Residential electricity consumption over the demographic transition in the Philippines

Abstract

The global shifts in population age distribution brings about both challenges and opportunities. On the one hand, demographic transitions present an opportunity for sustained economic growth. However, it also poses challenges in meeting future consumption requirements. In this paper, we performed an index decomposition analysis linked with an economic-demographic model to trace how population age structure change may affect household electricity demand with the Philippines as a specific case study. Our results show that population ageing has a direct, significant, and persistent effect on residential electricity demand growth. In economies like the Philippines where the elderly consumes more electricity per person relative to younger cohorts, population ageing is expected to raise aggregate electricity demand through sheer compositional accounting effect. But even in economies where average electricity consumption is flat or declining in age, demographic dividends are projected to raise aggregate electricity consumption by expanding electricity access and increasing usage intensity across all age groups through a positive income effect. The permanence and irreversibility of population ageing, and the persistence of economic growth from demographic change may drive continuing growth in the energy sector.