Price and income elasticities of industrial electricity demand in Brazil: estimates and implications of COVID-19
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 13 June 2023
Abstract
Purpose
This study aims to examine the price and income elasticities of short- and long-run industrial electricity demand in Brazil between 2003 and 2020. The research also examines the impacts of COVID-19 in Brazil’s industrial electricity sector, including an analysis in states more and less industrialized.
Design/methodology/approach
Dynamic adjustments models in panel data are used to present robust estimates and analyze the impact of different methodologies on reported elasticities.
Findings
The short-run price elasticity is estimated at −0.448, while the long-run values are around −1.60. Regarding income elasticity, the value is 0.069 in the short-run and is concentrated in 0.25 in the long-run. The inelastic results of income show that the industrial demand for electric energy follows the trend of loss of competitiveness of the Brazilian industry in the past years. In addition, the price of natural gas, the level of employment, and, in specific cases, the level of imports also influence industrial electricity demand.
Originality/value
The research is a pioneer in the investigation of the industrial behavior of electricity of the Brazilian industrial branch, using as control variables, the average temperature, and the level of rainfall, this one, so important for a country whose main source is hydroelectric. In addition, to the best of the authors’ knowledge, it is the first study, which is prepared to analyze the effects of COVID-19 on electric consumption in the industrial sector, investigating these impacts, including in the states considered more and less industrialized. The estimates generated may help in the design of the Brazilian energy policy.
Keywords
Acknowledgements
This work was supported by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES).
This work was also supported by the Post-Graduate Program in Intellectual Property and Technology Transfer for Innovation (in Portuguese, Programa de Pós-Graduação em Propriedade Intelectual e Transferência de Tecnologia para Inovação – PROFNIT) and PRPGI/IFBA.
Citation
Martins, L.O.S., Amorim, I.R.d., Mendes, V.d.A., Silva, M.S., Mendonça Freires, F.G. and Torres, E.A. (2023), "Price and income elasticities of industrial electricity demand in Brazil: estimates and implications of COVID-19", International Journal of Energy Sector Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJESM-03-2022-0007
Publisher
:Emerald Publishing Limited
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