Modeling Residential Electricity Demand in the GCC

About the Project

This project attempts to model econometrically residential electricity demand for the six Gulf Cooperation Council countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Using the Structural Time Series Model, the impact of the drivers of residential electricity demand – prices, income, population, weather and other exogenous factors – are considered in order to provide information on their relative importance. This project is part of a larger body of KAPSARC research analyzing energy demand, energy efficiency, and rebound.

Key Points

Our research suggests that consumers’ response to a change in the real electricity price in the GCC region has been very limited during the past three decades.

The low price response coupled with the low administered electricity price regime, together with rapidly increasing income and prosperity, has resulted in residential electricity demand in the GCC region increasing rapidly over the past three decades. 

Beyond a certain level of harsh climatic conditions, variations in local temperatures have a minor impact on residential electricity demand in the GCC region since temperatures have traditionally been extreme. 

Underlying electricity use due to evolving consumer behavior — holding all other drivers constant — has been increasing in Saudi Arabia, Bahrain and Oman. However, for Kuwait, it reached a level in the early 1990s that has been maintained thereafter. This suggests a sizeable reduction in consumption could be achieved through energy awareness campaigns.