Residential energy environmental Kuznets curve extended with non-linear temperature effects: a quantile regression for Andalusian (Spain) municipalities

Abstract

The increased use of renewable energy in electricity generation has not been sufficient to reduce the associated emissions. Therefore, a better understanding of the evolution of electricity consumption may be advisable to undertake suitable energy policies. This paper contributes to this understanding by analyzing the non-linear income and temperature effects on electricity demand in the residential sector in Andalusia (Spain). To this end, panel data Ordinary Least Squares and quantile regression analysis methods have been performed to provide a complete picture of the relationship between the studied variables. The results show evidence to support an inverted N shaped relationship, with respect to income, without reaching the upper threshold point. The results also show that electricity elasticity, with respect to income, tends to increase with residential electricity consumption. It is also observed that temperature values, increasing above 22ºC and temperatures decreasing below 15ºC, progressively increase residential electricity consumption, the elasticity with respect to temperatures being higher for municipalities with lower residential electricity consumption. Reinforcing energy efficiency measures in the municipalities with the highest electricity consumption is recommended.