Economics

Introduction

For energy consumption both income and price elasticity, the ratio between the relative change in energy consumption and the relative change in income or price, have been studied by many researchers. Often, the income and price elasticity are used to describe future electricity and fuel consumption trends for households (Filippini: 533). This is especially convenient for a longer time frame when little is known about specific factors that may shape future energy consumption. However, it is difficult to justify transposing elasticity values observed in the past to the future. The elasticity is by nature a statistical entity at the level of aggregated energy use and it is hardly possible to relate elasticity values to real world causes for changes in energy consumption. These causes encompass, for instance, the chosen dwelling type with a certain energetic quality, the heating and hot water systems with more or less comfort and efficiency, the purchasing of all kind of electric appliances and finally the intensity of use of all these items (ECN: 18). The choices made by households are not only affected by income and energy prices but also by many other factors, such as the composition of households, own versus rented dwellings and energy use standards for new dwellings or appliances.

Outline of the model and simulation of past energy trends

The simulation model, which is applied in the analysis of historic prices, policy measures and household energy consumption, is an adapted version of the SAVE-Households model, described in Boonekamp (1997). It has been applied for various energy policy scenarios for the India, e.g., ECN (1998). First some key elements of the model are presented; then the adaptations and the historic simulation are described.

Main structure of the simulation model

In the model, household energy consumption is divided into 7 so-called energy functions: space heating, supply of hot water, cleaning (washing/drying/dishwasher), cooling (food), cooking, lighting, and other appliances (television, audio and all other electric devices). For each function energy demand follows from a set of driving factors, e.g., the number and type of dwellings for space heating, or the type of households and life style trends for cooking (Dubin & McFadden: 345).

The demand for each energy function is met by one or more energy consuming systems or appliances, e.g., boilers or geysers for hot water, or refrigerators and freezers for cooling. Dwellings are considered as an energy consuming system too. Their energetic characteristics, together with the heaters or boilers, provide for a comfortable living space. The development of energy consumption for all these energy systems or appliances determines the trend in total household energy consumption. In the model total energy consumption of every system or appliance is defined by three factors: the ownership rate, the intensity of use and the energy efficiency of the system or appliance (see Fig. 1).

Fig. 1. Key elements in the simulation model for household energy consumption.

The ownership rate, the fraction of households that use a specific system or appliance, is most often coupled to socio-demographic developments, such as the increase in the number of ...