Stochastic demand frontier analysis of residential electricity demands in Japan

This study analyzed the efficiency of residential electricity demands from 1990 to 2015 across the electrical supply regions of Japan. Specifically, I utilized a stochastic frontier analysis to statistically identify the determinants of the efficiency of residential electricity demands. The analysis revealed that a decline in average household size improves the efficiency of electricity demands, whereas a rise in the aging of household members worsens it. Furthermore, this study showed that the efficiency of electricity demands improves in warmer regions because of increased cost consciousness in cooling demands, whereas it deteriorates in colder regions because of the complementary use of various heating devices. A shift in Japan’s energy policy following the 2011 Great East Japan Earthquake has not significantly affected the efficiency of residential electricity demands. In other words, no structural changes have occurred in the efficiency of electricity demands during the observation period. As such, long-term trends within this sector in Japan include a decline in the average household size and a rise in population aging. Therefore, these findings provide important insights into Japan’s future trends in terms of energy demands.