Analysis Of Electricity Demand In Ethiopia Using Partial Adjustment And Arima Modeling

This paper examined demand for electricity in Ethiopia as a function of real grossrndomestic product per capita, real price of electricity and population growth raternbetween the period 1976 and 2010. Partial adjustment and ARIMA models were used tornprovide electricity demand estimation and forecast, and resul ts were compared withrngovernment projections. In the partial adjustment model, we found that income andrnpopulation growth are the main determinants of electricity demand in Ethiopia, whilernthe effect of electricity price is insignificant. Moreover, elasticities of electricity demandrnin Ethiopia are low (inelastic demand) meaning that, the responsiveness of consumers'rnto price, income and population growth rate changes is limited. From the comparison ofrnARIMA (1, 2, 1) model forecasts and government projection, except reference scenario,rnwe found that the government electricity demand projections are consistently higher forrnmoderate and targeted scenario than forecasted values of ARIMA (1, 2, 1) model.rnKey words: Partial adjustment model, Elasticity, Co-integration Analysis, ARIMA

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