The effect of conservation on residential electricity consumption: evidence from Kuwait

ABSTRACT

Based on data from a household survey completed in 2016, this paper estimated a model for residential electricity consumption in Kuwait. The main objective of estimating the model was to examine the impact of curtailment and efficiency energy conservation measures on household electricity consumption. Given Kuwait’s demographic composition and variations in electricity consumption across months, the model was estimated for two population groups (nationals and expatriates) and three periods (annual, summer months, and winter months). Prior to estimating the model, tests were conducted to determine if the observed differences in consumption across the population groups were sufficiently different to warrant separate treatment of groups. The survey data revealed that despite electricity consumption being heavily subsidized, households made efforts to conserve electricity by investing in efficient technologies as well as changing habits and practices. While the curtailment measures reported to be adopted by households were found to lower electricity consumption of the national households, the efficiency measures were found to impact electricity consumption of expatriate households. Awareness of conservation campaigns and conservation issues were found to lower electricity consumption, particularly in the case of expatriate households.

KEYWORDS:

• Conservation
• consumption
• households
• curtailment
• efficiency
• electricity

JEL CLASSIFICATION:

• C12
• C21
• Q4

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. At the global level, the residential sector accounts for approximately one-third (31%) of the total energy consumed, which varies from 16% for Finland to 50% for KSA (Swan and Ugursal 2009).

2. See Ascensio and Delmas (2016), Bedir, Hasselaar, and Itard (2013), McLoughlin, Duffy, and Conlon (2012), Mizobuchi and Takeuchi (2012, 2013, 2015), and Zivin and Novan (2016).

3. There is a long list of measures that the households can adopt to save/conserve energy, which involves both turning off lights/appliances when not in use (curtailment), as well as investing in energy-efficient technologies embedded in buildings, equipment, appliances, and machines used by the households (efficiency). For more on curtailment vs. efficiency measures, see Martiskainen (2008) and Burney et al. (2017).

4. The GCC region, which was established in May 1981, consists of Bahrain, Kuwait, Oman, Qatar, Kingdom of Saudi Arabia (KSA), and United Arab Emirates (UAE).

5. The electricity supply industry in the country is owned and operated by the government. Apart for the industrial consumers in a specific area, who were charged a flat rate of 1 fil/kWh (or 0.3 cents/kWh) between 1966 and 2017, all other electricity consumers (including residential, commercial, industrial, and others) were charged a flat rate of 2 fils/kWh (or 0.6 cents/kWh). The rates remained unchanged between 1966 and 2017.

6. For administrative purposes Kuwait is divided into six regions (Aasimah, Ahmedi, Farwaniya, Hawally, Mubarak Kabir, and Jahra). There are three main types of residential dwellings in Kuwait; villa, traditional house, and apartment. A villa is a modern looking independent residential building of varying size with a maximum of three floors. Strictly speaking, a villa is to be used by a single family and cannot be divided into smaller units and rented out. In practice, however, villas are often divided into smaller units and house multiple families, with each floor having at least one apartment. A traditional house is an older dwelling structure based on Kuwaiti architecture that has no more than two floors and a courtyard. For various reasons, the residential sector in Kuwait consists of two main categories: pure residential and commercial. The pure residential category includes villas and traditional houses with no private commercial enterprises, while the commercial category includes apartment buildings, public and private offices, and other commercial enterprises.

7. It has been estimated that, on average, 25% of the growth in total consumption of electricity over the years was due to increases in per capita consumption, and about 75% was due to increases in the total population. In addition to the subsidy on consumption, the electricity metering, monitoring, and billing system in Kuwait are not complete. Thus, electricity consumers not only do not bear the full cost of the supply of electricity to their homes, a majority of them are not aware of their own consumption either. For details, see Burney et al. (2017).

8. The model was estimated with both total monthly consumption as well as average monthly per capita consumption as the dependent variable. The results corresponding to average monthly per capita consumption as the dependent variable are reported in the paper because overall the performance of the model with average monthly per capita consumption as the dependent variable was found to be relatively better. For the benefit of the readers, the results corresponding to total monthly consumption are reported in Appendix Table A5. As statistically significant differences have been found to exist between electricity consumption behavior of Kuwaiti and expatriate households, only final group specific regressions are reported and discussed in the paper, which were selected on the basis of overall explanatory power of the models and statistical significance of the explanatory variables.

Additional information

Funding

This work was supported by the Kuwait Foundation for the Advancement of Sciences (KFAS) [2010-1112-02].