Electricity prices and energy intensity in Europe

Abstract

The purpose of this article is to analyse the impact of residential electricity prices on energy intensity in Europe. The research is primarily based on a panel analysis for the European Union (EU-28) member states plus Norway over the period 1990-2015, to which a fixed-effect estimator was applied. The results suggest that the residential electricity price has one-third on energy intensity, taking into account the control variables. This implies that the level and structure of electricity prices should be considered as a potential energy policy tool for improving energy efficiency by reducing energy intensity. The results also suggest that energy intensity in Europe was favourably affected by the restructuring of industrial companies in transitional economies, the implementation of national programmes for improvement of energy efficiency, and the introduction of EU Emissions Trading Scheme.