Analysing the determinants of household electricity demand in Spain. An econometric study

•Determinants of household electricity demand with partial adjustment, panel data model in Spain.•Demand is positively related to income, temperature, lagged demand and natural gas price.•Demand is negatively related to the price of electricity.•Income and price elasticities are within the ranges reported in the literature. This paper analyses the determinants of household electricity demand with a panel data, partial adjustment model of the Spanish regions between 1998 and 2009. We find that electricity demand is positively and significantly related to several variables (electricity demand in the previous year, income, temperature range, penetration of electric water heating in households and the number of heating and cooling degree days). It is significantly and negatively related to electricity prices, gas prices, penetration of electric heating in households and the presence of older people in the household. Electricity demand is slightly more responsive to changes in income than to changes in prices. The short-term and long-term price elasticities of our preferred model (DIFF-GMM) are −0.26 and −0.37 respectively. The income elasticities are 0.31 (short-term) and 0.43 (long-term). Some policy implications are derived from the results of the analysis.