The influence of electricity prices on saving electricity in production: Automated multivariate time-series analyses for 99 Danish trades and industries

We examine whether industries save electricity per production unit when electricity prices rise. This is of interest for policy makers considering changing tariffs on industrial electricity consumption. Previous studies use national or sector-level data offering limited information about how individual industries are affected, which is needed for better targeting policies. Using Danish time-series data (1966–2015), we therefore analyze industries at a detailed level. In particular, for each of 99 industries, we use Autometrics to find a well-specified partial VAR model for the intensities of electricity and other energy (an aggregate of oil, coal, gas, district heating and biomass). The model allows for cointegration and is conditional on energy prices and heating degree days. We find that, 15 industries (26% of total industrial electricity use in 2015), save electricity (per unit of output) when this becomes more expensive. For another 18 industries (10%), both electricity and other energy are saved when electricity prices increase. Finally, there are only 4 industries (3%), for which the savings on electricity are compensated by an increase in other energy.