A Long-Term Forecast of Electricity Demand in Israel

31/12/2017 |  Gallo Lior
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The Economy and Economic Activity
Abstract:

This paper estimates a model for forecasting electricity demand in the Israeli economy in coming decades.  It locates the main variables that affect demand for electricity, particularly the rate of increase of economic activity, the relative price of electricity, the industry structure of GDP, household consumption habits, and the availability of alternative energy products.  The paper estimates the effects of these variables on demand for electricity by using data for 1970 to 2015, and builds a forecast based on the estimation results and assumptions regarding the future development of the variables.  Differing assumptions are reflected in the difference in the forecasts.

The results show that the average rate of increase in demand for electricity in the next two decades is expected to be between 2.6 and 2.9 percent per year.  This rate of increase is slightly lower than the average rates of increase in the past.  The main reasons for this are the expected slowdown in the rate of growth of economic activity relative to previous decades, and changes in the structure of GDP in the Israeli economy, where the weight of industries that are not electricity intensive is increasing.​

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