Electricity Consumption and Temperature: Evidence from Satellite Data

Past studies on the relationship between electricity consumption and temperature have primarily focused on individual countries. Many regions are understudied as a result of data constraint. This paper studies the relationship on a global scale, overcoming the data constraint by using grid-level nig...

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Bibliographic Details
Main Author: Yao, Jiaxiong
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2021
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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653 |a Population & demography 
653 |a Wealth 
653 |a Income 
653 |a Regional Economic Activity: Growth, Development, and Changes 
653 |a Environmental Economics 
653 |a Demographic Economics: General 
653 |a Natural Disasters and Their Management 
653 |a Investments: Energy 
653 |a Saving 
653 |a Climate 
653 |a Electricity 
653 |a Climate change 
653 |a Aggregate Factor Income Distribution 
653 |a Population and demographics 
653 |a Consumption; Economics 
653 |a Demography 
653 |a Global Warming 
653 |a Consumption 
653 |a Population 
653 |a Electric Utilities 
653 |a Macroeconomics 
653 |a Macroeconomics: Consumption 
653 |a Investment & securities 
653 |a Size and Spatial Distributions of Regional Economic Activity 
653 |a Climatic changes 
653 |a Electric utilities 
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520 |a Past studies on the relationship between electricity consumption and temperature have primarily focused on individual countries. Many regions are understudied as a result of data constraint. This paper studies the relationship on a global scale, overcoming the data constraint by using grid-level night light and temperature data. Mostly generated by electricity and recorded by satellites, night light has a strong linear relationship with electricity consumption and is correlated with both its extensive and intensive margins. Using night light as a proxy for electricity consumption at the grid level, we find: (1) there is a U-shaped relationship between electricity consumption and temperature; (2) the critical point of temperature for minimum electricity consumption is around 14.6°C for the world and it is higher in urban and more industrial areas; and (3) the impact of temperature on electricity consumption is persistent. Sub-Saharan African countries, while facing a large electricity deficit already, are particularly vulnerable to climate change: a 1°C increase in temperature is estimated to increase their electricity demand by 6.7% on average