How will promoting the digital economy affect electricity intensity?

The digital economy plays a critical role in changing the pattern of economic and social development and has a multifaceted impact on carbon neutrality. However, the causal relationship between digitalization and electricity intensity remains unclear and controversial. To fill this gap, this paper measures the level of the digital economy in 227 Chinese cities from 2011 to 2019. The non-linear effect and mechanism of the digital economy on electricity intensity are investigated through the panel smooth transition model. This research finds that the digital economy promotes electricity intensity and this effect shows an inverted "U" shape. The correlation between the digital economy and electricity intensity has been consistently positive throughout the sample observation period. According to the findings, the digital economy increases electricity intensity by encouraging the development of infrastructure and the usage of electronic items while decreasing it by encouraging a change in consumption and technological advancement. This study provides new insights and enhances the understanding of correlation between the digital economy and electricity intensity. •The digital economy has a significant role in promoting power intensity.•The promoting effect presents an inverted "U" shape.•The marginal effect begins decrease as digital economy’ level exceeds 0.0959•The digital economy promotes changes in consumption patterns and technological progress.•The digital economy promotes the infrastructure and the terminal equipment.