Estimating the Elasticity of Electricity Demand in Iran: A Sectoral-Province Approach


Faculty of Economics, University of Allameh Tabataba'i, Tehran, Iran



nergy is one of the main and essential factors in economic growth. Electricity as one of the most important resources of energy supply for economic sectors on one hand, and as an index of welfare, on the other hand, is one of the economic development benchmarks. The growth of GDP will increase the demand for energy resources, including electricity. Hence, policymakers should pay attention to secure electricity supply in their economic planning process. In this study, due to the different structure of each economic sector and the impact of geographical and climate conditions, the electricity demand function in different economic sectors (industry, agriculture, and services) between 31 Iranian provinces during the period of 2010-2014 is estimated in which different panel data method was employed. The results of this study show that the value-added (income) elasticity of electricity demand in all economic sectors is significant, positive and smaller than unity. The elasticities estimated for the industry, agriculture, and service sectors are 0.39, 0.6 and 0.53, respectively. Also, the own price elasticity of electricity demand for industry and service sectors is significant and smaller than unity and is not significant for the agricultural sector. Additionally, the results indicate that the value-added of the Iranian economic sectors has a positive and significant effect on the electricity demand of each sector.


Amadeh, H., Mehregan, N., Haqhani, M., & Haddad, M. (2014). Estimation of Structural Model of Electricity Demand in Agriculture Sector Using Implicit Trend Concept and Kalman Filter Algorithm. Quarterly Journal of Energy Economics, 10(42), 109-134.


Asgari, A. (2002). Estimating the Demand for Electricity in the Sectors of Industry, Agriculture, and Services, and Estimating its Price Elasticity and Revenue. Journal of Program and Budget, 78, 47-75.


Azarbaijani, K., Sharifi, A., & Satei, M. (2006). Estimation of the Electric Energy Demand Function in the Industrial Sector of Iran (1361-1386). Journal of Economic Research, 73, 133-166.


Bianco, V., Manca, O., & Nardini, S. (2009). Electricity Consumption Forecasting in Italy Using Linear Regression Models. Energy, 34(9), 1413-1421.



Bose, R. K., & Shukla, M. (1999). Elasticities of Electricity Demand in India. Energy Policy, 27(3), 137-146.


Campbell, A. (2018). Price and Income Elasticities of Electricity Demand: Evidence from Jamaica. Energy Economics, 69, 19-32.


Chang, Y., Kim, C. S., Miller, J. I., Park, S., & Park, J. Y. (2014). Time-varying Long-run Income and Output Elasticities of Electricity Demand with an Application to Korea. Energy Economics, 46, 334-347.


Dieleman, J. L., & Templin, T. (2014). Random-Effects, Fixed-Effects and the Within-Between Specification for Clustered Data in Observational Health Studies: A Simulation Study. Plos one, 9(10), 1-17.


Feehan, J. P. (2018). The Long-run Price Elasticity of Residential Demand for Electricity: Results from a Natural Experiment. Utilities Policy, 51, 12-17.


Jalayee, A., Jafari, S., & Ansari Lari, M. S. (2013). Estimation of Domestic Electric Demand Function in Iran Using Provincial Panel Data. Iranian Energy Economics Quarterly, 2(8), 69-92.


Kamerschen, D. R., & Porter, D. V. (2004). The Demand for Residential, Industrial and Total Electricity (1973-1998). Energy Economics, 26(1), 87-100.


Latif, E. (2015). A Panel Data Analysis of the Demand for Electricity in Canada. Journal of Applied Economics and Policy, 34(3), 192-205.


Mehrara, M., & Abdi, A. (2005). Estimation of Demand Functions for Construction Inputs: Case of Iran. Quarterly Journal of Economic Research, 5(4), 112-189.






Mohammadi, H., & Mohtashemi, M. (2010). Investigating Factors Affecting Electricity Demand in the Industrial Sector. Second National Conference on Electricity Consumption Pattern Modification, Khuzestan Regional Electricity Network, Retrieved from


Mohammadi, T., Khorsandi, M., & Amir-Momeni, M. (2014). Modeling Demand for Electricity in Iran's Industrial Sector: Structural Time Series Model Approach. Quarterly Journal of Economic Modeling Research, 8, 117-187.


Nazari, B., & Sadeghi, H. (2015). Estimation of Demand in the Industrial Sector of the Country. International Conference on Management, Economics, and Accounting, Retrieved from


Saha, D., & Bhattacharya, R. N. (2018). An Analysis of Elasticity of Electricity Demand in West Bengal, India: Some Policy Lessons Learnt. Energy Policy, 114, 591-597.


Salavati Nejad, I., & Ismailnia Ketabi, A. A. (2014). Short-term and Long-run Factors Affecting the Demand of Electric Energy Among Different Economic Sectors of the Country. International Conference and Online Green Economy, Retrieved from


Salimifar, M., Seifi, A., & Shoorri, S. (2017). The Study of the Effect of the Value-Added of the Industrial Sector on the Electricity Demand for This Sector and the Prediction of the Electricity Demand of the Industry in Light of Price Reforms. Economic Research, 52(2), 311-322.


Samadi, S., Shahidi, A., & Mohammadi, F. (2008). Power Demand Analysis in Iran Using the Concept of Co-integration and ARIMA Model (1336-1368). Science and Development Magazine (Scientific-Research), 15(25), 113-136.






Vahrami, V., & Movahedian, M. (2017). The Fitting of the Demand Function of the Domestic Electricity Sector of Selected Cities in Tehran Province Using Dynamic Panel Method. Quarterly Journal of Economic Research (Sustainable Growth and Development), 17(2), 121-144.