Analysis of Iran's Electricity Consumption: Application of Index Decomposition Analysis and Decoupling Analysis

Iran's electricity consumption and the relationship between electricity consumption and economic growth. For this purpose, by using the Logarithmic Mean Divisia Index approach and the non–oil real GDP, electricity consumption, energy consumption, and value-added of services, industry, and agriculture sectors, during 2001-2019, the electricity consumption was analyzed and the relationship between electricity consumption and economic growth was investigated based on decoupling analysis. Based on the results of the electricity consumption analysis, during the entire study period, only the structure effect caused a decrease in electricity consumption. According to the periodic analysis results, before the implementation of the targeted subsidies law (2001-2010), the electricity consumption because of the intensity and structure effects was reduced, and due to the production, activity, and population effects increased; and after the implementation of this law (2011-2019), only the structure effect has led to reducing the electricity consumption, and it was increased due to four effects including activity, population, intensity, and production. Based on the decoupling approach results, in the whole period, the situation of growing negative decoupling, meaning the realization of economic growth at the cost of more increasing electricity consumption and environmental pollution, was dominant. Therefore, only actualizing the energy price is not effective in managing energy consumption, hence other energy efficiencies, economic, and environmental complementary policies must be implemented simultaneously.