How price responsive is industrial demand for electricity in the United States?

Raymond Li, Chi Keung Woo, Asher Tishler, Jay Zarnikau

Research output: Contribution to journalArticlepeer-review

Abstract

We use five parametric specifications and monthly data for the lower 48 states in 2001–2019 to document that industrial demand for electricity in the United States (US) is price inelastic, with statistically significant (p-values ≤ 0.05) estimates of − 0.029 to − 0.130 for the static own-price elasticity, − 0.021 to − 0.133 for the short-run own-price elasticity, and − 0.043 to − 0.214 for the long-run own-price elasticity. Absent significant price escalation (e.g., 10% per year), the US industrial customer class's price-induced conservation of electricity is likely modest, justifying the continued use of energy efficiency standards and demand side management programs to achieve deep decarbonization.

Original languageEnglish
Article number107141
JournalElectricity Journal
Volume35
Issue number6
DOIs
StatePublished - Jul 2022

Keywords

  • Industrial electricity demand
  • Panel data analysis
  • Price elasticity
  • United States

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