Energy Demand Models for Policy Formulation : A Comparative Study of Energy Demand Models

Energy Demand Models for Policy Formulation : A Comparative Study of Energy Demand Models

This paper critically reviews existing energy demand forecasting methodologies highlighting the methodological diversities and developments over the past four decades in order to investigate whether the existing energy demand models are appropriate for capturing the specific features of developing countries. The study finds that two types of approaches, econometric and end-use accounting, are used in the existing energy demand models. Although energy demand models have greatly evolved since the early 1970s, key issues such as the poor-rich and urban-rural divides, traditional energy resources, and differentiation between commercial and non-commercial energy commodities are often poorly reflected in these models. While the end-use energy accounting models with detailed sector representations produce more realistic projections compared with the econometric models, they still suffer from huge data deficiencies especially in developing countries. Development and maintenance of more detailed energy databases, further development of models to better reflect developing country context, and institutionalizing the modeling capacity in developing countries are the key requirements for energy demand modeling to deliver richer and more reliable input to policy formulation in developing countries.

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Bibliographic Details
Main Authors: Bhattacharyya, Subhes C., Timilsina, Govinda R.
Language:English
Published: 2009-03-01
Subjects:AFFORDABLE ENERGY, AGGREGATE DEMAND, AGGREGATE ENERGY DEMAND, AGGREGATE LEVEL, AGRICULTURE, ALLOCATION MODEL, ALTERNATIVE USES, ANNUAL ENERGY OUTLOOK, APPLIANCE STOCKS, APPROACH, AVAILABILITY, BIOMASS, CALORIFIC CONTENT, CAPACITY SHORTAGES, CLEAN ENERGY, CLIMATE CHANGE, CLIMATIC CONDITIONS, COMMERCIAL ENERGY, COMMERCIAL ENERGY DEMAND, CONSUMER DEMAND, CONSUMERS, CONSUMPTION INCREASES, COOKING, COST OF ENERGY, CRUDE OIL, DECISION MAKING, DEMAND CATEGORY, DEMAND CURVE, DEMAND ELASTICITY, DEMAND FOR ELECTRICITY, DEMAND FOR ENERGY, DEMAND FOR ENERGY PRODUCTS, DEMAND FOR ENERGY SERVICES, ECONOMETRIC ANALYSES, ECONOMETRIC ANALYSIS, ECONOMETRIC MODELS, ECONOMIC ASSUMPTIONS, ECONOMIC BARRIERS, ECONOMIC FORECASTS, ECONOMIC INTEGRATION, ECONOMIC MODELS, ECONOMIC STRUCTURE, ECONOMIC THEORIES, ELASTICITY OF DEMAND, ELECTRICITY, ELECTRICITY DEMAND, ELECTRICITY GENERATION, EMPLOYMENT, END-USE, END-USE ENERGY, END-USES, ENERGY ANALYSIS, ENERGY BALANCE, ENERGY COMPANIES, ENERGY CONVERSION, ENERGY DECISION, ENERGY DEMAND, ENERGY DEMAND ANALYSIS, ENERGY DEMAND FORECASTING, ENERGY DEMAND GROWTH, ENERGY EFFICIENCY, ENERGY FORM, ENERGY INDUSTRY, ENERGY INPUT, ENERGY INTENSITY, ENERGY MARKETS, ENERGY MODEL, ENERGY MODELING, ENERGY MODELS, ENERGY NEEDS, ENERGY OUTLOOK, ENERGY PLANNING, ENERGY POLICIES, ENERGY POLICY, ENERGY POLICY ANALYSIS, ENERGY PRICE, ENERGY PRICES, ENERGY PROBLEM, ENERGY PRODUCTS, ENERGY REQUIREMENT, ENERGY RESOURCES, ENERGY SOURCE, ENERGY SUPPLY, ENERGY SYSTEMS, ENERGY USE, ENVIRONMENTAL IMPACTS, EXTERNALITIES, FACTOR DEMAND, FINAL ENERGY DEMAND, FORECASTING MODELS, FORECASTING TECHNIQUES, FORECASTS, FOSSIL, FOSSIL FUELS, FREIGHT TRANSPORT, FUEL, FUEL DEMAND, FUEL PRICE, FUEL SUBSTITUTION, FUNCTIONAL FORMS, FUTURE ENERGY DEMAND, GDP, GNP, GROSS DOMESTIC PRODUCT, GROSS NATIONAL PRODUCT, GROSS OUTPUT, GROWTH RATE, INCOME, INCOME ELASTICITY OF DEMAND, INCOMPLETE MARKETS, INDUSTRIAL ACTIVITIES, INTERNATIONAL ENERGY AGENCY, INVENTORY, KEROSENE, MARGINAL UTILITY, NATIONAL INCOME, OIL, OIL CRISIS, OIL DEMAND, OIL PRICE, OPTIMIZATION, PER CAPITA ENERGY, POLLUTION, POWER, POWER SECTOR, PRICE OF ENERGY, PRIMARY ENERGY, PRIMARY ENERGY CONSUMPTION, PRIMARY ENERGY DEMAND, PURCHASING POWER, REAL INCOME, RENEWABLE ENERGIES, RENEWABLE ENERGY, RESIDENTIAL DEMAND, RURAL ENERGY, SOURCE OF ENERGY, STATISTICAL ANALYSIS, SUSTAINABLE DEVELOPMENT, SUSTAINABLE ENERGY, SUSTAINABLE ENERGY FUTURE, SYSTEMS ANALYSIS, TOTAL ENERGY CONSUMPTION, TOTAL ENERGY DEMAND, TOTAL OUTPUT, TRADITIONAL FUELS, UNEMPLOYMENT, UTILITY FUNCTION, UTILITY MAXIMIZATION, VALUATION, VALUE JUDGMENTS, VALUE OF OUTPUT, VEHICLES, WORLD ENERGY, WORLD ENERGY COUNCIL,
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090317093816
https://hdl.handle.net/10986/4061
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Summary:This paper critically reviews existing energy demand forecasting methodologies highlighting the methodological diversities and developments over the past four decades in order to investigate whether the existing energy demand models are appropriate for capturing the specific features of developing countries. The study finds that two types of approaches, econometric and end-use accounting, are used in the existing energy demand models. Although energy demand models have greatly evolved since the early 1970s, key issues such as the poor-rich and urban-rural divides, traditional energy resources, and differentiation between commercial and non-commercial energy commodities are often poorly reflected in these models. While the end-use energy accounting models with detailed sector representations produce more realistic projections compared with the econometric models, they still suffer from huge data deficiencies especially in developing countries. Development and maintenance of more detailed energy databases, further development of models to better reflect developing country context, and institutionalizing the modeling capacity in developing countries are the key requirements for energy demand modeling to deliver richer and more reliable input to policy formulation in developing countries.

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