What Determines Household Electricity Consumption?

The capacity to predict the immediate changes in electricity demand in a region and the factors that drive them are increasingly important to electricity system operators, particularly in the deregulated power system environment. In addition to its price, modeling residential electricity consumption (REC) involves millions of households and depends on numerous variables, such as temperature, income, household size, new energy technologies, users’ responses to pricing, and the level of investments made by utilities for energy savings and demand-response programs, as well as management strategies built on the relationship between energy price response and energy improvements. This study investigates the factors affecting residential electricity consumption in the Kurdistan Region of Iraq. The study of the determinants of household demand for electricity has a dual purpose: firstly, to determine the important variables that play roles in electricity consumption through econometric modeling of households’ electricity consumption, allowing us to analyze the possible impact of family behavioral changes on their electricity consumption, promoting its rationalization, efficiency, and hence reducing the electricity demand; secondly, the knowledge of these determinants will allow planning and development entities to benefit from the useful information for their decision-making to design strategies for rational electricity consumption, establish intervention strategies according to identified variables, and formulate and implement targeted campaigns to inform and educate in order to promote advances and changing habits of its users, to reduce the electricity demand.