Heterogeneous responses to climate: evidence from residential electricity consumption

Existing studies have shown that climate change has important implications for residential electricity consumption, yet how responses to climate vary between rural and urban residents, and more importantly, the roles of electricity pricing regimes in determining such responses remain largely unknown. In this paper, we explore these issues using monthly data in Anhui province in China. Our results suggest that on average rural residents are more sensitive to cooling degree days (CDD) than urban counterparts (0.19% vs 0.08% increase in electricity consumption per unit increase in CDD). Additionally, households who adopt the time of use (TOU) pricing regime tend to be less responsive to temperatures than households choosing tiered pricing regimes (TPHE). Substantial increases in electricity demand induced by climate change are expected in the future. With the pessimistic RCP8.5 scenario, our results suggest an increase of 35.5% and 77.1% in electricity demand respectively for the urban and rural residents in the 2080s relative to 2017.