The Determinants of Household Electricity Demand in Turkey: An Implementation of the Heckman Sample Selection Model

Abstract

Residential areas have a significant share in electrical energy consumption in Turkey. At this point, determining electricity consumption demand in residential areas will significantly contribute to ensuring energy efficiency throughout the country. Accurate econometric modelling of the relationships between the various socioeconomic characteristics of households and their energy consumption/expenditure can serve as a basis for policymakers when planning investments aimed at efficiency on primary energy consumption in residences. Considering these issues, this study aims to examine the electricity consumption demand in residential areas in Turkey in terms of various socio-economic and building and property characteristics variables. At this point, the fact that some households have zero electricity consumption has led to the need to use censored regression models. The Heckman Sample Selection model was used, which makes it possible to estimate the consumption decision of individuals in two stages and eliminates the parameter bias problem caused by linear regression analysis. Heckman Sample Selection modelling was carried out in the study using Turkish Statistical Institute (TURKSTAT) 2019 Household Budget Survey data. According to the results, it has been determined that annual disposable income, various demographic variables (age, education level, marital status), characteristics of the house (size) and the presence of various electrical household appliances (air conditioner, tumble dryer, deep freezer) have significant effects on electricity consumption. The systematic preparation of informative brochures on the effective use of household electrical appliances can significantly contribute to efficiency. In addition, in countries like Turkey that depend on foreign energy, providing incentives towards renewable energy sources is considered necessary to contribute to the country's economy positively.