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Open Access Publications from the University of California

Economic Rebalancing and Electricity Demand in China:


Understanding the relationship between economic growth and electricity use is essential for power systems planning. This need is particularly acute now in China, as the Chinese economy is going through a transition to a more consumption and service oriented economy. This study uses 20 years of provincial data on gross domestic product (GDP) and electricity consumption to examine the relationship between these two factors. We observe a plateauing effect of electricity consumption in the richest provinces, as the electricity demand saturates and the economy develops and moves to a more service-based economy. There is a wide range of forecasts for electricity use in 2030, ranging from 5,308 to 8,292 kWh per capita, using different estimating functions, as well as in existing studies. It is therefore critical to examine more carefully the relationship between electricity use and economic development, as China transitions to a new growth phase that is likely to be less energy and resource intensive. The results of this study suggest that policymakers and power system planners in China should seriously re-evaluate power demand projections and the need for new generation capacity to avoid over-investment that could lead to stranded generation assets.

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