBS) from 2006 to 2012. Several economic and non-economic variables are considered, including income, household features and characteristics of the dwelling. Our findings suggest that the level of electricity efficiency is already relatively high for households in all income levels. The results also reveal that there is a negative relation between income and efficiency in electricity consumption, i.e., that the lowest income households are also the most efficient. Furthermore, one feature of dwellings (the number of rooms) and two features of households (their size and the educational level) are relevant drivers of household efficiency in electricity consumption. Whereas the educational level and household size negatively affect electricity efficiency, the number of rooms positively influences efficiency. Our findings suggest that general price-based measures which drive the adoption of electricity efficient technologies and behaviors should be complemented with two types of policy interventions: policies which encourage households to be more efficient (i.e., information provision and financial support for the adoption of ele ctricity-efficient practices) and measures specifically targeted at low-income households which mitigate the comparatively greater distributional impact of price increases on this household segment.