Analysis of Electricity Demand in Ethiopia Using Partial Adjustment and ARIMA Modeling
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Date
2011-05
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Addis Ababa University
Abstract
This paper examined demand for electricity in Ethiopia as a function of real gross
domestic product per capita, real price of electricity and population growth rate
between the period 1976 and 2010. Partial adjustment and ARIMA models were used to
provide electricity demand estimation and forecast, and resul ts were compared with
government projections. In the partial adjustment model, we found that income and
population growth are the main determinants of electricity demand in Ethiopia, while
the effect of electricity price is insignificant. Moreover, elasticities of electricity demand
in Ethiopia are low (inelastic demand) meaning that, the responsiveness of consumers'
to price, income and population growth rate changes is limited. From the comparison of
ARIMA (1, 2, 1) model forecasts and government projection, except reference scenario,
we found that the government electricity demand projections are consistently higher for
moderate and targeted scenario than forecasted values of ARIMA (1, 2, 1) model.
Key words: Partial adjustment model, Elasticity, Co-integration Analysis, ARIMA
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Keywords
Partial adjustment model, Elasticity, Co-integration Analysis, ARIMA