Friday, September 2, 2016

The Electricity "Cost Share"

This graph shows the value of electricity divided by GDP for 130 countries in 2013 plotted against GDP per capita. I used the 2015 price of electricity reported by the World Bank Doing Business report, IEA data on electricity use in 2013 and GDP data from the Penn World Table. Cost share is in inverted commas because GDP isn't gross output and electricity is used for consumption as well as production. The fitted curve is a quadratic.

There is a general trend to lower cost shares at higher income levels. But the electricity cost share is very low in some poor countries like Ethiopia simply because they don't use much electricity. It is also low in many oil producing countries such as Kuwait who subsidize electricity. In Kuwait a kWh costs 0.7 U.S. cents. By contrast, in Jamaica a kWh cost 41.6 U.S. cents. The highest cost share is in Macedonia.

I think we should expect that total energy cost shares will be more declining with income. This is because poor countries use more of other energy sources and rich countries use less of energy other than electricity. This matches the longitudinal data we have from Sweden and Britain.

I put this data together for our Energy for Economic Growth project.

1 comment: