## Blowing Hot and Cold

_IMF Blog, March 16, 2021_

## Source details

**Canonical URL:** [Blowing Hot and Cold](https://www.imf.org/en/blogs/articles/2021/03/16/blowing-hot-and-cold)

## Other formats

- [Markdown version](/en/blogs/articles/2021/03/16/blowing-hot-and-cold/index.md)
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## Bibliographic details
- Authors: Jiaxiong-Yao
- Published: March 16, 2021

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### Research question and approach
- Examines where current conditions are relative to the temperature "sweet spot" for electricity demand and the implications of warming.
- Uses satellite data: changes in electricity usage are approximated by nighttime lights recorded by satellites, which are described as highly correlated with electricity usage.
- Analysis is conducted at subnational levels, comparing changes in electricity usage with changes in temperature over time.
- Focuses on places not extremely cold where the annual average temperature is above 0 degrees Celsius (32 degrees Fahrenheit).

### Key empirical findings
- The relationship between electricity demand and temperature is generally U-shaped: at both low and high temperatures, electricity demand is high.
- The identified "sweet spot" (minimum electricity demand) is about 14.6 degrees Celsius (58.3 degrees Fahrenheit) for the annual average temperature.
- For much of the world, the average temperature has already increased beyond that sweet spot; further temperature rises are set to increase electricity demand further.
- Regional vulnerability example: Sub-Saharan Africa’s average temperature is already well beyond the sweet spot.
  - A 1 degree Celsius (1.8 degree Fahrenheit) increase in temperature is estimated to raise Sub-Saharan Africa’s electricity consumption by about 7 percent.
- Differential effects by climate:
  - Hotter climates: electricity demand will likely surge to combat heat waves (increased cooling needs).
  - Colder climates: less electricity may be needed to keep people warm (reduced heating needs).

### Development and policy implications
- Access to affordable, reliable, sustainable and modern energy is one of the United Nations’ Sustainable Development Goals.
- Investing in basic energy infrastructure is described as especially urgent in the context of development needs.
- To avoid compromising the fight against climate change, it is vital that increased electricity generation be "green and renewable."
- Historical context: Three-quarters of the world’s households were electrified during the 20 th century, presented as a significant achievement and a foundation for future investment.

### Practical takeaway
- Continued global warming will generally raise electricity demand in many regions by moving average temperatures beyond the identified sweet spot of about 14.6 degrees Celsius (58.3 degrees Fahrenheit).
- Policy priorities highlighted: scale up electricity generation to meet rising demand; prioritize investments that support sustainable development and renewable generation to align adaptation and mitigation objectives.

*Blowing Hot and Cold — Jiaxiong Yao, March 16, 2021*

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## References

- [recent IMF staff working paper](https://www.imf.org/en/Publications/WP/Issues/2021/02/05/Electricity-Consumption-and-Temperature-Evidence-from-Satellite-Data-50031)

_Source: https://www.imf.org/en/blogs/articles/2021/03/16/blowing-hot-and-cold_