Exploring the determinants of household electricity demand in Vietnam in the period 2012–16

Abstract : As a developing country with surging demand in electricity, Vietnam has implemented demand-side management in the residential electricity market, such as increasing block tariffs to balance the tension between energy security and the development of clean technology. The implementation of demand-side management requires a deep understanding of customer behaviors and household demand. The thesis aims to explore the factors impacting on Vietnamese residential electricity demand in the period of 2012–16. The exploration focuses on four main factors: prices, income, demographics (including household size and composition), and heatwaves. The data are a pool data set and a panel data set which have been constructed from the three rounds of the micro survey Vietnam Household Living Standard Survey (VHLSS) in 2012, 2014 and 2016.The thesis has two novel points in estimating household electricity demand function.First, it uses micro survey data at national level, with detailed tariff structures and private electricity billing. In the past, researches have often used national aggregate data or national micro survey data with imputed quantity or price. Researches that use micro survey data with detail tariff schedules and electricity bills are often at a regional level rather than at a national level due to the absence of national data on tariff structures. The residential electricity market in Vietnam is a monopoly with a single seller, Vietnam Electricity (EVN). Electricity tariff schedules are proposed by EVN and set by the Government and are thus uniform in national scale. This provides a chance to estimate demand function from national micro survey data, with full detail of electricity prices and billings.Second, the thesis proposes a new way to capture the impact of high temperature on electricity demand. That is, to include an additional dummy variable to represent the extreme distribution of temperature. The additional dummy variable is a complement to the concept of cooling degree days which is a popular representation of temperature in previous researches.The estimate results lead to five main conclusions. (i) Households do respond to marginal prices and demand is elastic to price. (ii) There exists an income threshold from which household electricity consumption increases as income increases. The electricity consumption of households in the income group is the reference level of electricity poverty threshold. (iii) The increasing block tariff does not cancel out economies of scale in electricity expenditure of households. (iv) There is no difference in electricity expenditure across children, adults and elders. (v) Heatwaves – a climate change related phenomenon – do have impacts on electricity demand and need to be addressed carefully in estimating electricity demand in the future.
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Hoai-Son Nguyen. Exploring the determinants of household electricity demand in Vietnam in the period 2012–16. Economics and Finance. Université Paris-Saclay, 2019. English. ⟨NNT : 2019SACLA013⟩. ⟨tel-02294630⟩

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