Electricity Demand of Pakistan in the Context of Cooling Degree Days: 1972-2022

Abstract

Background: Pakistan faces a critical reliance on electricity for socio-economic development and its commitment to achieving sustainable energy goals. The investigation of robust electricity demand requires the inclusion of the effects of climate change along with income, number of consumers, and use of capital goods.

Objectives: The study analyzes the complex electricity demand function in the face of climate change revolving around the bottom of overall consumption to frame evidence-based, efficient electricity planning and policies for the country mired in darkness and vulnerable to climate change.

Methods: This study avails ARDL cointegrating bounds approach to assess the long-run effects for the case of Pakistan between 1972 and 2022.

Results: The results showed that the cooling degree had a significant positive effect on electricity demand. The income had an inverted U-shaped effect, while the number of consumers was also positively and significantly affected. The analysis to forecast Pakistan’s electricity consumption demand by considering cooling degree days, along with other factors, shows that the demand is likely to grow around 6-8% per annum, which is twice the size of current estimates.

Implications: It is recommended to revisit Pakistan’s electricity planning to take cooling degree days into account to develop a climate change-compatible electricity sector, a prerequisite for the country's sustainable development.