Evaluating the impacts of the increasing block tariffs on residential electricity consumption in China

Residential electricity consumption in China experienced a boom in recent years and may increase faster in the future. To reduce residential electricity consumption, China has adopted Increasing Block Tariffs (IBT) since 2012. The previous work mainly used regional level aggregated data to assess the impact. Few studies using household level data did not overcome the endogeneity problem. Based on the instrumental variable method, this paper found that commonly used OLS estimation gave unreasonable results and instrumental variable method is appropriate and effective in this study. The IBT was found to significantly reduce residential electricity consumption in high-income group, which achieving the initial goal of China's IBT. Lastly, this paper proposed to generate more publicity of the IBT policy and increase the electricity price of second or third tier. (C) 2021 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.

Automated summary

The study found that residential electricity consumption in China is growing rapidly, and the use of Increasing Block Tariffs is effective in reducing consumption, especially among high-income groups. The instrumental variable method proved to be effective in assessing the impact, providing a reliable means of evaluation.