Exploring the impact of temperature change on residential electricity consumption in China: The 'crowding-out' effect of income growth.

Under the background of global warming, the world is experiencing many extreme climate events. The temperature fluctuation associated with climate change is often considered as a primary driving force of electricity consumption. To better explore the impact of temperature on electricity consumption, this paper aims to analyze the question from the perspective of income growth, i.e., the moderating effect of income growth on the response of urban residential electricity to temperature changes. Using the unbalanced panel data of 23 cities in the Yangtze River Delta Urban Agglomeration from 2004 to 2015, we construct the response model of residential electricity consumption to income growth, heating degree days, cooling degree days and their interactions. The results show that heating demand, cooling demand and income growth significantly increase residential energy consumption. However, urban residential disposable income growth weakens the positive effect of heating demand and cooling demand on residential electricity consumption. Because, urban residents have obvious demand for improving indoor heating comfort and cooling comfort, the moderating effect of income is shown as the crowding-out effect. Residents may adjust the structure of heating energy consumption (from electricity to natural gas) and upgrade their electrical equipment to high energy efficiency equipment, thereby reducing residential electricity consumption. This study also indicates that urban residential energy consumption is very sensitive to changes in permanent populations. The main contribution of this study is proposing the hypothesis of the negative moderating effect of income growth on temperature changes and expanding the response model of residential electricity consumption to temperature changes. Finally, this paper also proposes the adaptive strategies and policy implications for climate change. [ABSTRACT FROM AUTHOR]