Eleventh International Conference on Climate Change: Impacts & Responses

Abstract

The industrial and commercial sectors comprise three quarters of global electricity consumption while the residential sector uses only 22%. Several studies show that increasing temperatures are expected to raise overall electricity consumption, but few consider the more critical industrial and commercial sectors. In this study, I estimate the impacts of temperature on electricity consumption of all three sectors, plus agriculture, for South Korea. I find that electricity consumption is non-linearly associated with temperature, but the shape varies across sectors. Residential, commercial, and agricultural demand responds strongly temperature changes, while the response of industrial sector is relatively moderate. The consumption of the commercial sector significantly increases during both hot and cold days, but the consumption of the residential sector significantly increases only during hot days and the agricultural sector during cold days. To calculate potential impacts of warmer temperatures on electricity consumption, I consider uniform temperature increases of 2 C and 5 C. Total electricity consumption in August, the peak month, is predicted to increase by 4.1% (1.5 TWh) and 11.3% (4.1 TWh) under the respective scenarios, holding all else the same which creates additional costs of $0.17 billion and $0.45 billion as the marginal cost of electricity is 11 cents per kWh in South Korea, 2016. Actual cost impact will likely exceed these estimates because peak loads are more expensive to serve.