The commercial sector demand for energy in Kuwait

This paper models and estimates the energy demand by the commercial sector, using an error correction model. It also simulates the estimated model under three pricing scenarios and presents an analysis of the results. The empirical results indicate that short and long term energy consumption and the level of economic activity are entwined. The forecasts show that electricity consumption varies directly with economic growth. It also suggests that an increase of 100 per cent in nominal electricity prices will lead to a reduction in commercial sector electricity demand by about 27 per cent by the year 2015. The simulation of the model under the different pricing scenarios demonstrates that there is a great potential for energy conservation by the commercial sector.