Oil prices and electricity production in Morocco

This paper investigates the impact of oil prices on a single public utility's electricity production by using a cointegration approach. We estimate the elasticity of the electricity produced, by different fuel sources (coal, oil, and water) in the Moroccan power system, to oil prices. We find that, in the long run, the elasticities of the electricity produced by coal and oil to oil prices are similar. On the contrary, significant differences exist in the short-term elasticity of the electricity produced by coal and oil to oil prices. We also find that hydropower could substitute the electricity produced by coal in the short run but not in the long run.