Electricity Consumption and Temperature: Evidence from Satellite Data

IMF Working Papers, February 5, 2021

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Canonical URL: Electricity Consumption and Temperature: Evidence from Satellite Data

Research objective: Study the relationship between electricity consumption and temperature on a global scale using grid-level night light and temperature data to overcome data constraints that limited prior country-level studies.
Rationale: Night light, mostly generated by electricity and recorded by satellites, has a strong linear relationship with electricity consumption and is correlated with both its extensive and intensive margins.

Proxy: Night light used as a proxy for electricity consumption at the grid level.
Scope: Global grid-level analysis (study spans 38 pages).
Series and identifiers: Working Paper No. 2021/022; Issue 022; Volume 2021; DOI: https://doi.org/10.5089/9781513568539.001; ISBN: 9781513568539; ISSN: 1018-5941; Stock No: WPIEA2021022.

U-shaped relationship:
- There is a U-shaped relationship between electricity consumption and temperature.
Critical temperature:
- The critical point of temperature for minimum electricity consumption is around 14.6°C for the world.
- The critical point is higher in urban and more industrial areas.
Persistence:
- The impact of temperature on electricity consumption is persistent.
Vulnerability of Sub-Saharan Africa:
- Sub-Saharan African countries are particularly vulnerable: a 1°C increase in temperature is estimated to increase their electricity demand by 6.7% on average.
Empirical justification:
- Night light has a strong linear relationship with electricity consumption and correlates with both extensive and intensive margins of electricity use.

Global applicability:
- Grid-level satellite night light enables analysis in regions previously understudied due to data constraints, allowing assessment of temperature–electricity links across diverse geographies.
Urban and industrial infrastructure:
- Higher critical temperatures in urban and more industrial areas imply differing temperature sensitivity and potential adaptation needs across space.
Climate change risk:
- Temperature-driven increases in electricity demand (e.g., 1°C → 6.7% increase for Sub-Saharan Africa) underscore climate change pressures on already large electricity deficits in vulnerable regions.
Persistence of effects:
- Persistent temperature impacts suggest planning for sustained shifts in electricity demand rather than temporary spikes.

Jiaxiong Yao, "Electricity Consumption and Temperature: Evidence from Satellite Data", IMF Working Papers 2021, 022 (February 5, 2021).